THE Government of Malawi has scaled up efforts to support expanding Zimbabwean seed breeder and distributor, Seed Co Limited, which has captured fresh opportunities in that market, as part of its African growth strategy. Seed Co commissioned a US$10 million seed production facility in Lilongwe last week, taking its cumulative investment into the southern African country, where it now controls a 55 percent market share, to US$15 million since 2000.
The Zimbabwe Stock Exchange-listed Pan African group is projecting that its market share will climb to 60 percent by 2015, before it achieves a 70 percent target. Seed Co’s operations are seen as central to future food security in Malawi, one of the world’s poorest countries grappling with a defenceless domestic currency and corruption.
On November 11, Seed Co consolidated its commitment to Malawi by commissioning the multimillion dollar factory, which processes 160 tonnes of seed maize per day, enough for the country’s national requirements. Malawian Minister of Agriculture, Irrigation and Water Development, Allan Chiyembekeza, told The Financial Gazette after officially opening the facility that Seed Co had significantly reshaped that country’s agricultural landscape.
He said other foreign firms operating in Malawi should follow Seed Co’s example. “A lot has changed (since Seed Co arrived in Malawi),” Chiyembekeza said.
“We never used to have facilities like this before. Two years ago, this was an open land. Seed Co started as a small company but it is changing the landscape in Malawi. It is very impressive. I appeal to other companies to emulate what Seed Co is doing. We have had good working relations with them,” said Chiyembekeza, who was instrumental in taking Seed Co to Malawi before his appointment as Minister of Agriculture.
Seed Co group chief executive officer, Morgan Nzwere, said with the latest investment, the Malawian unit was now the company’s third largest operation in Africa; Seed Co has spread its tentacles to 15 countries. “This project being launched today has used up nearly US$10 million in project construction, consultancy fees, financing costs and new equipment,” said Nzwere.
He added: “Malawi is a very busy market. Three years ago we opened a facility bigger than this in Zambia. In two years we want a similar facility in Nigeria. Malawi should contribute US$15 million to US$20 million in revenue and between US$2 million and US$3 million in terms of profit. The strategy is to build premises in these countries.”
“To us, this is a worthwhile investment and it only shows how committed we are to the Malawian market. We strongly believe that this investment by Seed Co will go a long way in precipitating growth in the Agriculture sector, through increase in employment, productivity, and quality. We would therefore encourage the government (of Malawi) to continue creating a conducive business environment for the sustainability of all investments by the private sector.”
Two years ago, Nzwere reaffirmed Seed Co’s African growth ambition when he unveiled a plan to increase the regional footprint. Seed Co, which had moved 6 754 metric tonnes of seed maize into Africa at the time of the announcement in May 2012, indicated that it was reaching market saturation in Zimbabwe. “We have reached 85 percent market share,” he said then.
“It is difficult to go further because our competitors are not sitting and watching us grow. We said why not go anywhere where we have zero percent market share and grow to five percent, to 10 percent.”
Seed Co has expanded into Zambia, Kenya, Tanzania, Rwanda, Botswana, Swaziland, Lesotho, South Africa, Ethiopia and Malawi, while it is undertaking business development initiatives in Nigeria, Ghana, the Democratic Republic of Congo and Uganda.
Nigeria is among Africa’s fastest growing economies, which has been buoyed by a booming petroleum industry. However, its agricultural sector suffered following the oil boom, but the government in Abuja is now under pressure to launch an agricultural revolution to boost farming output.
Ghana has been robustly growing on the back of political stability and the rush for its recent oil discoveries, which had attracted western multinationals. Tanzania, one of southern Africa’s most populous economies with about 27 million people, offers extensive opportunities for growth, riding on high demand for agricultural inputs by its vast population.