The initiative is poised to roll out across sub-Saharan Africa © RAD
It was great to read yesterday’s article on Tropo Farms, which included plenty of food for thought from the company’s CEO, Francisco Murillo.
It is very encouraging that someone in the African industry is actually flagging to investors the success and impact of aquaculture operators there with (relatively) small investments (up to a few tens of millions of dollars) versus the repeated failures of RAS projects in the Global North which seem to continue to receive hundreds of millions of dollars, for minimal returns.
If the money that has gone into even one sophisticated salmon RAS project had been invested in African aquaculture it should have generated considerably larger volumes of production, more SME development in the supply chain, and more societal impact.
But, let's be clear: to have a decent chance of impact this money would have had to go into commercial projects. Not quasi-government farms nor donor projects connected with national extension systems (although they may have their place). And not just into large cage-based operations, nor purely into farms.
In many African countries right now we see investment in new feed mills and there are some really commercial hatcheries starting to emerge. While there are still many locations in Africa where vertically integrated operations – like Tropo and Victory Farms – take a leadership role in industry development, there is a shift to a more widely distributed industry made up of thousands of businesses, supporting millions of livelihoods.
And isn't that bound to happen? Just look at any scale of production in Asia – whether shrimp in Indonesia or carp culture in Bangladesh – there are larger input producers (and off-taking processors in the case of shrimp) connected to farms by a myriad of other SMEs. We usually call them middlemen and often see them as value extractors, but they provide a vital service to move product, provide credit and give farmers confidence.
African aquaculture needs financing to support the big companies, for sure, but also financing for this whole ecosystem of other actors, including smaller independent farmers. But that network of SMEs is messy for investors!
New models for success
So, in this brave new world of African aquaculture development, which isn't just focused on large vertically integrated operators, can we reimagine that 'last mile' role being played by agencies who fulfil the middleman role in a more structured way? And even de-risk investments through the provision of technical assistance and guaranteed offtake, but remain focused on smaller volumes for local markets?
RAD is one such model being developed in Uganda with very small amounts of funding, but with a strategy for roll-out across Africa with the right investment partners. This exciting business has won a Global FoodShot Prize with close partner ThinkAqua because of the model’s impact and promise. AquaRech is another company innovating with a service delivery model, this time in Kenya.
Cage culture in Africa needs more finance, for sure, but it is capital intensive and probably only open to a select few companies. We should remind ourselves that 95 percent of fish farmed in Asia comes from ponds and there is massive potential for a similar industry in many African countries, built around a supportive and diverse business ecosystem that supports a multitude of independent pond farmers.
All investment into Africa aquaculture should have tremendous impact on the availability of quality protein in a continent with nutritional challenges; it could drive development of tens of thousands of SMEs; and provide decent returns to investors, given steep local interest rates. With the increasing senior, large-scale experience in the sector and innovative de-risking approaches with smallholders, surely it is time for investors to realise that RAS isn't fulfilling its low-risk promise, but perhaps African aquaculture can?
