African bio-energy pioneers
The inspiration behind the Verus Group is a noble one indeed. A belief in making the world a better place, and a belief in Africa as a viable market, prompted this company to develop a bio-energy business model back in 2002. Today, Verus Bio-Energy is a successful bio-energy provider with a vast acreage of oilseed bearing plants. These non-edible plant oils are used as biofuel, largely to power Verus’ own crops. This unique business model is a particularly new variety in Africa, so here at the African Business Journal we were intrigued with the idea. We sat down with General Manager Johan Van Huyssten who spoke with us about the bio-energy market in Africa and the future of this innovative company.
Innovative business model
Upon inception in 2002 the Verus Group was presented with the problem of winning over an African market with a relatively unknown concept of bioenergy. The project took time to get off the ground, and such a large-scale business model requires control of the entire energy supply chain, from primary production to processing and value adding, all of which require substantial skills and infrastructure to support it.
By 2005, as oil prices began to rise and the first few years were underway, crops expanded and the process became easier, making the model more successful. “When we started there was nothing being done with bioenergy in Zambia,” Van Huyssten reflects on the expansion. “Our 2,100 hectares of crops are now about 4 years old. We are producing biodiesel at 1.5 million litres per year so it’s going to expand…the more plantings we have the more capacity we can have, so it is a very robust refinery.”
In 2006 Verus combined forces with other investors in order to better fund and expand on their operations, and joined forces with a multi-national company called Bio-Energy Investments. The aim of the collaboration, according to the website, is “to establish 12 corporate farming estates across a number of African countries to produce food and bio-fuel feedstock crops in parallel, the latter of which will be used in bio-fuels and bio-electricity production.”
Passion for business
The inspiration behind the project is close to home for Van Huyssten. “We operate in Africa because there is a real passion to develop and promote African business,” he says. “Secondly, there is the idea of renewable energy,” which he argues is a highly valuable business model in the African market for a number of reasons. First, of course, are the large spacious areas available for growing crops, and cheap rental rates. “The climate is very conducive for growing almost anything, especially in the regions where we are, in Zambia and Mozambique,” he notes.
Van Huyyssten also promotes the social aspects of such a large-scale project in a continent where poverty is prominent. “Because there are lots of displaced people it presents employment opportunities for a lot of people.” Verus has a direct impact on employment in the region and employs about 1,000 workers over its 2,100 hectares of land, which of course fluctuates in number seasonally. There is also the added value of the skills it teaches those it employs, something a worker can carry with them.
“There are additional skills we need to develop,” Van Huyssten explains, “There is a whole range of skills that are not locally found. This is a non-edible crop which requires totally different farming techniques so we basically have to teach all of the workers these skills. We are always training employees and seasonal workers as well. For example, the pruning of trees, that is an example of a skill [the workers] now have that we have taught them. There are really some obvious benefits in the community.”
Optimistic growth forecast
It seems that Verus was definitely ahead of the trend and was one of the first bio-energy companies to enter the African market. So where does Van Huyysten see this headed in the future? The industry is growing, but undoubtedly still is confronted with scepticism. “We are very passionate about the biofuel industry,” he says, but admits that it is a young technology still working out the kinks. “There is a limited scope of production on the global scale and it has a limited scope of supply because it is not as easy as people think it is. So it is finding a way to do that economically and sensibly, as well as environmentally friendly.”
Thankfully, a continent like Africa presents an optimistic outlook and is an opportune place to figure out the most effective operational model. There is generally a positive attitude from governments regarding any kind of investment opportunity. “During the early 2000’s there was a lot of environmental involvement specifically with biofuels, and we became more production and business oriented.
“In Africa, my general feeling is that in the poorer countries we have operated in during the last 8 years, there is an openness and a general invite policy to get people involved because of the potential revenue streams. Everyone in Africa is supportive of energy production here because that means less dependence on imports.”
The Verus Group of Companies has successfully maintained a business and adjusted its business model as the technology evolves. As the bio-energy market in Africa continues to slowly expand and mature, Verus will continue to be a major player—with passion for its cause.