The Norwegian Investment Fund for Developing Countries (Norfund) has announced an investment of $7.4 million in Verde Beef Processing PLC, an Ethiopian beef producer.
The capital provided by Norfund will help VBP become the largest cattle processing operation in Eastern Africa by enabling the construction of a state of the art abattoir and meat processing facility – currently underway – and also fund working capital for the business. Norfund will work alongside 8 Miles – a UK based pan-African private equity fund – who made an initial investment into VBP in November 2015.
Verde Beef Processing PLC (VBP) is an integrated beef producer that undertakes feed production and feedlotting activities. The company produces premium beef and aims to become the largest cattle processing operation in Eastern Africa with a target output of more than 130,000 carcasses per year.
VBP has a significant cost advantage over its international competition, and is expanding its feedlot operation in Ethiopia to capitalize on this; producing high-quality beef for export and local markets.
Ethiopia’s geographical positioning combined with its livestock population, the largest in Africa and the fifth largest in the world, position the country perfectly as a potential provider of meat to the rapidly expanding markets of the Middle East and Northern Africa (MENA).
The beef farm is located in the Adami Tulu district of the Oromia regional state, Ziway Ethiopia, close to the new railway line to Djibouti. The company is part of the agricultural transformation in Ethiopia, and has been instrumental in the development of the surrounding community through purchase of bull calves and inputs for feed.
The company has todate created over 400 jobs directly on the farm with the upgraded skills needed for competing in the global beef market. In addition, more than 3500 jobs have been created indirectly through local sourcing of calves and feed inputs.
As the company expands, these numbers will grow, and is anticipated to reach 2000 employees and supporting over 50,000 livelihoods when the company reaches full operation. VBP also supports the Ethiopian economy by creating a premium product with local resources, which is then exported, generating much needed foreign currency.
Commenting on the announcement, Scott Friesen, Chairman and Co-founder of Verde Beef Processing PLC said: “We’re excited about the partnership with Norfund which will enable us to provide incomes to thousands more families annually, generate USD 18 million of revenues in 2018, reach an export value of USD 100 million annually by 2021, and further develop the important meat sector in Ethiopia. Verde Beef is a critical project that is aligned with the Ethiopian government’s focus on job creation, increasing exports and introducing improvements to the agricultural sector.”
Managing Director of Norfund Mr. Kjell Roland added: “This is our first direct investment in Ethiopia, and Norfund is delighted to contribute to Ethiopia’s growth and export through Verde Beef” adding that “this investment is focused on employment creation and export and fits very well with our strategy to contribute to sustainable enterprises and economic development in Africa.”
Ethiopia is the second largest country in Africa in terms of population. Although the country has undergone significant economic and social changes and has recorded some of the highest growth rates in the world in recent years, Ethiopia still ranks 173rd out of 186 countries on the United Nations Development Programmes Human Development Index.