Thursday, October 19, 2017

A ‘Chilled Livestock Product’ Investment Prospectus

INTRODUCTION – Part One A

This HID project aims to attract Foreign Inward Investment Capital and Management Resource into the Ethiopian Somali region’s economy by unlocking value from the one of the largest concentrations of livestock in Africa. All in an environment where agriculture has also been mostly dormant to date – but where availability of irrigation water is now becoming a reality.

This investment aims to be:

  • Impactful.
  • Sustainable.
  • Profitable.

Impact on the local communities will be very significant.

For time immemorial, the Ogaden region’s economy has been based upon nomadic pastoralists rearing livestock for sale, nowadays - mostly for slaughter in overseas Arabian markets over a short sales period of two to three months.
This investment agenda will lead to creation of jobs, skilled and unskilled, a more secure and steady stream of income for livestock sales- thereby delivering a major improvement in local community wellbeing.
Impactful also to other Ethiopian regions and industries that would buy and convert skins and hides into leather goods with carcass material being sold on as source for gelatin and soap production.

Development will be sustainable.

Better livestock care and more regular cash flow, enabling a longer term investment culture and wealth creation will spark off demand for more goods and services improving the country’s GDP. Environmental, vetinary and traceability standards of inward investors will improve quality, health and reproducibility of livestock.
The supportive Ethiopian Government Policy for this project will boost further the important sustainable transformations that are taking place in Ethiopia (Horn Region) regarding the development of a competitive business environment and development of infrastructure and support for public services.

Investment will unlock added value and be profitable.

Value and profitability will be created by deploying a variety of asset classes to this region to ensure the full range of horizontal and vertical industry growth. Such investments will be designed to be inherently profitable.

Profitability will be driven by the attractive added value chain from agro production, livestock procurement for slaughter and chilled meat product delivery, sale of bye- product to local industries (skins hides etc), development of traceable livestock herds, commercial vetinary services, delivery logistics services and the sales and marketing of product to the international markets. Each part of the value chain may attract a different type of investor and risk-return appetite to support an all-round development of this industry.  

In summary:

The HID recognizes the following project attributes:   

a) A highly supportive Ethiopian Government Policy, its  Five-Year Growth and Transformation Plan (GTP) putting significant emphasis on the transformation of the country’s agriculture and livestock sectors, in particular,  from subsistence to sustainable and market-oriented production systems;
b) Attractive agro climatic conditions when combined with availability of water; and affordable reliable electricity supply;
c) New refrigeration capabilities;
d) Available human resource and a modern logistics network, of road, air, rail (the Chinese built high speed railway from Djibouti to Addis Ababa crosses our target regions).

These qualities can work to shape the Horn region to become a major contributor to GDP, improve local wellbeing and clan relationships through more interrelated  trading and generate good structural changes for the Ethiopian and regional Horn economies including the source of livestock in neighboring Somaliland. They also point to an attractive opportunity for investors to support the materialization of Ethiopia’s livestock value chain potential whilst obtaining reasonable returns expected in such a frontier market.

All inputs for a successful business prospectus are present.

The foundations of this project and the livestock investment prospectus:


1) A legacy blessing of Prime Minister Meles Zenawi.

One of the legacy blessings of the late Prime Minister Meles Zenawi is the development of Hydro-electric power generation with 230 KVA power distribution now extending eastwards to Diri Dawa, to the Somali Administrative centre of Jig Jiga and onwards to Djibouti.

The availability of low cost electricity offers the potential to fundamentally change the economy and living standards of Eastern Ethiopia.

Why? Because with electrical power, water may be pumped from known and plentiful aquifers for irrigation; dormant land may become productive for fodder and higher value harvests, livestock may be better fattened, then be processed and prepared as chilled product, opening up for the first time the potential to export chilled prepared meat products to international markets, offering market diversification beyond the Arabian markets and greater availability of remaining skins, hides and carcasses for local further processing and added value.


2) Support of the Ethiopian Ministries of Industry and Agriculture.

The State Ministers for Industry and Agriculture.

The Ministers have indicated agreement to visit the UK. (Note Westminster Easter Recess is from 10th to 28th April) with their group likely to include leadership from the Somali Region Administration. All with the objectives of:

Meeting the LBS Coller colleagues for this project and potential future working relationships,

Visiting the CEO of Dunbia and its abattoir and meat processing facilities in Dungannon N Ireland, (Dunbia is one of the major suppliers of meat products to UK and international markets). Dunbia is offering data and technical assistance to the project, with possible investor and / or operating interest in the to- be -built processing facility and product sales and marketing operations.

Visiting the CEO of Pittards and its leather based operations in Yeovil,

Visiting with HID colleagues and UK Government related interested parties.

The Ministers involved are:

  • The State Minister of Industry, Dr Mebrahatu Meles. The Minister has asked that project communications be addressed to his Livestock departmental Head: Mr. Desalegn G Medhin.
  • The State Minister of Agriculture – Animal Resources Sector Dr Gebregziabher Gebre Yohannes. The Minister has asked that project communications be addressed to his co-ordinator within the Pastoral Livestock Directorate: Mr. Gifawosen Tessema


3) HID and the support of the UK Government.

The Secretary of State for International Development, in recognizing the importance of attracting inward investment, thus helping to bring forward greater prosperity and stability sanctioned   financial support –last Qtr 2012.

As the Hon Alun Michael MP, former Minister of State for Industry and the Regions, put it in the House of Commons Chamber, The point of the Corporation is to facilitate international investment and economic interaction. To be part of the process for empowering inward investment; he also guided our founding Board to operate the Corporation as a Community Interest Company – a “C.I.C.”.

As a C.I.C., our corporation works to bridge investor and hosting community interests through a formal economic arrangement. This business approach serves to bridge and protect the interests of all parties involved with the view to sustaining healthy, long term partnerships, part of the process for empowering of economic investment into the Horn region of Africa.

More background information can be found here on the HID web site.

4) The HID’s role and support from its Investment Advisory and LBS Coller.

i. HID’s reward for its communities.

This project is originated / founded by the HID. Therefore future businesses that result from this programme shall include as part of their funds management the negotiated payment of between 3% to 7% of “net income” (after recovery of investments, operating costs and repayment of HID costs incurred in facilitating this investment programme) to HID for distribution by the CIC’s UK Companies House regulator to those communities that host the sourcing and operation of this business.

ii. HID’s human resources for this project.

The main resource supporting the investment prospectus comes the HID Investment Advisory – Messrs L Tiahlo, John Moriarty, Jock Green Armytage – and from London Business School and its Coller Private Equity Institute.

HID has successfully proven a pilot phase of livestock related trade with the first Horn Region cross border movement of skins to the commercial tannery operation of Pittards located in Mojo, Ethiopia. (Concept Initiated mid 2103 and completed January 2104.)

This activity spawned the significantly greater HID agenda as described herein, starting in 3rd Qtr 2013 with Investment Advisory support from potentially interested parties: Jack Dobson Livestock Farming and their UK their meat product supply company Dunbia Ltd, one of the UK’s major abattoir and chilled meat product suppliers and Pittards plc, a company having a growing need to secure access to skins and hides for its “leather products for export” factory in Addis Ababa.

iii. The LBS-Coller Directorate co-operates with the HID.

  • The Coller Private Equity Inst – LBS Executive Director supporting the HID is Ms Nicole Hergarten-Tucker.
  • The Coller Private Equity Director and Professor of Finance at LBS is Ms Francesca Cornelli.

In the last Qtr 2013, LBS-Coller forwarded to HID a set on interested MBA and Executive MBA interested parties to the HID’s Advisory. As of January 2014 the HID is delighted to now have on board the following prospectus team members (see appendix for more):

iv. The LBS - Coller Team consists of Daniel Duarte; Mehul Bhatt; Patricia Eskinasy; Sara Cheche.

The Team Bios are:


Patricia EskinasyPATRICIA ESKINASY –Team Leader.

  • Business Execution: General Management
  • Swedish/Brazilian
  • Senior business leader at Ericsson
  • Executive MBA candidate at London Business School

Patricia has developed new businesses worth more than US$5bn for blue – chip companies across four continents in three years. She has extensive international experience in strategy, management consulting, business development, finance and B2B / B2C sales and marketing. She is a proven skilled executive team leader.

 

Sara Cheche

SARA CHECHE

  • Strategy and Corporate Finance Consultant
  • Tanzanian

Sara Cheche is a member of the London Business School MBA Class of 2014. Prior to LBS she worked in the Corporate Finance department of Deloitte Tanzania helping clients navigate the infrastructure investment landscape and raise debt for major industrial projects. She also worked for the Boston Consulting Group in Boston providing strategic advisory to private equity, automotive, publishing and philanthropic clients and holds a “Mo Ibrahim” award. Sara is a graduate of Harvard College where she studied Economics.

 

Mehul Bhatt

MEHUL BHATT

  • Logistics General Management
  • Indian

Mehul is a first year MBA candidate at the London Business School. Prior to LBS, Mehul was Country Head and Commercial Head for the Danish A P Moller Maersk Group (Maersk) in East Africa (including Ethiopia). He was responsible for the logistics division and managed a team of 70 people based in Kenya. His clients ranged from sectors as diverse as Energy, Oil & Gas, FMCG, Agriculture, Temporary Power Generation, Manufacturing Companies and Trading Firms. Prior to this, he worked with Maersk Tankers based in Copenhagen and with Chevron based in United States. Mehul plans to return back to Africa post MBA.

 

Daniel Duarte

DANIEL DUARTE

  • Business Feasibility Specialist
  • Columbian

Daniel is reading for a Masters in Finance at London Business School. With extensive experience in private equity investments in Latin America,  Daniel was part of Darby team in Colombia , analysing and performing energy and Infrastructure transactions. Before joining Darby, Daniel worked with Colpatria, a Colombian conglomerate with interests in banking, insurance, construction, mining and energy. In Colpatria Daniel was part of the corporate investment team. Daniel holds a MS in economics from Universidad de los Andes in Colombia, where he also obtained a BS in economics and BA in Business.

 

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