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‘Ultimate goal of Chobi Ghana is to produce fertilizer in Ghana’Using locally sourced raw materials

Little did they know that they will become life-long business partners, when Jongsun and Nathaniel agreed to move into a same flat on an online community of INSEAD MBA admitted students. They were young, bright, healthy business majors who after 3-4 years of work experience were just admitted to one of the world’s best business schools. For them, future seems just promising as whales ready to dive into deeper ocean. Not having ever met face to face, they just realized that they were only two people in the group who have not decided where to live during the study. So, abruptly, they decided to move into a flat.

Chobi Ghana Logo

Like any first year MBA students, they enjoyed partying during the weekends, whilst busy life of writing reports, taking exams, reading case studies and most importantly job searching. This is particularly true, considering the fact that INSEAD is only 1 year program. Soon after they lived together they realized they have a good fit and shared lot about their personal life. When Jongsun Lee spoke about his girlfriend whose family runs a fertilizer company in Korea they were drinking beer at the kitchen. Nathaniel joked ‘if you get married to your girlfriend, we should set up a fertilizer company in Ghana’. Yes, like so many epic stories ‘it started as a joke’.
Nathaniel’s joke was not a complete pleasantry. Not having a fertilizer manufacturing plant, Ghana imports hundreds of millions of dollars worth of fertilizers from overseas even nowadays. To the contrary, Korean agricultural input companies are suffering from decreasing demand and are desperate to find a new market outside. While farming is one of the most important industries in Ghana blessed with young population, Korea’s arable land gave its way to industrial and residential use, partly because of aging population. After all, the joke did make lot of sense.

Chobi Ghana and CRIG conducted 16 cacao farmer training programs in 2017

Nevertheless, they never spoke about it again until 2010, when Jongsun received a wedding invitation from Nathaniel, a wedding that was taking place in Accra, Ghana. Jongsun would not have been able to find time to come to Ghana for wedding, if he hadn’t just finished his career as a consultant at Boston Consulting Group and was getting prepared for his next career at Lafarge Korea as a Marketing Director. “To me the wedding invitation in Ghana felt like an invitation to do business in Ghana.” As he traveled to Ghana for the wedding he decided to explore deeper inland, where even most of Ghanaian has never visited. He traveled from Accra to Kumasi, Tamale, and all the way to Mole National Park by bus. To him, Ghana as an unknown excitement full of rich tradition and culture. The inconveniences and inefficiencies he experienced in Ghana meant business opportunities for him. As soon as he came back to Korea, he sent 1.5 ton of organic fertilizer for registration testing.
It took 4 years in total for the organic fertilizer to be registered. As soon as they got the license in 2014, Jongsun left his job in corporate world, set up a JV with Nathaniel and became a full-time entrepreneur. This was a bold move for him, since getting a license is one this but getting an order was a very difference story. However, the wind was on their back. By that time, Ghana’s national cacao production had decreased significantly from 1 million ton in 2011 to 700 thousand ton in 2015. Among the reasons for diminishing yields were acidification and depletion of soil after decades of farming. This was one of the main drivers for growing demand for organic fertilizer, alongside with increased numbers of organic cacao farmers. In 2016, for the first time in many years, Government of Ghana decided to supply organic fertilizer to it cacao farmers, and obviously Chobi Ghana that had prepared for the market since 2010 and had recently acquired the license was the first in the supplier’s list. “Chobi Ghana is probably the only active JV between Ghana and Korea nowadays” says Hon. Kim Sung Soo the Korean Ambassador in Ghana.

Chobi Ghana and CRIG conducted 16 cacao farmer training programs in 2017

Thanks to Korea’s infamous chocolate brand “Ghana Chocolate”, Ghana is probably the most often mentioned African country in Korea. One may even say, Koreans perceive “Ghana Chocolate” as one word. As a matter of fact, Ghana alone produces 25-30% of world’s cacao production, making it the second largest export product of Ghana, next to gold. Cacao trees require human labor to nurture and are difficult to replace with machinery, which make it largest employer in Ghana, hiring 25% of total population. Acknowledging the importance of this crop to its economy and the people, Ghanaian Government has founded Ghana Cocoa Board in 1979 to control quality and price of cacao beans in order to protect its farmers. 5% price premium ‘cacao bean from Ghana’ claims compared to beans from other origination attributes to the effort Government of Ghana is making.
Due to not only the importance but also pride for it, Ghanaian ministries do not joke when it comes to dealing with input for Cacao. CRIG (Cacao Research Institute of Ghana) selects 10 farms in different location in cacao farming area for testing and spends 3 years applying the fertilizer to the cacao trees to analyze its effect on beans and soil. Only when the test results for 3 years are positive and consistent, CRIG issues license to sell to the cacao farmers.
The ultimate goal of Jongsun and Nathaniel is to produce fertilizer in Ghana with locally sourced raw materials. Currently Ghana imports USD 300-400 million worth of fertilizer every year. Chobi Ghana would be able to replace some part of this if it were to be able to produce fertilizers locally using imported raw materials. If it could use local raw materials, large part of this import can be replaced. In this regard, Ghanaian Government policy of 1 District 1 Factory is very timely.
Under the new government led by Nana Akufo Addo, Ghana’s economy has shifted gear. Bloomberg wrote on Feb 5th 2018, “according to World Bank, African Development Bank and International Monetary Fund, Ghana is poised to take lead as Africa’s fastest growing economy this year”. It is anticipated to accomplish 8%+ economic growth with narrowing deficit, lowering inflation and stabilizing exchange rate, at the same time. A plan to build manufacturing factories in every district in Ghana, 1 District 1 Factory, was one of main promises president made during his election campaign. This was a plan to transform the economy reliant on mining and farming to higher value-add businesses, and to also bring jobs to people in the village. In return for the investment, Government of Ghana will provide administrative support for license and permit, access to power, water, roads, and most importantly facilitate financial support. Putting aside skeptics around the promise, 475 companies applied for the program, among which 187 companies received “commencement of the implementation”.
Chobi Ghana was recently notified from Ministry of Trade and Industry that its “Proposal for Local Manufacturing of Organic Fertilizer in Ghana” was included in the list of 187 successful companies for the 1 District 1 Factory program. According to the proposal, Chobi Ghana will build a fertilizer plant that can produce 40 thousand metric ton of organic fertilizer per year using locally sourced raw materials, creating 650 new jobs. Moving forward, Chobi Ghana plans to establish a research center and test farm that will develop new fertilizers that is customized for Ghana’s crop, soil, climate and farming practices.
“Often when companies look for overseas business opportunities, they look for market that is similar to their home country. But interestingly, for us, dissimilarities or divergence of the business environment of the JV partners seems to be the source of competitive edge”, says Jongsun Lee. “Ghana and Korea are not just far by distance, but in are different in so many aspects, including history, culture, political system, economic structure, etc. Hence, there were not enough attempts to bring businesses all the way from the Far East Asia to West Africa. Although chances are slim, if you have the eye to identify the opportunities, you can take it to a whole new level. For instance who would have thought, green house equipments used to protect plants from frost in Korea, can work in Ghana to protect them from sun rays.
Jongsun Lee who spends 6 months in Ghana and another 6 months in Korea finds Ghana’s business environment very promising. “Once Koreans boasted about its economy catching up in 50 years what western world have accomplished in 2 centuries. I believe Ghana can do it in 30 years. Do I look like exaggerating? Take communication technology for instance, when Korea had to go through the development stages from fixed line phone to PCS, CT Phone, fiber optic cable, 2G, 3G, etc, Ghana went to 3G directly. Nowadays, you can easily find Ghanaian farmer in the village carrying a smart phone. It is not just the technological advancement that makes future of Ghana economy so promising. You should meet the young passionate Ghanaian entrepreneurs. I hope to be able to grow business with them” says this ambitious business man.

Kim Su-a  edt@koreapost.com

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