When two impact focussed agri-processing businesses were introduced to each other by Cambridge University in 2019, little did they know that in 2021 they would not only be unlocking Tanzania’s abundant underutilised agricultural wealth, they would be enabling the domestic production of much needed COVID related sanitiser too…
“Aspuna Group co-owns all the assets it manages and has a growing team of expert engineers, agri-tech and investment specialists. The fact that it registered as a social business from day one and that its leadership team are practitioners made it stand out as a potential partner. Aspuna is really plugged in too. Governments, NGOs, and private companies partner with them internationally. This was really reassuring to us. We were right to be reassured.” Viktor Kabegu, CEO, JV Biotech Ltd and Aspuna Tanzania and General Secretary of the Tanzania Cassava Producers and Processors (TACAPPA) Association.
|When, in 2019, Cambridge University introduced JV Biotech Ltd co-founders Viktor Kabegu and Jacob Tito to Aspuna Group co-founders Maria-Yassin Jah and Luis Prazeres, both parties immediately recognised an opportunity. Aspuna had a technical and commercial blueprint for building cassava processing plants that could transform cassava roots into starch meeting international standards. JV Biotech, a fellow agribusiness focused on value addition to raw materials, were already processing cassava into flour, bio-fertilizer, and animal feed. They were aware though that they were not making the most of the commercial opportunity available to them. And while both businesses were very much run as commercial enterprises, both aimed to meet environmental and social impact goals too.
“Sub-Saharan Africa’s agricultural potential has been historically underutilised. We established Aspuna to supercharge the sector and deliver upon United Nation Sustainable Development Goals by investing in processing capacity, implementing eco-friendly innovation, and positively impacting communities – as well as profit – wherever we operate,” said Aspuna Group’s Chief Operating Officer (COO), Luis Prazeres.
“Our pilot programme in The Gambia focussed on increasing the capacity of a cassava processing plant. We began with cassava because of the key role it has to play in the continent’s economics. Its success led to our second plant in Nigeria. With a proven business model to roll out across the region we were keen to find a partner in Tanzania too, given its top three rating, according to McKinsey, in terms of agricultural productivity potential in Sub Saharan Africa and the key role cassava has to play in the region’s economic power.”
Cassava’s key role in Sub Saharan African economics
In 2020 alone, according to the IMARC Group, global cassava processing market reached a volume of 298.8 million tons. In spite of the uncertainties brought by COVID-19, it is expected to continue moderate growth from 2021-2026. Given that the United Nations Food and Agriculture Organization (FAO) ranks cassava fourth as a food crop in the developing countries, after rice, maize and wheat this is not surprising. Cassava, after all, is in demand across the food, industrial, and agricultural sectors. Its starchy roots are a major source of dietary energy for more than 500 million people and its protein rich leaves are edible too. It is also increasingly used as an animal feed and in the manufacture of different industrial products, including glue and hand sanitizer. Because it can be stored in the ground for several seasons, it serves as a reserve food when other crops fail too.
Aspuna’s role in enabling Sub Saharan Africa to lock the value of its cassava crops into its place of origin
Yet, although Tanzania, alongside Ethiopia and Nigeria, is rated by McKinsey as one of the top three Sub Saharan African countries in terms of agricultural productivity potential, its share of the growing cassava starch market was zero. Starch importers were taking all the market share. The addition of an international standard starch producing factory to JV Biotech’s assets would not only enable them to meet local and national needs, it could also open up an export market. Aspuna’s unique social impact focussed business model would enable them to meet their social and environmental goals too.
“When we were introduced to JV Biotech, we had already invested in Aspuna Gambia, our flagship manufacturing operations. Even though it was too early to know the actual impact our investment and implementation programme would make, Viktor and Jacob immediately understood the business model and the potential of partnering with us. Since then we have invested in a cassava plant in Nigeria too, and our estimate of increasing productivity and profit tenfold in both territories is looking realistic, ” said Mr Prazeres.
It wasn’t just the investment programme that Aspuna offers that was attractive to JV Biotech though. The Aspuna business model extends to setting up local outgrower schemes, providing superior cassava seeds, training and support to local farmers, ensuring green technology is used to improve processes, and connecting partners to the international market. Aspuna is more than an asset management company, it sets up commodity trade deals too. Its business model is making the international trading of cassava fairer, as well as more sustainable.
“Aspuna Group co-owns all the assets it manages and has a growing team of expert engineers, agri-tech and investment specialists. The fact that it registered as a social business from day one and that its leadership team are practitioners made it stand out as a potential partner. Aspuna is really plugged in too. Governments, NGOs, and private companies partner with them internationally. This was really reassuring to us. We were right to be reassured,” said Viktor Kabegu, CEO and co-founder of JV Biotech.
So, what does the JV Biotech/ Aspuna Group partnership look like?
Following a period of research to establish the potential of JV Biotech’s cassava footprint in Tanzania, Aspuna has agreed to invest in upgrading the factory’s cassava processing equipment. JV Biotech will be the key shareholder, owning 60 percent of Aspuna Tanzania. Aspuna Group will own the other 40 percent.
A schedule of short, medium and long term goals have been agreed. Stage one goals include acquiring adjacent land upon which to extend processing capacities and house production and sales headquarters. Energy-efficient equipment which fits into the existing infrastructure will be purchased in order to increase processing capacity and quality immediately.
This will increase revenue and therefore profit, making it easier to raise capital for further basic improvements which will bring the plant up to international standards, the medium term goal. Long term, the aim is to raise significant capital in order to upgrade the plant further, enabling the Aspuna tenfold improvement margin.
With no other starch processing factory currently situated in Tanzania and the demand for ethanol alone, one by-product of cassava processing increasing due to the need to increase the country’s production of COVID-19 related sanitisers, the time to upgrade is here. And with stage one goals on track to complete in 2022, there is much to look forward to.