Northern

Basa Agrobusiness Enterprise

A well-established maize and soy aggregator with a strong supply chain network seeks $625,000 to invest in a warehouse and expand its operations to meet growing demand and manage price volatility.

Investment needed: $625,000

USAID FinGAP Environmental Risk Review required
Business Type
Aggregation, Warehousing
Deal Type
Debt, Equity, Mezzanine Finance
Financing
Cap-Ex, Working Capital
Value Chain
Maize, Soy

Market Opportunity

Warehouse capacity in the Northern Region is at a premium, causing tremendous price volatility throughout the year for maize, rice, and soy. Prices in general have trended higher in recent years, driven by increasing domestic demand from poultry farmers for feed ingredients (maize and soy) and from the population at large for rice. However, most of the region’s producers sell their goods immediately upon harvesting to earn desperately needed cash, despite the low price points. The shortage of product later in the year causes a sharp upturn in prices. As such, aggregators with warehouse capacity have the opportunity to make substantial profits by purchasing large amounts of produce at harvest time and holding on to stocks until the prices increase due to lessened supply. Given these regional market dynamics, as well as GoG plans for a commodities exchange and accompanying network of warehouses, northern Ghana provides a fertile opportunity for investors who seek an early mover advantage in a fast-growing market for agricultural commodities.

Investment Opportunity

Basa Agrobusiness Enterprise, established in 1979, is an aggregation company with significant cash flow and no debt, earning about $1.5 million in sales annually for the past 3 years. Dealing mainly in maize and soy, the company has identified opportunities to expand its business in production and storage to take advantage of growing demand and price volatility. Basa wants to add a 1,000 MT capacity warehouse to its three existing warehouses (60 MT capacity each). The new warehouse will enable the firm to aggregate stocks from the three northern regions for sale to large buyers, and stockpile inventory for when prices appreciate. Given the company’s excellent track record and Managing Director Abdulai Bawa’s business acumen and keen sense of each harvest’s supply and demand dynamics, Basa’s expansion is expected to result in quick growth and increased profits.

Investment Required

Basa is seeking investment of $625,000, of which $540,000 will be used to construct a 1,000 MT capacity warehouse. The rest will be used as working capital to produce and stockpile maize, rice, and soy for resale. The company is open to both debt and equity to finance construction of the warehouse.

BAS Needed

Basa may require a BAS provider to help source financing for the project.

Environmental Considerations

The company will need to conduct an environmental impact assessment on the construction of the warehouse. Pollution control measures should be undertaken during construction.

Supporting Initiatives

Numerous business initiatives support the planned investment, including:

  • GCAP
  • Ghana Grains Council (GGC)
  • GCX
  • The School Feeding Programme provides a ready market outlet for aggregation of grains, especially maize, for direct bulk purchase

Contact Info

Abdulai Bawa, Managing Director, +233 (0) 208 164 666 / +233 (0) 264 454 247