“Our favorite holding period is forever.” – Warren Buffett speaking on behalf of Berkshire Hathaway. At Africa Eats, our favorite holding period is the same. Why?
The current status quo will see Africa’s economy grow but is unlikely to see the continent be self sustaining in terms of food as the population doubles by mid-Century.
The food gap today exceeds $10 billion annually, even with 80% of Africans farming the land. And despite more and more funds, families, and foundations investing in Africa, the missing middle of capital (i.e. the gap in capital between ideation and $1 million in annual revenues) only grows bigger with the current model is too slow to keep up with the demand for capital as the few funded companies succeed.
It took 200 years for Europe, the U.S., and the other so called “developed” economies to be majority middle class. Africa doesn’t have 200 years.
It took China 35 years to pull 500 million of its 1+ billion citizens out of poverty. Africa doesn’t have the centralization and authoritarian systems to follow this path.
India took 25 years to pull 450 million of its 1.2 billion citizens out of poverty. Africa doesn’t have a centralized bureaucracy to follow this path either. Africa needs outside help, but in the form of massive investment capital, not yet-more philanthropy.
The solution is to provide investment structures which can eventually flow trillions of dollars into the African economy. Flowing not because Wall Street investors suddenly care about Africa, but because there are profits to be made as 500+ million Africans pull themsevles up into middle class.
The solution has a few parts:
- Bundle a portfolio SMEs to diversify risk, taking advantage of the distributed nature of African nations.
- Pick SMEs that are fast-growing and profitable.
- Scale these to companies and list them on the stock market, using growth capital from the capital markets.
- Do the same with the bundle, to rinse and repeat with more and more SMEs.
- Spin this flywheel as more capital enables more listings which enable a portfolio of great returns for investors.
Africa Eats is a bundle:
- Two dozen African fledglings from 10 countries, all focused on building the food/ag supply chain.
- 52% revenue growth from the decade 2014-2023, from under $1M in total SME revenues to over $36 million.
- That growth created by less than $18 million in total investment capital.
- The first public listings in 2024 on the new Exponential Growth Segment of the Stock Exchange of Mauritius.
- More listings planned for 2025, 2026, etc.
The biggest hurdle to growing Africa’s economy faster is capital. This Berkshire Africa investment company model is the simplest path to fill the capital gap, including retail investors, private equity investors, public equity investors, and development institutions as well.
