Revisiting Africa as an option for Malaysian oil palm expansion

“For the failures that have occurred, go back and check what were the reasons for the failures. Make an assessment; what is it that you should have done or should not have done?” Vimal tells The Edge in an interview.

Bidco Africa is a fast-moving consumer goods conglomerate based in Thika, Kenya. With more than 60 brands in its stable and a footprint in 18 countries on the continent, it claims to be East Africa’s leading manufacturer of edible oils, hygiene and personal care products as well as food and beverages.

One factor that makes Africa attractive for investors is the population boom projected from the continent. The United Nations (UN) has projected the population to reach 2.5 billion by 2050. In fact, more than half of the global population growth between 2023 and 2050 is expected to come from Africa, offering huge potential for palm oil. Currently, demand for palm oil outstrips what the continent is able to supply.

Vimal says edible oil consumption in Africa still has plenty of room to grow, from the current 5kg to 7kg per capita. “Now, WHO (World Health Organization) says 15kg per capita should be your consumption if you want to be a healthy person. The US is 48kg per capita. If consumption goes up, can Africa meet that demand? Right now, we’re importing from Asia, Malaysia, Indonesia, South America and Brazil,” he says, agreeing that the continent has to see massive expansion in oil palm planting to meet its own demand.

Africa imports close to eight million tonnes of palm oil from Malaysia and Indonesia.

According to the Malaysian Palm Oil Council (MPOC), Africa imported 3.9 million tonnes of Malaysian palm oil in 2023, rising 17.12% from 3.33 million tonnes in 2022. Kenya, Egypt, Tanzania, Nigeria, Djibouti, Mozambique, Togo, South Africa, Benin, Senegal, Mauritania and Madagascar were the top importers of Malaysian palm oil and palm products in Africa.

With the rising population in Africa translating into the need for more vegetable oil, including palm oil, how should Malaysia take advantage of the situation, with stagnating yields and expansion in planting capped back home?

“My proposition is Malaysia can do a lot more globally, rather than stay confined here in Malaysia and say, ‘This is it’. So, have a growth strategy and then see where [the potential is],” says Vimal.

Bidco Africa was founded in 1985 by Vimal, his father, Bhimji Depar Shah, and brother Tarun Shah. The company started with soap manufacturing and went into edible oil processing, refining and fractionation, before moving into crushing soya beans, sunflower and maize germs. It initially imported palm oil from Malaysia and continues to do so. In the early 2000s, Bidco Africa ventured upstream into oil palm plantations via a joint venture (JV) with Wilmar International Ltd in Uganda, supported by the World Bank and the UN’s International Fund for Agricultural Development.

“The government of Uganda gave us this land and said, Come and do plantations so that we actually have local production on the ground. It’s about 50,000 acres (about 20,000ha) now and still expanding,” says Vimal.

On how Bidco Africa ended up partnering with Wilmar, he explains that while the Ugandan government offered the land for the oil palm, the company itself lacked the expertise in planting.

“We had the processing and refining. We didn’t have the plantation technology. So, we looked for a partner. A friend of ours in Malaysia said, ‘Speak to Wilmar’. We did and they said, ‘Okay, let’s have a look’. They weren’t too keen intially, but then they got into it and now they’re quite keen. So, it was an experiment and it’s worked out well and it’s still working as we speak,” he says.

The JV with Wilmar is undertaken via Bidco Uganda Ltd. The JV’s oil palms are planted on Kalangala Island in Lake Victoria — Africa’s largest freshwater lake. It is expanding to a second island in Lake Victoria.

The venture also faced resistance from environmentalists but, in 2016, the Ugandan High Court cleared Bidco Africa of deforestation claims.

“It’s (the partnership with Wilmar) been 20 to 22 years now, so we’ve been harvesting all along. We have palm oil mills, we have the full value chain. We process [the oil] into refined products, finished products packed under our brand names and we sell to the whole region,” says Vimal.

Native to Africa, the oil palm has been planted commercially in the continent since at least the 18th century. However, it was in Southeast Asia that the crop was cultivated with huge success as a result of massive investments made in scientific research and development (R&D).

Oil palm planting in Uganda along the Equator is no different from that in Indonesia and Malaysia — the world’s top two producers of palm oil, says Vimal. The seedlings, planting methods and R&D are sourced from Southeast Asia, including Malaysia.

“Why reinvent the wheel?” he says.

Bidco Uganda’s palm oil business complies with requirements of the Roundtable on Sustainable Palm Oil.

Notably, there is a major difference between oil palm planting in Africa and in Indonesia and Malaysia — the availability of workers on the continent.

“We train our local workers there. They do very well. They learn fast, pick up fast and they adapt. And we have no shortage of people. There’s no availability issue.

“We have the land, the sun, the soil, the people and the demand. So, what is needed is [for] the master chef to bring the ingredients — sun, soil, land, people — together,” says Vimal.

The problem faced in Africa is the lack of capital formation.

“And that’s why people can come and say, ‘We’ll put the investment, we’ll also get the expertise, and get it done’. Which is what we call a smart partnership,” he says, adding that this is where Malaysian planters can come in to invest, develop and expand oil palm planting in Africa.

According to data from the US Department of Agriculture, Nigeria is the world’s fifth-largest producer of palm oil, after Colombia, Thailand, Malaysia and Indonesia. Meanwhile, among the African nations, Kenya is a major buyer of the commodity, importing a million tonnes in 2024.