OVERVIEW Agriculture
OVERVIEW Agriculture Huge challenges present massive opportunities. Sector Insight AGCO has new African headquarters. Ivory Coast imports more rice from China than any other country. One-fifth of the world’s imported rice goes to West Africa. With Africa’s population expected to double to two-billion by 2030, these are perhaps not such surprising facts. But there was a time when many African countries were net exporters of food and the amount of land available for agriculture on the continent suggests that Africa should be able to feed itself. A quarter of Sub-Saharan Africa’s population is undernourished and yet agriculture is often the biggest contributor to GDP. In Guinea- Bissau the sector accounts for over 90% of exports, nearly 85% of employment and just over 45% of GDP. Agriculture is the second-largest contributor to the continent’s GDP, after mining and quarrying. South Africa, Egypt and Kenya have thriving agricultural exports, but most farming on the continent is on a subsistence basis. Roughly 6% (or 13-million hectares) of land is irrigated which means that the vast majority of farming relies on rain, a risky undertaking. In countries such as the DRC and Tanzania, only a small fraction of arable land is farmed. Access to appropriate storage, good transport and reliable power supplies are all constraints on African farming. High input costs for fertiliser, pesticide and seeds are additional problems. Access to good seeds has been sporadic. The Food and Agriculture Organisation (FAO) of the United Nations has warned that if things don’t change, Africa will in 2050 be able to feed only 13% of its population. The scale of the problem actually holds the seeds of the solution. While demand is driven by a rising population and a more demanding middle-class, this is creating a market for agri-business which is expected to reach -trillion by 2030. This makes agriculture an investable sector. There is enough arable land in Africa for the problems to be solved, and for Africa to become a net exporter. Although 20% of Tanzania is suitable for farming, only 5% is currently cultivated. The World Bank calculates that Africa could farm on 202-million hectares of arable land. Access to new technology AFRICAN BUSINESS 2020 32
OVERVIEW also gives hope that progress can be quick. Smart phones, drones, hydroponics, improved genetics and precision farming equipment could be part of renewal strategies. Industrialisation If Africa can scale up and make agricultural production more efficient, the ramifications for the broader economy will be profound. Ethiopia cut poverty by 33% in just over decade, driven largely by annual agricultural growth of close to 10% (World Bank). The African Development Bank (AfDB) has flagged increased agricultural production as one of the keys to improved economic growth in countries which don’t have minerals. The 2019 African Economic Overview highlights the growth of Senegal, Rwanda and Ivory Coast and points out that increased agricultural production, if it is accompanied by an expansion of the value chain and development of processing facilities, can lead to the creation of manufacturing enterprises and ultimately play a role in industrialisation. Countries that currently rely too heavily on fossil fuels are looking to diversify into agriculture. Nigeria is increasing the contribution that agriculture makes to GDP. By contrast, Kenya’s recent oil discoveries are a welcome break for a country very reliant on a small basket of exports, tea and flowers chief among them. About two-thirds of employment is in agriculture. Plans and policies There are many people and organisations looking for agricultural solutions in Africa and investors are among them. In 2018 American agricultural company AGCO opened an African headquarters in Johannesburg. With global sales of .3-billion, the company already has an African parts warehouse, the AGCO Future Farm and Training Centre in Zambia and an Algerian joint venture to produce tractors. OLAM is a Singapore-based company that is increasing its African footprint, concentrating on developing capacity all along the value chain of selected foods. One of many non-governmental organisations working on practical solutions is the Alliance for a Green Revolution in Africa (AGRA). Started by the Rockefeller Foundation and the Bill & Melinda Gates Foundation, AGRA’s goal is to improve food security for 30-million farming households in 11 African countries by 2021. AGRA, whose field officers are shown in the picture, promotes better seeds, new crop varieties, fosters small business and works to improve soil health. In Kenya AGRA has highlighted the plight of potato farmers who have been short-changed by bad packaging. The crop is grown by about 800 000 smallholder farmers and contributes more than 0-million to the national economy. The AfDB has a unit called the Agribusiness Development Division and funds the Technologies for African Agricultural Transformation (TAAT), which aims to radically transform the sector through technology. TAAT works on soil fertility management, water management and training. It also advocates for supportive seed technology policies. Investment into agri-processing is promoted via Special Agri- Processing Zones (SAPZs). Ethiopia, Guinea and Togo have such zones which the AfDB, together with other investment banks such as the European Investment Bank and Korea-Exim Bank, has helped establish. The African Union (AU) has set up the Comprehensive African Agricultural Development Programme. The CAADP Compact has been signed by 44 countries to allocate 10% of their national budgets to agriculture and 39 countries have formulated national agriculture and food security investment plans. ■ Online Resources Alliance for a Green Revolution in Africa: www.agra.org Food and Agricultural Organisation UN: www.fao.org Comprehensive African Agricultural Development Programme: www.nepad.org/caadp International Food Policy Research Institute: www.ifpri.org Technologies for African Agricultural Transformation: www.taat-africa.org 33 AFRICAN BUSINESS 2020
