Sustainable cocoa production under agroforestry practices

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Sustainable cocoa production under agroforestry practices

Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Climate Action (SDG 13) Life on Land (SDG 15) No Poverty (SDG 1)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Gender Equality (SDG 5) Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12)

Business Model Description

Production of export oriented cash crops, such as cocoa, following agroforestry practices, including in savannah areas contributing to afforestation. Revenues flow from the sell of production to exporters or cocoa processors locally or internationally.

Expected Impact

Agroforestry for cocoa production reduces carbon emissions, increases protection of forest areas, national agricultural production, and the sector's revenues.

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

Explore the country and target locations of the investment opportunity.
Region
  • Congo (Republic of): Brazzaville
  • Congo (Republic of): Pointe Noire/Kouilou
  • Congo (Republic of): South Zone
  • Congo (Republic of): Centre Zone
  • Congo (Republic of): North Zone
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Policy priority
In the National Development Plan 2022-2026, agriculture is a strategic pillar for economic diversification. The National Seed Policy aims at ensuring seed security though greater involvement of the private sector. The National Roadmap for the Transformation of Food Systems aims at achieving nutrition and food security while create sustainable employments (1, 2, 8).

Gender inequalities and marginalization issues
While 89.4% of women are in vulnerable employment, they represent 70% of the agricultural workforce. Women experience a more difficult access to production means such as access to land or credit, with only 15.1% owning land. In 2023, the national under-nutrition rate was of 33%, with chronic malnutrition at 19.6% among children under 5. Most affected households are urban and female led (1, 2, 18, 19, 20).

Investment opportunities introduction
Opportunities lie in local production of livestock with a reported potential of 3 to 4 million and aquaculture with a fishery potential estimated at 180,000 tonnes. Additionally, cooperation agreements in the sector were signed with Rwanda and Ivory Coast. Moreover, the Government established Protected Agricultural Zones (2, 3, 5, 6, 20).

Key bottlenecks introduction
Lack of appropriate food chain logistics network including cold chain, low rate of mechanisation, poor development support from public authorities, unreliable electricity, limited access to finance, a rural exodus and unsuitable land tenure system for agricultural production are all major sectoral challenges (2, 3, 4, 17).

Sub Sector

Food and Agriculture

Development need
Agricultural production is mostly small scale and subsistence based, with a mechanisation rate of 1%. It is facing a lack of adapted preservation solutions and the processing units are outdated, affecting the sector's productivity and value-added. It is also highly vulnerable to climate change, with foreseen agricultural output losses of 5% by 2030 and 10% by 2050 (1, 7).

Policy priority
The NDP 2022-2026 aims at improving the productivity of the sector. The National Roadmap for the Transformation of Food Systems foster an inclusive transformation of the national food systems. The National Strategy for Industrialisation aims at increasing the share of agro-industry to 20% of GDP and reduce food imports by 50% by 2030 (1, 8, 55).

Gender inequalities and marginalization issues
Women involved in agricultural activities are more vulnerable to climate change than men due to the low quality of their land, their involvement in subsistence agriculture and small-scale production mostly supplying the local market and non-monetarized exchanges. Women experience difficult access to production means with 84.9% not owning land and limited access to credit. It is estimated that if women had an equal access to production means, the national agricultural production would increase of 10% (9, 10, 19).

Investment opportunities introduction
The World Bank calculated that USD 245 million investments in climate smart-agriculture could generate a Net Present Value of USD 296 million over 5 to 10 years, including the revenues from the potential 12 MtCO2e emission reduction. This could directly benefit over 20,1000 people (11).

Key bottlenecks introduction
The poor quality of agricultural land is a major challenge for productivity. The sector's emissions are partially caused by small-scale agriculture damaging forest ecosystems with 48.2% of tree cover loss linked to burning practices. Access to land, as well as to technical and financial means remain an issue for farmers (12, 56).

Industry

Agricultural Products

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Sustainable cocoa production under agroforestry practices

Business Model

Production of export oriented cash crops, such as cocoa, following agroforestry practices, including in savannah areas contributing to afforestation. Revenues flow from the sell of production to exporters or cocoa processors locally or internationally.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

< 5%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

In the Republic of Congo in 2024, the agricultural sector represented 9.44% of GDP (24).

In 2025, the global cocoa market was estimated at USD 11 billion and could reach USD 14.8 billion in 2032, with an estimated CAGR of 4.3% for the period (30).

Cocoa production in the Republic of Congo is estimated at 16 000 tones, out of the 3.6 million of tones produced in sub-Saharan Africa. It is mostly exported to Italy and Cameroon, with 520 tones exported to Italy in 2022 (47, 41).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

> 25%

GPM
Describes an expected percentage of revenue (that is actual profit before adjusting for operating cost) from the IOA investment.

20% - 25%

According to a study in Cameroon comparing certified and non-certified cocoa production, producers can expect a 36.9% IRR compared to 35.7% for uncertified production. It is calculated based on interest rates ranging from 18 to 50%, a premium of USD 0.1 (XAF 50) paid per kg of certified cocoa and the sale of agricultural produce from other trees grown under agroforestry practices (58).

In Cameroon, medium-size cocoa producers have a 9% net profit rate. According to conservative estimates, a gross profit margin of at least 20% can be expected (59).

Based on a study on certified and non-certified cocoa farming in Cameroon, the total revenue per hectare per year is averagely USD 1126 (FCFA 628.800) for certified cocoa producer and USD 962 (FCFA 537.249) for non-certified cocoa producers (58).

Based on Swiss Platform for Sustainable Cocoa's case study in Ghana, majority of farmers agreed that the level of income has increased and become more stable thanks to implementation agroforestry in cocoa production (60).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

According to a project in Cameroun, increase in the cocoa production under agroforestry practices and other agricultural produce can be expected between 5 to 10 years (61).

Based on SUCDEN SA SD 100 million two-year corporate loan for cocoa export and value chain financing in Cameroon, Ghana and Nigeria, the loan reimbursement period is 2 years. Considering the less dynamic environment of the Republic of Congo, a medium term timeframe is considered (62).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

< USD 500,000

Market Risks & Scale Obstacles

Market - High Level of Competition

There is high competition from other bigger African producers, including neighbouring countries such as Cameroon, the third African cocoa export country, and DRC (42).

Business - Supply Chain Constraints

The absence of local production for agricultural inputs, including quality seeds, planting materials and bio-fertilizers might cause issues in the production. Additionally, the lack of regional integration of the country represent a challenge for the export of the production (50).

Market - Volatile

Considering that agricultural inputs, machineries and equipment are mostly imported, so are food products, the market prices are highly fluctuant. (63)

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Agriculture is one of the major cause of deforestation and, therefore, one of the major contributor to national emissions. It has been recorded that over the period 2015-2020, deforestation for agricultural purposes with slash and burn practices caused 6 MtCO2eq/year of emissions. Additionally, over the period 2020-2035 absorptions from forests are expected to decrease by 6.4% (12, 25).

The Republic of Congo is presenting a total of 10 million hectares of arable land. However, currently only 2% of these lands are being used, resulting in a limited agricultural production. Additionally, 42% of the national territory are made of savannah, which can be used for agricultural purposes (1, 27).

Despite a steady increase, the added value of the agricultural sector is quite low representing around 9.4% of GDP, totalling USD 1,48 billion in 2024 (1, 14).

Gender & Marginalisation

Women's agricultural revenues are lower than men's due to yields that are 20% to 40% lower, caused by poorer land quality and limited access to production resources. Additionally, their production is often focused on local, non-monetized markets (2, 9).

Around 10% of the population in the Republic of Congo depends on forests for their livelihood, including indigenous people. Thus, deforestation threatens their subsistence, so does the industrial usage of the forest by agricultural or forestry companies (28, 29).

Expected Development Outcome

Agroforestry, specifically in savannah areas, can contribute to increase the national carbon stock through the sedentarization of agriculture, decreasing deforestation, and the increase in tree cover. Agroforestry represents an absorption potential of between 95 and 196 kgCO2eq/ha/year (30, 11, 12).

Agroforestry, especially for export oriented cash crop, contributes to the increase in agricultural production and sector's added value, contributing to the fight against poverty. The national poverty rate was estimated at 46.7% in 2024 while the objective is to reach 38.1% by 2026 (1, 12, 13, 17).

Agroforestry practices are also part of developing a climate-smart, resilient agriculture. For instance, tree crops are able to adapt to higher temperature, increase droughts and floods. This contributes to increase the sector's resilience to climate change (11).

Gender & Marginalisation

By contributing to the sedentarization of the agriculture in the Republic of Congo, agroforestry contributes to the reduction of deforestation, thus, helping to preserve indigenous and local communities livelihoods (27).

Investments in agroforestry, especially for cocoa production, can contribute to increase revenues of women farmers by giving them access to production types less demanding in agricultural input and export oriented, yielding higher revenues (26).

Primary SDGs addressed

Climate Action (SDG 13)
13 - Climate Action

13.2.2 Total greenhouse gas emissions per year

Current Value

24.6 ktCO2e in 2024 (14).

Life on Land (SDG 15)
15 - Life on Land

15.1.1 Forest area as a proportion of total land area

Current Value

Forest represent 64.13% of the national territory in 2023, with 0.1% permanent deforestation over the 5 past years (1, 14, 31).

No Poverty (SDG 1)
1 - No Poverty

1.1.1 Proportion of the population living below the international poverty line by sex, age, employment status and geographic location (urban/rural)

Current Value

In 2020, 67% of the population was living with less than USD 1.90 per day, and 85.8% with less than USD 3.20 per day (1).

Target Value

18.05% by 2030 (31).

Secondary SDGs addressed

Gender Equality (SDG 5)
5 - Gender Equality
Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

Directly impacted stakeholders

People

People working in the field of agriculture, people working in the field of cocoa production and agroforestry benefiting from increased activities.

Gender inequality and/or marginalization

People depending of the forests for their livelihood and women benefiting from less deforestation and increased economic activities.

Planet

The environment benefiting from less emissions and restoration of forest ecosystems and degraded savannah areas.

Corporates

The companies involved in the export of cocoa will benefit from increased activities, and agro-food industry from more cocoa beans produced locally.

Public sector

Ministry of Agriculture, Livestock and Fisheries, Ministry of Environment, Sustainable Development and of Congo Basin, Ministry of Commerce, Supply and Consumption.

Indirectly impacted stakeholders

People

General population benefiting from reduced emissions.

Corporates

Companies involved in exports and food logistics benefiting from increased economic activities.

Public sector

Ministry of Special Economic Zones and Economic Diversification, Ministry of Industrial Development and the Promotion of Private Sector.

Outcome Risks

If not developed taking into account the rights of indigenous people and local communities, there is a risk that expansion of agroforestry results in forced evictions and human rights violations (29).

If agroforestry do not follow sustainable practices, there is a risk that it increases damages to forest or savannah ecosystems.

Limited transport networks, their high prices and low regional integration might cause risks to exportations (8).

The anticipated revenue from the production might be impacted by possible issues related to tax collection compliance (8).

Gender inequality and/or marginalization risk: Women and local communities should be associated to agroforestry development, otherwise, they might remain excluded from the benefits.

Impact Risks

External risk can be caused by unpredicted climate change impacts on the cocoa production.

Stakeholder participation risk, if indigenous people and local communities are not associated in the development of agroforestry activities.

Execution risk provided that barriers to export, such as high tariffs might be in place (44).

Gender inequality and/or marginalization risk: Indigenous people and local communities must be included in agroforestry projects to avoid their loss of subsistence means.

Impact Classification

C—Contribute to Solutions

What

Decreased emissions, improved sectoral climate resilience, increased agricultural production, value added and income.

Who

People working in the agricultural sector, indigenous people, local communities, and women.

Risk

Risks linked to greenwashing, stakeholders involvement, climate change and export procedures.

Contribution

Decreases carbon emissions and increases value-added of the agricultural sector.

How Much

Agroforestry in tropical zones can absorb between 95 and 196 kg of carbon per hectare, per year (11).

Impact Thesis

Agroforestry for cocoa production reduces carbon emissions, increases protection of forest areas, national agricultural production, and the sector's revenues.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

NDP (2022-2026): emphasis on the need to diversify the economy with the development of agriculture, including through the expansion of agroforestry specifically for cocoa, coffee, cashew nut, sugarcane, oil palm, peanut, rubber production (1).

National Strategy for Sustainable Development (2016-2025): highlights agroforestry as a mean to diversify the national economy, and to preserve forest ecosystems (27).

Nationally Determined Contribution 3.0: identifies the development of agroforestry in degraded forest areas as a way to increase absorptions and as a climate-resilient form of agriculture. It also plans the development of agroforestry on 63,500 ha (25).

Financial Environment

Financial incentives: ABC Fund provides loans and equity investments adapted to the needs of rural SMEs, farmers organizations, agri-entrepreneurs and rural financial institutions. The FIGA supported cocoa producers in building bankable agro-pastoral projects for financing (53, 54).

Fiscal incentives: The investment charter's regimes G (above USD 180,88)2 and S (between USD 54,264-180,882) offer incentives during the first three years of operation, including reduced business registration fees, exemption from corporate income tax, and a zero VAT rate on exported products (51).

Fiscal incentives: The Tax Code exempts cooperative societies for the production, processing, preservation and sale of agricultural products form corporate income tax (39, 52).

Fiscal incentives: In addition, investments in Special Economic Zones are exempt from company income and dividend taxes for 6 years, and up to the tenth year a rate of 5% applies. The remuneration tax rate is set at 2.5% (51).

Other incentives: The government developed Protected Agricultural Zones, which are zones exclusively dedicated to agricultural purposes. They aim at ensuring food security and specifically target youth (40, 38).

Regulatory Environment

Law 9-2004 of March 26, 2004 constituting the code on the State domain and Law 10-2004 of March 26, 2004 establishing the general principles applicable to the land tenure system: set the general principles applicable to land, land tenure and State domain (32, 33).

Law No 25-2008 of September 22, 2008 on the agricultural and land regime: determines the regime for the recording, holding, use and exploitation of public and private land areas by private and public persons and determines the rules for rural land tenure (34).

Decree n°9450 of October 12, 2018 concerning orientation of agro-industrial plantations in savannah zones: regulates the mandatory move of agro-industrial farm above 5 hectares in savannah zones (35).

Law n° 21-2018 fixing the rules for occupying and acquiring land and plots of land: includes the rules for customary land tenure, as well as the rules for occupation and acquisition of rural, urban or peri-urban lands (36).

Law n°33-2020 of July 8, 2020 on the forestry code: sets the fundamental principles of organization and management of the national forest estate, as well as the commercialization applicable to forest products (37).

Marketplace Participants

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Private Sector

Cofcao, Capfor, Société Plantations Forestières Batéké Brazzaville (Forêt Ressources Management), ASC Impact.

Government

Ministry of Agriculture, Livestock and Fisheries, Ministry of Environment, Sustainable Development and Congo Basin, Ministry of Commerce, Supply and Consumption, Agriculture Support Fund.

Multilaterals

World Bank, Agence Française de Développement (AFD), African Development Bank (AfDB), Central African Forest Initiative (CAFI), European Union.

Non-Profit

Non-Profit: Association Congolaise pour le Développement Agricole, Association des Femmes pour le Développement de la Bouenza, Association Routes, Agriculteurs et Éleveurs du Congo.

Target Locations

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country static map

Congo (Republic of): Brazzaville

Congo (Republic of): Pointe Noire/Kouilou

Congo (Republic of): South Zone

Congo (Republic of): Centre Zone

rural

Congo (Republic of): North Zone

The Special Economic Zone (SEZ) of Ouesso will be hosting agro-industrial units aimed at processing cocoa and coffee, specifically (41). The Project to support the revival of the agricultural sector (PARSA), financed by AFD, aims at reviving the cocoa industry through the development of a sustainable and quality cocoa production in the north of the country, including in the department of Cuvette-Ouest and of the Likouala (42).

References

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