Developing Africa’s Chocolate Industry – Image rights reserved ©Hill Country Chocolate
Africa produces 75% of the world’s cocoa. In recent years, competition from cocoa producers in Asia Pacific and Latin America has intensified.
Cocoa is a major cash crop in the West African sub-region with cocoa farming mostly done by smallholder farmers, who primarily rely on aggregators for offtake. The aggregators in turn sell to international processors and traders. Unprocessed cocoa beans represent majority of cocoa exports in Ivory Coast (72%), Ghana (68%) and Nigeria (90%). Only 20% of the finished chocolate products consumed globally are processed on the continent, highlighting a significant profit gap between raw materials and finished products.
Cocoa processing capacity is largely concentrated among a few global players, with 77% of cocoa grinding taking place in Europe. Local African players often struggle due to a lack of adequate capital, technical expertise, and direct off-take relationships.
The Manufacturing Africa programme aims to address these gaps by providing transaction facilitation support to local players. Over the last few years, the programme has assisted two chocolate manufacturing companies in Kenya and Nigeria, securing $6 million and $12 million in investments respectively.
In Kenya, Manufacturing Africa supported a well-known icecream manufacturer to expand into the chocolate and yoghurt segments. With the programme’s assistance, the company secured $6 million from a South African private equity firm. Despite being a new entrant, their chocolate brand is rapidly gaining market traction.
A more recent deal in Nigeria involved a $12 million investment by a development finance institution into the country’s chocolate manufacturing sector. The founders of a leading cocoa processing company, with operations in Ghana and Germany, established a new business in Nigeria to replicate their success. This new entity aims to consolidate fragmented smaller producers, enhancing efficiency, standards, and outcomes for smallholder farmers.
Africa’s chocolate industry holds immense potential. By addressing the critical gaps in capital, expertise, and market access, initiatives like the Manufacturing Africa programme are paving the way for local players to thrive. The success stories from Kenya and Nigeria demonstrate the transformative impact of strategic investments and support. As more local manufacturers receive the necessary backing, Africa can move closer to capturing a larger share of the global chocolate market, ultimately benefiting its economy and smallholder farmers.
