Businessafrica.net Newsletter ISSN 1563-4108
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AFRICABIZ VOL 1- ISSUE : 35
MARCH 15 - APRIL 14, 2002
Previous Issue
Editor: Dr. Bienvenu-Magloire Quenum
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A WORD FROM THE EDITOR


Dear visitor and international investor,


We warmly welcome you, if this is your first visit to Africabiz Online - The ultimate newsletter on trading and investing in 49 sub-Saharan African countries. If you are a regular and faithful reader, welcome back.

If you are a regular and faithful reader, welcome back.

- THE PROBLEM OF BANK GUARANTEE / COLLATERAL TO SECURING LOANS FOR PROJECTS IN AFRICA

Lenders will not take the risk to lending funds to the promoter of a project without the certainty of recovering their funds in case of project failure. The Bank Guarantee and other collateral and security they usually request from the Borrowers provides an irrevocable third party guarantee to the Lender against any loss.

The issuance of a bank guarantee has been and remain a major long-standing roadblock for many entrepreneurs from sub-Saharan African countries and, frequently, good, high profit making projects are unable to obtain necessary funding. They end-up in limbo.

BusinessAfrica™ / Dr. Quenum And Associates / Financing Partner(s) are always searching for ways and means to solving the bank guarantee problem; in order to assist their client(s) securing much needed funds to starting or expanding their business.

For that matter BusinessAfrica™ / Dr. Quenum And Associates / Financing Partner(s) have added a new financing "Guarantee tool" to their collateral / security basket which deals specifically with business expansion project.

If you are planning to expand your existing business and need funding you may use that possibility based on the combination of Insurance and Reinsurance policies. For more on the matter please do visit following link..

Contributor's Guidelines is here to review. Your contribution on "How African countries / entrepreneurs could bridge the developing gap" is welcome
.

Many thanks for dropping by and see you here on April 15, 2002.

Dr. B.M. Quenum
Editor of AFRICABIZ
Contact Dr. Bienvenu-Magloire Quenum

BUSINESS OPPORTUNITIES IN AFRICA


- Several business opportunities with high profit making potential which are economic catalysts and components to the Strategy for African Countries - here available - have been introduced to you. They are listed in following table.

a- SHEA BUTTER (Issues 5, 6, 7, 11, 12, 13)
b- BLUE GOLD (Issues 14, 15, 16, 17, 18, 19)
c- FREEZE-DRIED PAPAIN (Issues 20, 21, 22 and here)
d- KENAF (Issues 23, 24)
e- VEGETABLE OIL (Issues 25, 26, 27 and 28)
f- CEREALS (Issues 30, 31, 32, 33)
g- FRUITS (34)

- TROPICAL FRUITS INDUSTRY AS INCOME BUILDING POWER FOR AFRICAN COMMUNITIES/ PART II : THE PASSIONFRUIT AND THE FRUIT JUICE INDUSTRY

Passiflora Edulis - commonly known as Passionfruit - is a fruit which gives a powerful tasting and appealing flavored juice (One drop of highly concentrated passionfruit juice is enough to flavoring 12 liters - three gallons - of pure water to a sweet beverage). For that reason the passionfruit juice is used to blending other fruit juices (orange, guava, pineapple and so on). The industry of ice-creams and candies also makes large use of the passionfruit juice and its byproducts.

Main producers are: South Africa, Australia, Brazil, Colombia, Fiji, Taiwan, Guyana, Hawaii, Japan, Kenya, Peru and Sri-Lanka.

One can notice that only two sub-Saharan African countries are listed as main producers. Other minor sub-Saharan African producers are: Cameroon, Cote d'Ivoire / Ivory Coast.

The demand for passionfruit juice on the marketplace being higher than the offer, there is an opportunity for any African country to entering the very lucrative worldwide tropical fruit juice's industry through the development of Passionfruit's plantations and processing units.

- VARIETIES OF PASSIFLORACEAE FAMILY SUITABLE FOR INDUSTRIAL PLANTATIONS

Courtesy of Purdue UniversityThere are two varieties of Passiflora Edulis (out of more than 400 species of Passifloraceae family) which had been extensively developed in several countries around the world and processed to fruit juice: the Yellow species (on the image at left) and the Purple species However there are also other species of Passifloraceae family which are mainly cultivated in some South American countries (Sweet Granadilla / Passiflora Edulis var. flavicarpa; Banana Passion Fruit / Passiflora mollissima).

Banana Passion Fruit is the one which tastes the most deliciously sweet and also the less industrially processed into fruit juice and byproducts.

- POTENTIAL FOR GREAT DEVELOPMENT

The development of passionfruit represents a niche activity - for African investors - to entering the worldwide market of fruit juice. Furthermore It is a perfect economic catalyst as in addition to the juice produced (36%) the commercial processing of the yellow passionfruit also yields 51% of rinds, and 11% of seeds.

The rinds can be chopped, dried, and combined with molasses as cattle or pig feed. They can also be converted into silage. Milling of the seeds produces 23% of edible and industrial oil similar to soybean or sunflower oil.

Not to forget the promising medical uses. There is currently a revival of interest in the pharmaceutical industry, especially in Europe, in the use of the glycoside, passiflorine, especially from P. incarnata L., as a sedative or tranquilizer. Italian chemists have extracted passiflorine from the air-dried leaves of P. edulis. For more on that matter click here.

- PASSION FRUIT PLANTATION DEVELOPMENT

One should bear in mind that the successful cultivation of Passiflora Edulis to reaching high level of production and good quality of fruit - to be subsequently processed into fruit juice - requires fairly "sophisticated" agricultural techniques, attention and constant care. Below listed few specifics of this opportunity:

1- Purple species originated from high altitude topical regions. Yellow species from lower altitude of tropical regions and is the most suitable for highest tropical temperatures.

2- Passiflora Edulis plants are tropical creepers (liana similar to vine plant) which supports / needs rainfalls between 1.500 mm / 1.750 mm per year (as in the Olyfberg region in South Africa) to 600 mm per year (Transval region in South Africa). And also supports heavy rainfalls like in Hawaii (2.125 mm to 3.680 mm per year).

3- Productivity ranges from as low as 8.5 metric ton per hectare to 46 metric tons in compound cultivated with high expertise in Hawaii. The average for a "normal" plantation being 15 to 20 metric ton per hectare.


A passionfruit plantation. Far beyond at the highest level of the compound
one can see the threes' shelter protecting the plantation from excessive winds.

Courtesy of The Horticulture and Food Research Institute of New Zealand Limited


- This exposure of course does not cover all the aspects of the cultivation of Passifloraceae plants. It is just a quick brief to attracting the attention of investors to this niche agribusiness development.

- ECONOMICS TO SETUP 500 HECTARES OF PASSION-FRUIT PLANTATION

A - Figures listed in table below are linked to following cultivation conditions:

1- Cultivation technique with the liana (creepers) guided and held by iron-made wiring system / fences / palisade / trellis: (see figure below current paragraph)

- 1-a: Spacing between two palisade-lines is 3 (three) meters.

- 1-b: Palisade wiring with galvanized iron threads leveled at 1,80 meter above the ground; and prompt up by wooden stakes positioned at 5 (five) meters from each other.

- 1-c: Passionfruit plants are located at 5 (five) meters from each other; slightly drove off the position of nearby wooden stake; and inserted into a small rising above the ground level.

2- Irrigation by flooding technique guided by drains.


Passionfruit trellis elevation: (A) main leaders; (B) secondary leaders; (C) post;
(D) wooden or bamboo stakes; (E) 2.5mm high-tensile wire; (F) passionfruit plant; (G) laterals -

Courtesy of The Horticulture and Food Research Institute of New Zealand Limited

B - Estimate of investments to establishing 500 hectares of passionfruit plantation:

Items
Amount
(US$ x 1,000)
INVESTMENT

1- Land preparation: Land acquisition - Land clearing with heavy machinery - hand clearing of stubs and shrubs - harrowing - ground leveling and so on.

380

2- Establishment of the irrigation system: Reinforced concrete catch drain - adjacent main drains - gutters - 800 metric cube water tower and so on.

150

3- Establishment of the palisade / fencing / trellis: Wooden stakes positioning - inserting into ground of the stakes - fixing of iron wire - planting and miscellaneous works linked to planting (manure filling, phytosanitary treatment) - nurseries setup. Etc.

850

4- Farming and general equipment: Two 45 CV wheel type tractors - Two 80 CV wheel type tractors - Seven 6-metric tons trailers - two bucket-trucks - water pumping engines - One 150-KVA power engine. Etc.

220

5- Shelters and Buildings: 500 square meter open shelter - Storage facilities and offices - Housing for management. Etc.

300

6- Starting expenses: Feasibility study / Business Plan - startup agri-technical assistance. EtcS. Click here for tentative terms of references covering the plantation establishment (Processing plant's Feasibility Study / Business Plan excluded).

190

Total investment

2,090
PRODUCTION LEVEL

With good weed control and adequate fertilization; permanent care, clipping and trimming of laterals; the annual harvest - based on an average 15 metric tons yield per hectare = 7500 metric tons of passionfruit.

OPERATING COSTS

Operational Expenses: Hand weeding - pruning, trimming and clipping of plants - cross pollination - irrigation - equipment maintenance - harvesting - insurance - utilities - fertilizers - plantation phyto-treatment - staff and hands / management salaries - external management assistance - amortization. Etc.

450
ONE METRIC TON PRODUCTION COST

Total Operational Expenses / Production level

US$60

- ESTIMATE OF THE TOTAL REVENUE GENERATED BY THE PLANTATION

The production cost of one metric ton above outlined is fairly good (compared to off- plantation prevailing selling price of some African producers on the market place: US$ 106) and allows for the application of a wide and competitive beneficial margin. Let's be conservative and apply just 30% margin this gives us a selling price off-plantation of US $78 per metric ton.

The global revenue generated by the plantation stands therefore at: 78 x 7500 = US $ 585,000. Enough to cover operational expenses year upon year.

- INVESTMENT ESTIMATE OF A PLANT TO PROCESSING PASSIONFRUIT INTO FRUIT JUICE CONCENTRATES

In next Issue N° 36 - April 15 - May 14, 2002 - we shall continue the introduction to this opportunity with a global estimate of the processing plant. The purchasing price of the raw material by the processing plant being set at US $ 86 - taking into account 10 % price increase (over above mentioned off-plantation selling price of US $ 78) linked to transport and handling operations to the plant (located not to far from the plantation compound).


The passion fruit plantation establishment needs the drafting of a comprehensive Feasibility Study / Business Plan that covers all operational aspects (plantation establishment and processing of pasionfruit to fruit-juice's concentrate); that is to say: soil analysis; seeds and species selection; nurseries setup, plantation organization and management; plantation's production planning; processing plant sizing, engineering coordination; operational staff training organization and startup assistance; marketing in Europe / Americas and Asia of processed fruit juice. Business-to-Business online marketing website designing, setup/ hosting and management's training; additional business operations organization to using byproducts (rinds and seeds). Etc. Click here for services pricing

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