Commercial Agri-Developments for Agricultural Produce and Livestock
Business Model Description
Establish "agricultural towns" through commercial agri-developments that first lead to mini economies within the developments and then scale with capacity for export of produce and livestock to international markets. The developments offer 10 hectares plot for sale and provide supporting infrastructure, including a hub offering training, mentorship and offtake.
Expected Impact
Create mini-economies and turn marginalised areas into productive agri-produce and livestock centers.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Namibia: Omusati Region
- Namibia: Oshikoto Region
- Namibia: Kavango East Region
- Namibia: Kavango West Region
- Namibia: Ohangwena Region
Sector Classification
Food and Beverage
Development need
25% of Namibia's population is food insecure (II), including due to persistent drought situations (IV) and the country's farmers facing challenges to access affordable financing (V). SDG 2 on Zero Hunger is "stagnating" and faces "major challenges" in Namibia (I).
Policy priority
As captured in Namibia's 5th National Development Plan (NDP5), the Government seeks to transition from a provider of live animals to exporting value-added agricultural goods, and increase food and livestock production by 30% and 10% in 2022 (II). Although the agriculture sector only contributes 3-5% to GDP, it is a Government priority as it employs 23% of its population (III).
Gender inequalities and marginalization issues
The majority of the 167,242 jobs in Namibia's agriculture sector are within rural areas of the country. Only 21.1% of the workforce is female (III), signaling a major opportunity to provide additional income generation opportunities for women.
Investment opportunities introduction
Agriculture, among others, generates significant multipliers: an increase in final demand of NAD 1 million (USD 72,000) for traditional agriculture is likely to generate an output twice that value as well as GDP and income for roughly the same value (VI). This is expected to lead to the development of Namibia's economy and result in poverty alleviation (V).
Food and Beverage
Policy priority
Namibia's Government focuses its efforts for greater food security on developing the agro-processing industries by utilizing local produce and strengthening regional value chains, as well as increasing the agricultural production for cereals, horticulture and livestock (II).
Gender inequalities and marginalization issues
An increase in final demand for traditional agriculture is expected to generate the highest impact among low-income households in Namibia, benefitting marginalised communities and women, among others (VI).
Agricultural Products
Pipeline Opportunity
Commercial Agri-Developments for Agricultural Produce and Livestock
Establish "agricultural towns" through commercial agri-developments that first lead to mini economies within the developments and then scale with capacity for export of produce and livestock to international markets. The developments offer 10 hectares plot for sale and provide supporting infrastructure, including a hub offering training, mentorship and offtake.
Business Case
Market Size and Environment
USD 50 million - USD 100 million
For the 2019/20 season, Namibia exported 33,000 tonnes of table grapes, earning USD 60 million (7). As of 2019, the country exported 1,446 tonnes of dates to South Africa, the UK and the UAE with a total value of USD 5 million, and the worldwide date market is expected to grow with 2.3% CAGR between 2018 and 2025 (13).
Export markets in China, EU, United Kingdom, USA, Zambia, DRC, Angola and Sudan alone offtake 10,440 cattle from Rundu Abattoir and 28,710 cattle from Oshakati GRN abattoir (14).
Indicative Return
15% - 20%
The IRR for small scale horticultural projects ranges from 15 to 21%. A benchmark project in the drier Kunene region recorded an IRR of 15%; the inclusion of dryland farming can increase the IRR (11).
Investment Timeframe
Medium Term (5–10 years)
Existing agronomic production loans for small scale farmers and corporate projects or loans to acquire agricultural equipment extend over five to ten years dependent on the scale of investment (12).
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Capital - Limited Investor Interest
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Namibia produces only 40% of the food it consumes and is highly dependent on imports. This means that while food is available, price fluctuations can make it difficult for 28% of Namibian households to access food, especially for the 80% of Namibians who depend on markets to fulfil their needs (15).
Namibia’s annual demand for horticultural products is about 89,082 tons, of which only 31,501 tons or 35% is currently produced locally (7).
Gender & Marginalisation
Namibia's smallholder farmers have limited access to nutritious food due to recurrent droughts and floods, low productivity and limited access to land (15).
Most of Namibia's low earners spend 57% of their incomes on food (16), leaving little for productive activities.
Expected Development Outcome
Increased smallholder or communal farmers productivity of local horticulture products.
Reduced dependency on imported food from the region as well as increased food security and enhanced agricultural expertise in Namibia.
Reduced poverty through stabilisation of local food prices.
Gender & Marginalisation
Emerging farmers in rural communities with enhanced empowerment opportunities.
Primary SDGs addressed
9.3.1 Proportion of small-scale industries in total industry value added
9.3.2 Proportion of small-scale industries with a loan or line of credit
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
2.3.2 Average income of small-scale food producers, by sex and indigenous status
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
The commercialisation of agriculture can negatively impact the environment, if not pursued with a sustainability approach, and lead for example to ground water depletion.
The concentration of economic activities in certain localities can lead to new migration streams and marginalisation of parts of Namibia.
Impact Risks
If the plots within the developments are not offered at affordable costs, the opportunity may benefit mostly established farmers and exclude those most in need, especially of its support services.
Unless the concept of the agri-developments is marketed, it is possible that small-scale farmers are hesitant to explore the opportunity due to unfamiliarity with the commercialisation aspect.
Impact Classification
What
The outcome is likely to be positive, important and intended because commercial agri-developments create an ecosystem to effectively scale up agri-produce and livestock for small-scale farmers.
Who
Small-scale farmers in the agri-food sector benefitting from support services and new markets, and consumers in Namibia and abroad accessing high quality and affordable produce and livestock.
Risk
While the model of commercial agri-developments is well developed, the concept may require strategic marketing and planning to reach scale in Namibia.
Impact Thesis
Create mini-economies and turn marginalised areas into productive agri-produce and livestock centers.
Enabling Environment
Policy Environment
Agricultural Policy, 2015: Creates a conducive environment for increased and sustained agriculture production and productivity, accelerates the agriculture sector contribution to national Growth Domestic Product, and promotes development of national agriculture sector (22).
Agriculture Marketing and Trade Policy and Strategy, 2011: Contributes to the achievement of the agriculture sector’s objectives as reflected in Vision 2030, the NDPs and the National Agriculture Policy in concert with other policies and strategies across the agricultural value chain (20).
National Policy on Sub-Division and Consolidation of Agricultural Land, 2018: Serves as the safeguard for the sustainable existence of agriculture by preventing subdivision and fencing that leads to ecologically and economically non-viable farming units (21).
Financial Environment
Financial incentives: Agribank, as a state-owned financial institution and mandated by the Agribank Act (2003), advances money to persons or financial intermediaries to promote agriculture and activities related to agriculture (23).
Fiscal incentives: Farmers can deduct capital expenditure in full in the year in which the expenditure is incurred, limited to the farming taxable income for the year. This includes a deduction of capital expenditure relating to power supply (10).
Other incentives: FNB's Agri Medium-Term Loan product can be used for the establishment of production capacity, such as the purchase of livestock, establishing orchards and farm buildings, and other projects that take time to generate an income (24).
Regulatory Environment
Namibian Agronomic Board (NAB): Oversees development and implementation of the framework for a sustainable crop industry. It develops crop specific marketing quality standards, food safety, and traceability regulations in accordance with the Agronomic Industry Act (18).
Horticulture Market Share Promotion: As an implementing vehicle for the National Horticulture Development Initiative, importers are obliged to ensure that a minimum of 44% of their horticultural produce sales consist of Namibian grown products, prior to qualifying for an import permit (21).
National Horticulture Development Initiative, 2002: A strategic intervention in the development of Namibia's horticulture produce which has led to fresh fruit and vegetables being gazetted as controlled products under section 2 of the Agronomic Industry Act (19).
Marketplace Participants
Private Sector
Investors such as Agribank Namibia, Musa Capital Namibia (Mid-Cap Fund), EOS Capital (Euphrates Agriculture Fund), FNB Namibia and Spitz Capital. Businesses such as the existing Roots Agri-Village or the planned Fransforntein Green Scheme.
Government
Ministry of Agriculture, Water and Land Reform, Namibian Agronomic Board (NAB).
Multilaterals
The Environmental Investment Fund (EIF) is the local partner for the Green Climate Fund (GCF), which provides funding for the development and implementation of environmentally sustainable development projects, including commercial agriculture (25).
Target Locations
Namibia: Omusati Region
Namibia: Oshikoto Region
Namibia: Kavango East Region
Namibia: Kavango West Region
Namibia: Ohangwena Region
References
- (I) SDG Center for Africa and Sustainable Development Solutions Network, 2019, Africa SDG Index and Dashboards Report 2019, Kigali and New York: SDG Center for Africa and Sustainable Development Solutions Network, https://sdgcafrica.org/we-content/uploads/2019/06/SDGS_INDEX_REPORT_2019WEB.pdf. II) Republic of Namibia, National Planning Commission, 2017, Namibia's 5th National Development Plan (NDP5), https://www.npc.gov.na/?wpfb_dl=294. III) Martha Nangolo & Ndapwa Alweendo for Institute for Public Policy Research (IPPR), 2020, Democracy Report. Agriculture in Namibia: An Overview, https://ippr.org.na/wp-content/uploads/2020/02/Agriculture-in-Namibia-An-Overview.docx-10.pdf. IV) Republic of Namibia, National Planning Commission, 2018, Implementation of Sustainable Development Goals, Voluntary National Review, https://sustainabledevelopment.un.org/content/documents/19880New_Version_Full_Voluntary_National_Review_2018_single_1_Report.pdf. V) Republic of Namibia, National Planning Commission, 2018, Is Agricultural Productivity an engine for growth, https://www.npc.gov.na/?wpfb_dl=357. VI) DNA Economics, 2021, SAM Multiplier Analysis for the SDG study in Namibia, Six Capitals.
- (1) Republic of Namibia, Namibian Agronomic Board, 2020, Presentation on Agronomy and Horticulture Industry Overview by Gilbert Mulonda General Manager: AHMD.
- (2) Republic of Namibia, Namibian Statistics Agency, 2011, Population and Housing Census Regional Tables based on 4th delimitation, https://nsa.org.na/page/publications/.
- (3) Embassy of Namibia, Investment Catalogue: Regional Profiles and Contact Details, https://www.embassyofnamibia.se/index.php/trade-and-investment/why-invest-in-namibia/fields-o,-investments/84-investment-catalogue-regional-profiles.
- (4) Republic of Namibia, Namibia Statistics Agency, Namibia Household Income and Expenditure Survey (NHIES) 2015/2016 Report, https://nsa.org.na/microdata1/index.php/catalog/28/pdf-documentation(Note: Data does not specify what type of farming).
- (5) UNDP, Subnational Human Development Index Database, Namibia, https://globaldatalab.org/shdi/shdi/NAM/?levels=1%2B4&interpolation=0&extrapolation=0&nearest_real=0.
- (6) The Research Department of the Bank of Namibia, 2017, 18th Annual Symposium: Feeding Namibia: Agricultural Productivity and Industrialisation, https://www.bon.com.na/CMSTemplates/Bon/Files/bon.com.na/52/52c35978-5912-4429-9052-3c8f5cc7971e.pdf.
- (7) Presentation on National experience on WATER STATISTICS, National Technical training workshop on Environmental Statistics 3-5 December 2019, https://unstats.un.org/unsd/envstats/meetings/2019-Namibia/documents/Session%205.1.1%20Water%20Statistics%20Namibia.pdf.
- (9) WFP, 2017, Namibia Country Strategic Plan (2017–2022), https://documents.wfp.org/stellent/groups/public/documents/eb/wfp291597.pdf?_ga=2.178426727.297177160.1621597913-166023273.1621597913.
- (10) PWC, 2021, Namibia Tax Reference and Rate card 2021, https://www.pwc.com/na/en/assets/pdf/namibia-tax-reference-and-rate-card-2021.pdf.
- (11) Planned Fransforntein Green Scheme Project, Ministry of Industrialisation and Trade, Available on Request from Ministry of Industrialisation and Trade.
- (12) Agribank Namibia, 2021, Horticulture Production Loan Facility, https://agribank.com.na/product/horticulture-production-loan-facility-92-16.
- (13) Global Trade Mag, 2019, Global Date Market 2019 – Egypt Continues to Dominate the Market, https://www.globaltrademag.com/global-date-market-2019-egypt-continues-to-dominate-the-marke.
- (14) Northern Communal Areas Livestock Strategy 2019-2020, available on request.
- (15) WFP, 2021, Namibia, https://www.wfp.org/operations/na01-namibia-country-strategic-plan-2017-2022.
- (16) WFP, 2017, Namibia Country Strategic Plan (2017–2022), https://documents.wfp.org/stellent/groups/public/documents/eb/wfp291597.pdf?_ga=2.178426727.297177160.1621597913-166023273.1621597913.
- (17) Namibia Agronomic Board, 2018, Annual Report, https://www.nab.com.na/wp-content/uploads/2019/09/Annual-Report-02.pdf.
- (18) Namibia Agronomic Board, https://www.nab.com.na.
- (19) Namibia Agronomic Board, Horticulture Market Share Promotion, https://www.nab.com.na/horticulture/market-share-price/
- (20) Ministry of Agriculture, Water and Forestry, 2011, Namibian Agriculture Marketing and Trade Policy and Strategy, http://extwprlegs1.fao.org/docs/pdf/nam188595.pdf.
- (21) Ministry of Agriculture, Water and Forestry, 2018, National Policy on Sub-Division and Consolidation of Agricultural Land, http://extwprlegs1.fao.org/docs/pdf/nam181018.pdf.
- (22) Agricultural Policy, 2015, Republic of Namibia, https://www.atf.org.na/cms_documents/8f7-nationalagriculturalpolicy1995.pdf.
- (23) Agribank, Republic of Namibia, https://agribank.com.na.
- (24) FNB, Agri Medium Term Loan, https://www.fnbnamibia.com.na/for-my-business/industry-expertise/agriculture/lending-solutions/agriMediumTermLoan.html.
- (25) Environmental Investment Fund (EIF), https://www.greenclimate.fund/ae/eif.
- (26) Namibian Statistics Agency, 2018, Labour Force Survey 2018 Report, https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NLFS_2018_Report_Final_.pdf.
- (27) FAO, 2005, Bankable Investment Project Profile: Development of Infrastructure for Marketing Horticulture Produce, http://www.fao.org/3/af315e/af315e.pdf.