NIGERIA – Pioneer Foods plans acquisitions in at least five more African countries after taking a majority holding in Nigerian competitor Food Concepts.
“We’re talking to entrepreneurs for opportunities to expand our investments in the continent” within the next five years, Thushen Govender, the company’s head of international business, said in Lagos, on Tuesday.
“Our focus is on larger economies with a higher population — for example, Angola, Kenya, Ethiopia, Tanzania and Ghana,” he said.
Pioneer Foods completed the $7m purchase of a 50.1% stake in Food Concepts, an operator of quick-service restaurants and bakeries in Ghana and Nigeria, Africa’s largest economy.
The acquisition will enable the Paarl-based producer of baked goods, cereals and beverages to expand beyond SA, Mr Govender said. Pioneer Foods sees Nigerian economic growth and its large, young population as a boost for the consumer market, he said.
Nigeria has a population of more than 177-million people, of whom 44% are under the age of 15 years, Bloomberg data showed. That compares with 28% in SA.
“Our approach to investing in Africa is long term,” even if “over the short term there may be concerns,” Mr Govender said. “In the case of Nigeria, the exchange rate and growth level could be of concern because of the dependence of the economy on oil,” though “because of the younger population, we see a lot of opportunities.”
The currency has weakened about 18% against the dollar over the past six months, the worst performer among 24 African currencies tracked by Bloomberg. That’s partly due to a 50% fall last year in the price of oil, which makes up almost all of Nigeria’s exports.
The country’s economic growth may slow to 4.75% this year from 6.3% in 2014, the International Monetary Fund said March 5.
Pioneer will develop a strategy in coming months to develop the Nigerian business, Mr Govender said.
“In the early period, there may not be material impact. In the future, we expect it to be significant contributor to the group business.”
The South African company will focus on buying into existing businesses in Africa, said Mr Govender. – Bloomberg