September 13, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Sustainable aquaculture and related tech investor Aqua-Spark has released an in-depth, 92-page report exploring current geography and the potential for Tilapia farming in sub-Saharan Africa.

Noting in AquaInsights, An Introduction to Tilapia in Sub-Saharan Africa, “We don’t doubt that farmed tilapia production in sub-Saharan Africa will grow,”Aqua-Spark has committed to a Q4 2021 launch of the $300 million Aqua-Spark Africa Fund. With an initial close on capital commitments of $50 million, intentions are for the fund to reach its funding goal within six to eight years. 

Dedicated fully to the entire aquaculture in sub-Saharan Africa, this fund will act to spark development, with its most fundamental investments designed to advance the framework for growth in the industry.

The Scenario

By 2050 the population of the sub-Saharan region is expected to double from 1-2 billion people. This explosive increase will lead to fish demand that dwarfs what we see today – with forecasts for demand to climb from 10 million metric tons per year today to between 16-29 million metric tons per year by 2050.

This demand pressure will never be able to be met, or even substantially alleviated, through wild-catch fishing due to overexploitation, leaving aquaculture to fill the impending void in supply. And, as the second-most fished species in the world, and due to its ability to easily scale, its healthy reputation, its sustainability, and its affordability, Aqua-Spark stated that it has identified tilapia as the fish of choice for the job.

Deeper Dive

Known in both ancient Egypt and ancient Greece, the name ‘tilapia’ is rooted in the Bantu languages spoken in the sub-Saharan region, where the word for fish is “tlhapi”. Many tilapia species are native to the region, however, Aqua-Spark’s analysis finds that production from tilapia farming is minor when compared to output from other global producers such as China, Egypt, and Brazil.

The report goes on to cite 2019 data from the FAO stating that farmed tilapia production in sub-Saharan Africa totaled 263,000 metric tons, however, Aqua-Spark stated that its own findings pinpoint output at between 125,000-150,000 metric tons.

Some of the larger farms in the region have achieved a level of scale, however, for a greenfield cage farming operation to reach this level of output (about 10,000 metric tons per year) it would require a time sink of 7-10 years, and an investment of between $9-$10 million. But taking sub-Saharan tilapia farming to the next level is a more complex issue than simply funding.

This report explores in detail, tilapia production in the region – turning a lens on all segments of the supply chain from feed and feed ingredients, genetics, hatcheries, fish health and disease risks, the technologies behind the operations, who are the producers, and marketing and distribution options in a competitive global protein space.

Aqua-Spark also examines the current investment landscape and the investment opportunities in the sector concluding, “At AquaSpark, we believe that in the short term around $300 million needs to be invested through equity, which will only cover the current capital requirements of the top 25 most-needed investments in our pipeline for aquaculture in sub-Saharan Africa. A significant amount of this total involves tilapia production and its upstream and downstream value chain. These initial investments will be the basis from which to develop and scale a regional industry.”

Noting that the current lack of infrastructure makes sub-Sahara African aquaculture a different risk profile for the investors in its main fund, Aqua-Spark is launching this separate vehicle focused on building out this needed infrastructure across the continent to act as a foundation for a thriving industry providing regional food security.

Its core investments will be between 6-8 vertically integrated farming hubs with production capacity of 20,000 metric tons per hub. Of this, Aqua-Spark foresees 50 percent being from outgrower programs.

It also will invest in small and medium-sized aligned businesses, such as feed ingredient companies, tech companies, cold chain operations, marketing and distribution endeavors, and animal health advances. 

The fund will commit to initial ticket sizes of between $250,000 – $5 million, taking a minority position of between 20-49 percent with a board seat on each of its portfolio companies, which commit to working together, giving each other favorable terms to increase the sustainability within the global Aqua-Spark ecosystem. 

The first $50 million will be used to finance a significant portion of the funding requirements for select companies within the top 25 of Aqua-Spark’s pipeline. And once the fund reaches its goal of $300 million, Aqua-Spark noted that it envisions being able to fund the longer-term future of aquaculture in sub-Saharan Africa.

Download the report here-

https://www.aqua-spark.nl/aqua-insights/aqua-insights/reports/an-introduction-to-tilapia-in-sub-saharan-africa/

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.