Posted on September, 11, 2017 at 09:13 am
Small and Medium Enterprises (SMEs) and smallholder farmers in Africa are capitalising on the rapidly growing food market in the continent to drive a quiet economic revolution that is likely to tip the region into a new path to prosperity.
According to the latest Africa Agriculture Status Report, launched this week at the African Green Revolution Forum -in Cote d’Ivoire, Africa is waking up to the rapidly growing food market in the continent, which may be worth more than $1 trillion (Sh103 trillion) each year by 2030.
The report says agriculture will be Africa’s quiet revolution, with a focus on SMEs and smallholder farmers creating the high productivity jobs and sustainable economic growth that failed to materialise from mineral deposits and increased urbanisation.
Despite 37 per cent of Africa’s population now living in urban centres, most jobs have been created in lower paid, less productive services rather than in industry, with this service sector accounting for more than half of the continent’s GDP.
Agnes Kalibata, President of the Alliance for a Green Revolution in Africa, which commissioned the study said smart investments in the food system can change this picture dramatically if planned correctly.
“Africa has the latent natural resources, skills, human and land capacity to tip the balance of payments and move from importer to exporter by eating food made in Africa,” she said in a statement.
The report, Dr Kalibata added, shows that agriculture involving an inclusive transformation that goes beyond the farm to agri-businesses will be Africa’s surest and fastest path to that new level of prosperity. For instance in Kenya, agriculture is still the mainstay of the country’s economy, contributing around 26 per cent directly and 25 per cent indirectly to the national GDP. Vision 2030 emphasises value addition to industrial crops.
The agricultural sector is made up of four major sub-sectors: Industrial crops: Tea, coffee, sugar cane, cotton, tobacco, sisal, barley and fruit and Food crops: Maize, wheat, rice, sorghum, millet and legumes, Irish potatoes are now becoming a very significant food crop.
Others are Horticulture: Vegetables, flowers, nuts and spices and Livestock and fisheries: Poultry, goats, sheep, cattle, hides and fish. Industrial crops contribute around 55 per cent of agricultural exports and contribute 17 per cent to GDP.
Horticulture has now become the largest sub-sector. The report highlights the opportunities for Africa to feed itself with food made in the continent that meets the growing demand of affluent, fast growing urban populations looking for high value processed and pre-cooked foods. Furthermore, it advocates that these opportunities should be met by many of the continent’s existing smallholder farmers.
Currently, part of this growing demand for Africa’s food is met by imports. These amount to $35 billion (Sh3.6 trillion) per year and are expected to cost $110 billion (Sh11.3 trillion) by 2025 unless Africa improves the productivity and global competiveness of its agribusiness and agriculture sectors. The report acknowledges that the private sector holds the key to the transformation of the food system so far.
“Impressive value addition and employment is being created by SMEs along value chains in the form of increased agricultural trade, farm servicing, agro processing, urban retailing and food services.
Large agribusinesses like seed companies, agro processors and supermarkets are also playing an increasing role in the food value chain in many regions,” said Peter Hazell (IFPRI), the technical director of the report.
The authors also call on governments to stimulate new private public partnerships for more innovative financing and insurance provision which can lead to increased resilience for farmers and their households. While globally agricultural insurance is a $2 billion (Sh206.4 billion) business, Africa accounts for less than two percent of the market.
Other fiscal stimulus measures suggested include improving financial regulations, developing better credit-reporting processes, opening up special economic zones, supporting digital warehouse receipt systems and sharing risk with lenders through credit guarantees and matching funds.
The report points out other new opportunities to target support presented by digital technology such as satellite tracking and big data. These can help locate new high value agri-economic zones and smarter financing and food security polices, especially in the face of climate change.
According to the World Bank, agriculture accounts for about 65 per cent of the region’s employment and 75 per cent of its domestic trade. “Transforming agriculture from largely a subsistence enterprise to a profitable commercial venture is the prerequisite and driving force for accelerated development and sustainable economic growth in sub-Saharan Africa,” said a World Bank brief on agribusiness indicators for Kenya .
Source: MediaMax Network