AlphaTalents Africa: Changing the agri-business landscape in Africa

By Sruthi Menon Seeboo

AlphaTalents Africa (ATA) is a purpose-driven investment company supporting the creation and growth of profitable, sustainable, and impact-centric agribusiness ecosystems in Africa. ATA recently launched an investment vehicle based in Mauritius to meet the needs of the African agri-food industry.

With his core competency in food supply chains and his in-depth understanding of the agri-food industry in emerging markets, Nestlé veteran Roland Decorvet founded ATA to invest patient capital in companies that will help advance the pan-African agribusiness industry to the next level. He joined forces with financial services veteran Bastien Maucet who possesses 15 years of investment experience in Europe and Africa and is a former partner at an equity fund investing in African early-stage businesses.

ATA’s team of senior food industry and investment experts bring a combined 350 years of experience in the agri-foods industry together with an in-depth understanding of the long investment lifecycle needed to realise the sector’s true potential. They actively identify and provide support to investee companies committed to having a positive social, human, and environmental impact on the ecosystems they operate in, and that are managed by people upholding the highest standards of integrity and fairness.

We speak with Roland and he tells us how ATA aims to accelerate the transition of Africa’s agri-food value chain towards a sustainable and inclusive industry capable of meeting the continent’s growing food needs. Excerpts:

1. As an agribusiness investment company dedicated to promoting profitable investment in African agriculture while accelerating agribusiness growth across different value chains, can you take us through your personal journey and how your expert team actively identifies and provides support to investee companies?

To start with, I’m basically a food guy. I have always worked with food processing organisations. Prior to ATA, I was the Chief Executive Officer at Nestlé. I worked in China for 15 years where we started and built Nestle from scratch. Today, it’s a multi-billion-dollar organisation. In the corporate world, Nestlé was a wonderful learning experience for me as I managed billions of dollars of products and 50,000 employees in China. But everything was about money and power. So, I wanted to do something worthwhile for my life and family. That’s when I decided to change my career path and moved from the corporate world to NGOs where I led an organisation called MercyShips. The largest floating hospital in the world, MercyShips sails to Africa as well and offers free consultations.

MercyShips was founded in 1978 by Don and Deyon Stephens and has worked in more than 70 countries providing services valued at more than $1.3 billion, impacting the lives of more than 2.56 million direct beneficiaries. The Africa Mercy is crewed by 400 volunteers from up to 40 nations, an average of 1,000 each year. Professionals including surgeons, dentists, nurses, healthcare trainers, teachers, cooks, seamen, engineers, and agriculturalists donate their time and skills to the effort.

The issue here is that NGOs are always based on donations. I started combining the two – by building a food processing group dedicated to agri-business in Africa with very large American investors. For six years, we built and bought companies, we reached out to factories but with limitations. Investors were agreeable to have a social impact, however, we had to basically deliver worldwide competitive returns to private equity players. The problem is that this model simply doesn’t work for agriculture.

Within the African context, the only industry which can touch hundreds and millions of lives is agriculture. There are 700 million farmers in Africa – no other industry even comes to close to this. If you want to change Africa, we have to create jobs. If you want to create jobs, you need to be involved in agriculture. The problem is very few people are willing to invest despite the great potential of African agriculture because the horizon is too long, and the expected return is often not good enough.

So, after much research, learning, experience and brainstorming together with the expert team at AlphaTalents Africa, our model has been put in place. We are developing this fund, which combines a positive return aiming at 7%, but at the same time, we want to maximise impact. We are going by the motto of ‘optimise returns and maximise impact’ for this model.

2. ATA launched its operations in Mauritius, where there is a growing focus on Environmental, Social and Governance (ESG) factors. How do you see this serving to ease the process to raise financing on the international market front, especially through global investors using ESG factors to direct their investments? Beyond ESG, what are the attributes of Mauritius that led you to set up the company on the island?

First of all, what we are driving with this impact investment model is ESG on steroids because the management and fund staff will be monitored and rewarded based on four pillars which are:

1. What does the company do for the community?
2. What does the company do for its employees?
3. What does the company do for the environment?
4. How does the company contribute financially?

These pillars are measured equally. Most of the companies, indeed 90% of them, do have an ESG agenda.  In our case, it is all completely integrated, which is very unique. You can do great financially, for instance, but that’s only one of the four pillars which has a weightage capped at 25%. So, the human, community and environment impact will contribute equally. The whole company will be forced to focus on these pillars.

Why Mauritius? Because it is the investment platform for Africa. It is uniquely placed to serve both Anglophone and Francophone Africa as the manpower is bilingual. To exemplify the spread of our own investments, the first investment we are working on is in Francophone Africa, in Congo, and then in Tanzania, which is part of Anglophone Africa. Besides, in terms of transport and infrastructure too, Mauritius is very well placed and the legal framework is most trustworthy as well. Most of our investors are Europeans, and Mauritius being out of the grey list makes it much easier for us to attract the right interest.

3. The disruptions in food systems due to the Covid-19 pandemic re-affirm the need for a new transformation agenda and desire to promote profitable agribusiness in Africa for investors, farmers, government and for the continent. What is ATA’s key focus here?

The major disruptions in food supply chain started with Covid and worsened with the situation in Ukraine. The lessons learnt from Covid are that the whole world’s economy was based on the concept of just in time. This means when you don’t keep stocks at your end, you will depend on the supplier (like China).

The challenge is when there is no more supply, it leads to a break in the chain and causes a negative impact on the business. This has incentivised more and more countries to make sure that their suppliers are closer to home. In the past, we’ve had one supplier for one key ingredient (like China). Right now, they need two to three which are close to home.

With Ukraine, it shows how hyper-dependent we are on a few countries. For example, Ukraine as a country cultivates 40 million hectares of agriculture land, and because of what’s happening the whole world is in crisis. In Africa, there are 200 million of hectares of good land with water which is not cultivated. There is so much of opportunity and the crisis has been a wake-up call to people on the importance of food supply.

4. Africa has resources capable of feeding its population and the world, but still there are challenges. What are the major issues you see and how do you plan on addressing these?

Africa does have its challenges, be it governance, structure, education etc. But, to me, this is not the main issue. The main issue that blocks the growth of the continent is the lack of investment. For example, according to the World Bank, Sub Saharan Africa received USD 68bn of development aid in 2021 – where did this money go? Imagine what one can do with this money! In contrast, the total private investment landscape in Africa is about USD 25bn a year. Aid is three times more than investment, and I don’t believe in free money. Europeans and Americans should give less and invest more.

They should stop treating Africans like they are inexperienced and start investing instead of providing them with donations and charity. Africa needs investment. The problem is that the same people who were giving money for free are wary to invest and reduce their profit expectations. They have a perceived risk factor.

On one side, you have the traditional private equity model, which is to maximise profits in the shortest possible time. This does not work. The money is not coming because the model is not working. On the other hand, you have the charitable funds coming in (free money) and this also doesn’t work. The solution is in the middle – we need investors willing to accept modest returns and we can prove to them that the accompanying non-financial returns have changed lives and communities.

5. Beyond achieving food security and building profitable agribusiness for economic prosperity for the continent, how are you building a sustainable and value creation-driven food industry that positively impacts people, communities, and the environment?

Firstly, we are only investing in organisations that already have this vision. We are buying a majority stake of the companies which can transform people, environment, and communities with acceptable returns. It’s only about transforming local crops. I don’t believe in building factories to bring imported crops. There is a clear link between a factory and the farm, this is key for agri-business. If you have a small factory with 100 people, depending on the crop, you will need 1,000 to 3,000 farmers. You have a multiplier effect on farmer livelihoods, and it will eventually have a multiplier effect on food supply.

Nowadays, everybody talks about ESG and Sustainability. But 90% of it is the top-down pyramid structure. If you ask someone from the space, speaking practically and concretely, especially those who are on the ground from the same company, they will tell you that these are just concepts to them.

At ATA, we take the four pillars very seriously and there are four KPIs. For example, on the people front, we monitor and question the organisation on:

1. How many jobs did you create?
2. How many hours of training have you provided for the staff?
3. How many of your staff are medically covered at the factory?

We want to see everyone progress. Then, on the environment front, we question:

1. What is the factory’s water consumption like?
2. How many tonnes of waste do you throw?
3. What are the actions you are taking to reduce the waste?
4. How much of power do you use?
5. Do you use solar power?

And then when it comes to communities we question:

1. How many of the suppliers’ children are going to school?
2. How many of the suppliers have running water available to them?

So, you see, it’s all very practical. We must bring a balance between the funds, people, and the environment. These four pillars play a vital role for us to bring this kind of progress, so, for us, the pyramid structure is bottom-up.

6. What does the future outlook look like in the African agricultural landscape?

I think the food crisis due to Covid and the Ukraine situation is waking up several people to the importance of food security. We need investors to agree and understand that they need to sacrifice something by investing in the right avenues – they might lose a few percentage points of profit, but they will gain in terms of millions of lives being transformed.

So, this concept is still a bit niche. Large investment institutions don’t buy into it yet. They want to maximise profits. So, in our case, most of the investors are more family offices who think long-term, plus, we have the younger generation that thinks differently. Our hope at ATA is to be a pioneer and show the big organisations that we can make smaller profits – but lives and communities will be transformed, the planet will be safer, and that has value to make up for the little profit that is being lost.