“I do not think anyone in Nigeria needs persuading of the need for urgent action on the environment. Desertification in the north, floods in ... the centre, pollution and erosion on the coast are enough evidence. For Nigeria, climate change is not about the perils of tomorrow, but what is happening today,” President Muhammadu Buhari said during the UN Climate Change Conference (COP26) in October. And today means Nigerians are finding it increasingly hard to afford basic food items.
One year after its inauguration in December 2018, overlooking the multimodal port of Doraleh, Golden Africa’s palm oil refining and packaging plant has already picked up speed. And trucks, destined for Ethiopia, will soon be on their way, fully loaded.
More than $30m was invested in the refinery, the largest in Djibouti. With 500 employees, it will be able to process between 8,000 and 9,000tn of vegetable oil each month. The company, headed by the Yemeni Fouad Hayel Saeed, Djibouti’s honorary consul in Malaysia, has a 3.4 km pipeline to its own terminal, where ships from Malaysia and Indonesia (producing 85% of the world’s palm oil) dock.
Within a year of opening, the company had captured almost a fifth of the palm oil market share in Ethiopia. Undoubtedly, the consul’s links with the influential Yemeni community facilitated the establishment of Golden Africa in Djibouti. A subsidiary of the Malaysian trader Pacific Inter-Link, it is investing $5m in new machinery to raise production to 13,500tn of oil per month. It also has plans to build a soap factory.
Djibouti, on the other hand, intends to become a production and processing hub for the Horn of Africa.
“Our factory is the largest in the country, but it is small in relation to the region’s potential,” said Adnan Hantosh, deputy managing director of what is also the Djibouti branch of a very powerful family conglomerate with a presence throughout South-East Asia, Hayel Saeed Aman (HSA). With 35,000 employees and several billion dollars in turnover, the group is one of the world’s leading producers and refiners of palm oil.
The monthly target of 21,000tn of oil in the medium term, however, is still insufficient to meet Ethiopian demand of 50,000tn per month and between 6,000 and 8,000tn in Somalia and Eritrea. But it is enough to gain a foothold in a market of 109 million people who consume only 5.46kg of palm oil per person (compared to a world average of 25kg) and where imports from Malaysia rose from 76,000tn in 2014 to 149,000tn in 2017.
Ethiopia, obviously, is thus a prime target for Malaysian palm oil as it seeks new markets. India, a major customer, suspended imports after statements from Kuala Lumpur about Kashmir. In addition, anti-palm oil campaigns are intensifying around the world.
Attracting other interest in the region
While 90% of the palm oil sold in Ethiopia is imported, the region’s only refinery offers an important advantage. Addis Ababa is spending $500m a year on imports, against a backdrop of foreign-exchange shortages.
“By importing from Djibouti, there is no foreign-exchange problem. Since HSA controls the entire chain, it controls prices and can be more competitive,” said one analyst. The Ethiopian authorities, looking to stimulate local production, estimate that refining on the spot could save $80m a year.
Already active in Kenya, Golden Africa, which already operates in Kenya, is also considering a facility in Ethiopia. This is attracting other investors: last December, Saudi-Ethiopian billionaire Mohamed Al Amoudi laid the foundation stone of a refinery to process other edible oils, including soya, sunflower and peanut.
Golden Africa’s Djibouti operation in figures
A son-in-law named Dangote…
In December 2018, the Malaysian press unveiled photos of the “sumptuous marriage” of Sara Fouad Saeed, daughter of the Djibouti consul, to Mohammed Dangote, son of Sani Dangote and nephew of the Nigerian billionaire Aliko Dangote, who was present for the occasion. From sugar to cement and flour mills, the two groups are present in the same sectors.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options