December 9, 2016    3 minute read

What Lies Beneath Ajinomoto’s Expensive Stake In Africa’s Promasidor

A Growing Attraction For Africa    December 9, 2016    3 minute read

What Lies Beneath Ajinomoto’s Expensive Stake In Africa’s Promasidor

Ajinomoto’s jaw-dropping share purchase agreement of 33.33% in Africa’s Promasidor for $532m marks one of the highest recent deals in the African food and drink sector. At $532m, Ajinomoto’s purchase is far greater than the GDP figures of the 36 African countries in which the major seasoning and processed foods business Promasidor presently operates in.

The Attraction

Many questions may be raised as to why the Japanese firm is intent on including Africa in its growth plans. The mission is clear: to combine its extensive product development capabilities and production technologies with Promasidor’s significant sales and distribution network in Africa. In doing so, its ambitions to become a top 10 global food company may be accomplished.

Ajinomoto is confident that the projected (1.7 billion) population of Africa for the year 2030 will contribute to the increasing demand for the processed foods market. The average real GDP growth rate for Sub-Saharan Africa between 2011 to 2015 may be indicative of the positive expectations for trading activities in the region.

33.33% was the stake Ajinomoto bought in Promasidor

The collaborative efforts between the two corporations may be aided by Ajinomoto’s prior experience establishing West African Seasoning in Nigeria in 1991, followed by Ajinomoto Foods Egypt in 2011 and Ajinomoto Afrique De L’ouest in Côte d’Ivoire in 2012.

Ajinomoto is likely to draw lessons from its prior experience with these entities as it immerses itself in the management and business operations of Promasidor. It is eager to plan ways to make Promasidor an affiliated company (accounted for by the equity method) as Promasidor considers integrating its Nigerian subsidiaries.

Changing The Structures

On the surface, the deal presents a win-win situation. The core elements of the agreements may, however, reveal the complicated challenges that the firms are certain to face. Past experiences provide value for such collaborative efforts, as does size. However, small is powerful. Efficiency and productivity are harder to truly quantify on a macro-level than on a micro-level. The relatively significant sizes of Ajinomoto and Promasidor may indicate the magnitude of the systemic risks inherent in these firms.

While pursuits of rapid growth are viable in some senses, it may be useful to partition factions of the firms for the purpose of allocating resources for activities in a more efficient manner.

This may be achieved by amending the structure of Promasidor by region or by making significant alterations to the overall hierarchical structure of the firm. How this is achieved depends largely on Ajinomoto’s core philosophies and those of Promasidor. Deeper insight into the horizontal networks within the two firms may provide greater perspective of the most suitable course of action to take regarding the risks of the firms’ collaborative efforts.


Despite varying notions, contrasting ideologies, and multifaceted challenges, the stance taken by large corporations in Africa is clear. Onwards and upwards. Coca-Cola invested in Nigerian drinks firm Chi in January. Kellogg’s carried out an investment in the same region in Multipro last year. The scope for rapid growth cannot be ignored.

Many investors may find some of their risks countered by the striking rate of growth in the continent’s population and diversification of resources. Ironically, it is these same surges in growth that may define the foundations of new risks for these organisations.

Get articles like this straight to your inbox each morning with our Breakfast Briefing. Sign up by clicking here!

Log in with your details


Forgot your details?

Create Account

Send this to a friend