The need for Africa to diversify its economy from commodities alone has been mentioned constantly by many economic commentators. The UN recently reiterated this point, saying that Africa needs to embrace economic diversification, but also needs to focus on agribusiness to lift the continent out of poverty and put it on the path to prosperity, a senior United Nations official said.
“Agriculture is the most important sector of the African economy and will have to be its driving engine out of poverty. It accounts for 65% of the continent’s employment and 75% of its domestic trade,” the Director-General of the UN Industrial Development Organisation (UNIDO), Kandeh K. Yumkella, said in a news release.
He added that Africa is also urbanising at a fast rate, noting that “in order to turn bright prospects into employment opportunities for its young people, Africa needs to embrace economic diversification”.
His comments came at the Africa Caucus Meeting in Kinshasa, the capital of the DRC, which brought together Africa’s finance ministers, central bank governors, and representatives of international development agencies and financial institutions and where he was a keynote speaker.
The Director-General stressed the need to boost agricultural productivity to achieve sustainable industrial and agribusiness development as a means of wealth and job creation. “The transformation of agricultural raw materials into industrial products depends increasingly on the capacity of African entrepreneurs to participate and compete in global, regional and local value chains.
“Accordingly, African agribusiness value chains will have to adapt to changing market conditions, continuously improve efficiency and strive to meet consumer requirements in a competitive global trade system,” said Yumkella.
Value added agriculture as a percentage of GDP for Africa remains very low, and there is thus room for significant growth in that arena.
He added that Africa needs “new learning and innovation systems involving regional cooperation, new types of partnerships between farmers, sellers, investors and researchers, and the right incentives and public actions that crowd-in rather than crowd-out private investment”.
Investment in transport infrastructure, access to energy and water, information and communication technologies and management efficiency were vital for agribusiness to thrive, he noted.
In 2012, in partnership with the UN Food and Agriculture Organisation (FAO) and the International Fund for Agricultural Development (IFAD), UNIDO launched the Accelerated Agribusiness and Agro-industries Development Initiative, or 3ADI, to promote value addition to agricultural commodities.
Such initiatives should prove valuable in pushing through a potential agricultural value add revolution for the continent.
Imara is an investment banking and asset management group renowned for its knowledge of African markets.