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African Business 2021

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The 2021 edition of African Business is the second issue of this useful guide to business and investment on the continent. The positive reception accorded the inaugural edition in 2020 was encouraging and we are optimistic that this publication and future issues will continue to meet the need for timely and relevant information in an exciting time for African business. African Business 2021 has articles on recent trends plus overviews of the key economic sectors on the continent and regional and country profiles. There is an in-depth analysis of the implications for trade on the continent of the introduction of the African Continental Free Trade Area agreement (AfCFTA) and an article on the growth and importance of exploration for minerals, gas and oil. Namibia and Botswana feature in an article on how cooperation can drive economic growth and an opinion piece focusses on the role that digital technology can play not only in the financial sector, but in the driving progress in a broader sense. Global African Network is a proudly African company which has been producing region-specific business and investment guides since 2004, including South African Business and Nigerian Business, in addition to its online investment promotion platform:

OVERVIEW Agriculture

OVERVIEW Agriculture Uganda has a new coffee brand. Modern consumers like to know where the food they eat or the coffee they drink comes from. Nespresso understands this, but the Swiss coffee company has taken it a step further by creating a programme to revive coffee production in areas where it has stopped: the programme is called “Reviving Origins”. Launched in 2019, the programme expanded to Uganda with the launch in 2020 of Amaha awe Uganda (Hope of Uganda) from the Rwenzori Mountains (pictured). Working with Agri Evolve, Nespresso is backing 2 000 farmers to return to cultivating coffee. The programme met with significant success in the Manicaland province of Zimbabwe: the availability of AAA high-quality coffee grew by 9% from 2018 to 2019. Nespresso is investing a total of .2-million in the programme over a period of five years from 2019. 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. SECTOR INSIGHT Zimbabwean farmers can earn from renting out equipment. The International Maize and Wheat Improvement Center (CIMMYT) runs a seed test centre near Nairobi in Kenya but few Kenyan farmers use new seeds because the state subsidises its seed company and approval for new seeds can be difficult to obtain. The Economist argues that “Sub- Saharan Africa is decades behind” when it comes to agricultural productivity (November 28, 2019) and cites the development of a seed that can resist fall armyworm that neither Ugandan nor Kenyan farmers may use as their governments have banned genetically modified crops. AFRICAN BUSINESS 2021 30

OVERVIEW CIMMYT is involved in a project of a quite different nature in Zimbabwe. Fifteen Zimbabwean farmers have signed up for a programme where they become the owners of agricultural equipment which they then rent out. Funding is supplied by the Swiss Agency for Development and Cooperation (SDC). CIMMYT is the lead implementor of the pilot in collaboration with Kurima Machinery and the Zimbabwe Agriculture Development Trust (ZADT). The mechanisation package (a two-wheel tractor and trailer, a direct planter and a maize-cob sheller) is purchased through a “lease-to-own” credit facility. Participants can pay over 24 months after paying a deposit. 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. The Food and Agriculture Organisation (FAO) of the United Nations has warned that if things do not 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 also gives hope that progress can be quick. Smart phones, drones, hydroponics, improved genetics and precision farming equipment could be part of renewal strategies. 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 ONLINE RESOURCES Alliance for a Green Revolution in Africa: Comprehensive African Agricultural Development Programme: Food and Agricultural Organisation UN: International Maize and Wheat Improvement Center: Technologies for African Agricultural Transformation: growth in countries which do not 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. The AfDB has an 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 agriprocessing 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. ■ 31 AFRICAN BUSINESS 2021

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