Related News

GTR Ventures invests in UK-based digital trade solutions provider

Lawmakers approve delay to EU deforestation law

Industry Perspectives: The path to scaling digital trade

GTR Ventures announces strategic investment in blockchain-based XDC Trade Network

Industry Perspectives: Transforming trade payments for SMEs

Policymakers have long sought to grow intra-African trade, not least through the introduction of the African Continental Free Trade Area (AfCFTA), while also forging stronger trade ties with other regions, such as Gulf Cooperation Council (GCC) member states. 

However, access to finance remains a critical challenge, making it more difficult for exporters to make the most of the opportunities generated by AfCFTA. It is also a barrier to adding value by processing raw commodities domestically, widely considered a major opportunity for businesses across the continent. 

Nigeria-headquartered Sunbeth Global Concepts, which trades cocoa beans, cashew nuts, soya beans and sesame seeds of Nigerian origin, is tackling these issues head-on.  

GTR speaks to Sunbeth’s managing director, Olasunkanmi Owoyemi, about the growing opportunities for trade within Africa and with the GCC, and what is needed to boost access to finance for the continent’s exporters. 

 

GTR: To what extent has AfCFTA opened new opportunities for intra-African agri-commodity trade, and how can exporters leverage the agreement to reach other markets, such as GCC states? 

Owoyemi: The biggest issue in Africa remains the buying power and trade finance cycles of businesses across the continent. We have AfCFTA, but there is still not enough capital for the free flow of goods across its member states. That is the biggest issue when we speak about this kind of trade. 

You also have to look at the processing capacity that this origin has. There are processing capabilities, but not to the point of being able to import large volumes from other AfCFTA states that can be processed in one market, and then exported. This is simply because of the high cost of capital to import those goods. 

Looking at the GCC states, the benefit of AfCFTA is being able to aggregate goods from across member states, then consolidate them and ship them out at one clear port of origin. If GCC companies decide to set up buying structures in origin AfCFTA countries, they can bring in the working capital to buy from multiple markets. 

 

GTR: What is needed to grow these opportunities and accelerate the development of value chains, particularly for trade between Africa and the GCC? 

Owoyemi: Partnership is needed to accelerate growth quickly. When you have partnerships across AfCFTA states, and also with GCC states, there is a transfer of knowledge around technology. They can save costs on the technological side and at the sourcing level, for example knowing where you should and shouldn’t take risks. 

Those partnerships are so important because everyone can focus on their area of expertise, whether that is sourcing, technology, trade finance or providing cheap capital. That allows AfCFTA states to grow their competence and the GCC states to get products they need at a reasonable cost without taking on too much risk, because they are working with people who know the origin markets. 

 

GTR: Do those partnerships also help with the challenges around financing? 

Owoyemi: Partnership is key for financing too. The GCC state needs the product, so they partner with a local exporter, check each other’s governance and form good rapport and trust. That is the moment when people see the value both parties bring, as no one is trying to undercut the other, which helps ease the financing situation. 

For example, the GCC state can import the raw materials at a reasonable cost, and the seller might be able to secure some pre-payment from the buyer. That ends up increasing the crop because it generates the liquidity needed to trade. Farms can use that to buy tools, inputs and fertilisers, and increase production. Even if you have a farm selling to an exporter – a local buying agent – that exporter’s working capital always flows down to the farm gate. 

 

GTR: Why does access to finance remain such a challenge across AfCFTA states, and as Sunbeth continues to expand its international footprint, what innovative financing solutions or trade instruments do you see as game-changers for African exporters? 

Owoyemi: This is still a big challenge in Africa. Many traditional African banks are still adapting to the complexities of structured trade finance to discount invoices or provide inventory finance against stock. Their preference often leans towards vanilla financing, where you have to bring assets and borrow money against them. However, for businesses looking to purchase large volumes – such as 10,000 tonnes of cocoa – securing such collateral can be a major hurdle. 

That’s one of the reasons why so many businesses are putting up structures in Dubai, the UK and the US, so they can access structured trade finance. But it will keep inhibiting African businesses if they cannot access the right capital to allow them to trade. Expanding access to structured trade finance within Africa will be essential to unlocking the full potential of businesses on the continent. 

Likewise, when you have the right governance and the right auditors, you can start to attract investors, access finance and grow the overall confidence in your business.  

Even if you have the best ideas, there is no way for those investors to analyse your business if you don’t have good governance, the right talent or proper capital planning, and you won’t have enough integrity for partners to give you pre-payment. 

We’ve benefitted from this. Because of our good governance and strong partnerships, we have had referrals from buyers that introduce us to banks, and we can access finance because of that. 

 

GTR: Sunbeth emphasises ethical and sustainable sourcing, which is increasingly important for consumers and investors in GCC markets. How do you ensure that farming practices meet these standards, and how does this impact the appeal of African agri-products globally? 

Owoyemi: There are set strategies for farming processes in Africa in cocoa and in soya. There is also the EU Deforestation Regulation, which is about mapping farms, and it contains a requirement that farmers’ returns must be enough for them to take care of their means of livelihood. The child labour part is also being addressed.  

So for you to be able to sell cocoa to Europe in the next few years, you have to be fully aligned with EU policies, and there is a lot of certification work to be done. 

For us, the processes are there. We continue to train farmers, providing education on deforestation and putting them on programmes that ensure transparency. We also trace goods from farm to factory, and because of that, there is a lot of data around the farmland itself to be sure it remains free of deforestation. 

The moment you stop doing these things, you effectively start to lower the value of the goods you are selling. A lot of people are investing in traceability because buyers don’t want products that are not traceable or certified. Sustainability is the watchword in the business world, and consumers are asking for this too, so you must align with sustainability to ensure you can continue to survive. 

 

GTR: You mentioned the importance of processing commodities within AfCFTA states. How do you see the future of processing on the continent, and what is needed to grow this industry and add more value to African exports? 

Owoyemi: We’ve been able to build significant partnerships and gain the right knowledge, and so now we are building processing plants for soya, cocoa and cashews. We’ve traded a lot of those raw materials over the years, but Africa’s destiny is to process more. Africa is at the point now where processing would work. 

Unfortunately, a lot of people run into issues with this. They need to make sure they can buy the volumes they want to process, so they need their working capital to be well planned out – otherwise they will lose that business. One of the biggest reasons why processing has been an issue in Africa is because people use short-term working capital to build long-term projects. 

African companies must also look for the best talent, and work on governance. If they can get that right, with the right rewards and KPIs, then Africa will do well. Again, transparency is key in getting processing plants approved and enabling top-tier businesses to work with you.