There are a couple of reasons why the cocoa business remains an interesting opportunity for African entrepreneurs. Let’s take a look at three of them…
1. Africa has a strong advantage in the cocoa business
Although the cocoa plant is not native to Africa and was introduced to our continent over 100 years ago from South America, Africa now dominates the global supply of cocoa.
Fortunately, a significant portion of our continent lies within the narrow belt around the earth’s equator that is best suited for cocoa cultivation. Outside this belt, cocoa trees may find it impossible to grow.
In addition to Africa’s suitable location, the evergreen forest and climatic conditions (adequate rainfall and favourable temperatures) make West and Central Africa a sweet spot for cocoa production.
Over two million smallholder families and communities in Cote D’Ivoire, Ghana, Nigeria and Cameroon have been cultivating cocoa for decades.
As a result, there is a lot of experienced labour in the region who have accumulated extensive knowledge about the cocoa business over the years. (photo credit: vibeghana.com)
There are over 25 countries in the West and Central Africa region which, by virtue of their location, have a significant advantage to make money from the international cocoa business. However, only four countries in this region (Cote D’Ivoire, Ghana, Nigeria and Cameroon), are dominant cocoa producers.
There still remains a lot of unexploited opportunities in cocoa production in Guinea, Sierra Leone, Liberia, Central African Republic, Congo and several other countries in this region with fertile land and favourable climate that is suited for cocoa production.
In addition to the countries in the region that are yet to exploit the potentials of cocoa, there are also countries like Nigeria and Cameroon that are under-utilizing their potentials for cocoa.
Nigeria, for example, which used to be Africa’s top cocoa producer now produces significantly less. There is still a lot of room in Nigeria and Cameroon for more cocoa.
2. There is an ongoing and future boom in demand for cocoa
Statistics show that people develop a taste and appetite for impulse and luxury products as their incomes increase. Therefore, it is not surprising that almost all the chocolate that is produced from cocoa every year is consumed in the developed and fast-developing countries.
According to Oxfam, the demand for cocoa is growing to a point that some experts warn that the world may run out of affordable supplies of cocoa within 20 years.
More pressure will be exerted on this already high demand by countries like China and India which will have over 450 million people joining the middle class over the next ten years.
Middle-class people usually have higher incomes and some extra money to spend on exotic items like chocolate. This is likely to exponentially increase the current demand for cocoa.
We must not forget that although chocolate is the biggest and most popular cocoa product, it is not the only cocoa product in high demand. Cocoa beverages are heavily consumed (especially by growing children and young adults) in developing regions of the world like Africa.
Our continent now has the fastest-growing population in the world. With the world’s highest birth rate, Africa’s current population of nearly one billion people is predicted to more than double in 40 years to 2.3 billion.
As a result of this explosive population growth, more people in the developing world will depend on cocoa farmers to produce the valuable beans used for producing these beverages.
And because cocoa can be grown in only a few other places outside Africa, the high demand for cocoa products will provide a steady and lucrative market for cocoa producers.
3. Increasing investments and support for cocoa farmers
The truth is, while the cocoa business may seem very lucrative on the outside, many cocoa growers are very poor people.
How is this possible?
How can the people who produce the major and most important ingredient for chocolate be poor?
Well, somehow the middlemen and giant chocolate companies have found a way to take a significant chunk of profits while leaving very little for the poor farmers.
As a result of the little returns made by cocoa farmers over the past few years, many of them have become frustrated and are increasingly abandoning cocoa to cultivate more profitable crops like rubber and oil palms.
Because the international cocoa industry now understands that it could collapse if African cocoa farmers run out of business, governments, NGOs and the big chocolate companies are now making huge efforts to make cocoa production more lucrative for African farmers.