Agriculture has become an increasingly crucial issue for African governments. Poor infrastructure and lack of long-term finance have been fingered as the culprits blocking Africa’s path to food security.
Africa’s last decade belonged to telecommunications. To achieve meaningful development, the next decade must witness massive investment and progress in the education, healthcare, electricity, water, road, rail and air transport sectors. This means economic diversification, urban decongestion and its economic gains, namely, rural development, inclusive growth, innovation, heightened productivity and spiraling employment.
Solid infrastructure will boost knowledge and agro-produce exchange between African nations.
Beyond infrastructure development and food security concerns, expanding food production will also have a positive impact on local and regional labor markets, as more people are absorbed into the agribusiness value chain.
Small scale farms produce 80% of the food consumed across Africa. Consequently, the agribusiness value chain is a short one, delivering little value to national economies. According to the African Export-Import Bank, Africa’s global share of food processing is less than 20%.
The paucity of processing, trading and retail mechanisms has restricted Africa’s agribusiness sector to the bottom of the socio-economic pyramid. The current practice of just cultivating-to-sell restricts the value chain to a primary commodity-level activity. Service providers involved in input supplies (seeds, fertilizers, machinery), packaging, exporting, transportation, processing, and converting basic produce into finished goods are urgently needed to extend the value chain. De-risking the sector might also require the establishment of public and private-sector initiatives which enable farms and agro-allied concerns to access bio- and agro-technology, financial credit and risk assurance.
According to the World Bank, Africa’s agriculture sector could be worth $1 trillion by 2030 if infrastructure and financing challenges are overcome.
Slightly over 60% of all the uncultivated arable land in the world is in Africa. In Nigeria, only 40% of its 84 million hectares of arable land is cultivated. These productivity gaps can become Africa’s competitive edge.
Coming out of the 23rd AU Summit of Heads of State and Government in Malabo, Equatorial Guinea, last July, African leaders adopted the Malabo Declaration, reinforcing a decade-old commitment (the 2003 Maputo Declaration) to end hunger and cut poverty in half by 2025.
To meet this lofty goal, the leaders reaffirmed their resolve to devote at least 10% of their national budgets to agricultural development. Only 10 countries have so far met this target. The Malabo Declaration raises the bar of focus and commitment to smallholder farmers and rural communities across the continent, says One.org, a campaigning and advocacy group which helped to galvanize pan-African and global support for the pact.
Africa’s leaders however stopped short of agreeing on a common formula for measuring the 10% target. Whichever way one looks at this matter, the key point is that the local and international appetite for Africa’s agribusiness sector has picked up.
Embedded in the declaration are a set of risk management and strategic corporate social objectives namely, operationalization of the African Investment Bank; increased support for intra-regional trade; adoption of climate-resilient farming strategies; responsible private sector investment; youth inclusion and employment targets; and mutual accountability for results.
Hopefully, Africa’s next decade will be fruitful. Ethiopia, South Africa and Kenya seem well adjusted to the nuances of commercial and small-scale farming, producing and exporting excellent quality coffee, wine, citrus, vegetables, tea and flowers.
In Nigeria, an Agricultural Transformation Agenda (ATA) has transformed a once comatose sector into an engine of growth. Food imports declined from $19 billion in 2011 to $4.35 billion in 2013; bank lending to the sector as a share of total loans has also risen from 0.7% to 6% within two years. Over $4 billion private sector investment commitments has also been attracted to Nigerian agriculture over the last three years.
Earlier this year, Aliko Dangote, president of Dangote Industries, reached out to Kenya for agro-expertise. The Kenyans initially hesitated, pointing at Boko Haram and Ebola as the reasons why they feared coming to West Africa. But when they were offered a remuneration package that was too sweet to refuse, they accepted the challenge. They are now supporting Dangote’s sugarcane fields in Nigeria.
Money talks and agriculture is a multi-billion dollar business.