* For other news from Reuters Africa Summit, click here
* Sees annual revenue from Kenyan unit quadrupling by 2017
* Lack of suitable farmland in east Africa a challenge
* Likely to sell shares to the public in ten years
By Duncan Miriri
NAIROBI, April 10 Bidco, one of Kenya's leading
manufacturers of consumer goods, will invest about $200 million
by 2017 in new product categories to meet growing demand, the
head of the company said.
Managing Director Vimal Shah told the Reuters Africa
Investment Summit on Thursday that the group expects its annual
revenue from Kenya to grow by four times in that period from the
present $250 million thanks to the investments.
Family-owned Bidco gets another $250 million in annual
revenue from its operations in other African nations. It has
factories in neighbouring Uganda, Tanzania and Rwanda, from
where it exports to 14 other African markets.
Shah said the group would invest in new production lines and
factories and diversify into food and hygiene products like
toothpaste, moving its present focus on edible oils and soap.
He attributed the investment plan to growing demand for
consumer goods, which is projected to rise further on the back
of population growth.
"It is demand-led. It is a consumption story," he said on
Bidco could sell its shares to the public in ten years after
it has taken advantage of the available growth opportunities,
Kenya's population of about 40 million people is expected to
rise to 60 million by 2030, accompanied by increased
urbanisation, Shah said.
He likened the demographics in Kenya and other African
markets to a pyramid which is expected to grow from the bottom
towards its middle.
"That middle bulge is going to be the consumer," he said.
Bidco, which makes Kimbo vegetable fat, various margarines
and soaps, will add staples like wheat, rice and sugar to its
product range through the investments, which is being funded
mainly through bank debt.
The growth plan may, however, be curbed by a lack of
suitable land to cultivate raw materials.
"Land availability is a big problem in Kenya," Shah said.
In neighbouring Uganda, Bidco has only managed to plant
10,000 hectares of palm oil out of an initial target of 26,000
hectares due to lack of land.
The plantation supplies less than 15 percent of the firm's
requirement for palm oil in its Ugandan operation, frustrating
its efforts to substitute imports of palm oil from Indonesia.
Undeterred, the company is casting its eye over other crops
used in production, offering small-scale farmers in Kenya
"We are ramping up our agricultural activities in east
Africa... We are looking at sunflower and Soya beans on a
massive scale," Shah said.
He said the risks on the continent, like rampant youth
unemployment, could be turned into an opportunity by African
governments through training of young people and exporting
labour to the rest of the world.
"We have got to turn it around. Rather than (saying it is) a
challenge we have to say this is an opportunity," he said.
Perceptions about the continent better known in the past for
wars famine and coups are changing in tandem with faster rates
of economic expansion and Shah said foreign investors looking
for good returns should not wait too long to get in.
"Africa is not a bubble. Africa is happening, it is a
reality... The opportunity in uncertainty is massive," he said.
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(Editing by James Macharia and Tom Pfeiffer)