Infrastructure is crucial to increasing agricultural productivity and expanding agribusiness in sub-Saharan Africa, along many dimensions: water management, power, access to markets for both agricultural inputs and outputs including sturdy roads, storage, processing facilities, telecommunications for access to market information, etc.

The lack of meaningful market outlets prevents too many African subsistence farmers from embracing commercial farming. Long transportation times to the nearest town often translate into high transportation costs and post-harvest losses, especially during rainy seasons. Transit delays have a significant effect on exports. A one-day reduction in inland travel times has been estimated to lead to a 7% increase in exports. Over one-third of sub-Saharan Africa’s rural population lives five hours from the nearest town of 5,000 people. The World Bank estimated that, including maintenance, it would cost around US$110bn to provide 75% of the rural population in Africa with access to an all-season road within 2km.

If current investment rates persist, irrigated area is expected to expand only at around 1% annually, according to the Food and Agriculture Organisation. Given the role of irrigation as a productive input, the private sector has a natural role in investing in irrigation. The public sector has a role in regulating the sustainable use of a critical and limited resource. Given the high levels of the initial costs and risks involved, particularly in the absence of clear land rights, it makes sense to share them.

Similarly, the public good feature of roads and market infrastructures means that public-private partnerships can advantageously fill the gaps, providing that African governments create incentives for private investments.

5. Technology and human capital

Agricultural research for sub-Saharan Africa has to address a wide range of conditions such as diverse ecologies, frequent droughts, poor soil fertility and various types of pests and diseases. It is essential to develop high-yield varieties which are nutritious and resilient and to use cropping methods which are smallholder friendly and sustainable. In order to best respond to local needs, incorporating local knowledge is greatly beneficial.

A range of skills required in the broad agricultural sector are often lacking in sub-Saharan Africa, from practical training to farmers through agricultural extension services to academic education for full-time university students or agribusiness executives. Educating women is particularly important given their critical role in farm households. Women are responsible for 75% of the work involved in food production at large, 90% in food processing. As farmers, mothers, educators and innovators, they are a crucial link between food production, consumption and food security.

Encouraging rural youth to enter agriculture and to provide the training and services for them to succeed as commercial farmers or small and medium-level entrepreneurs is a particular challenge. It is ironic that, given the place of agriculture in sub-Saharan Africa economies, only 2% of students major in agriculture.

Building skills and entrepreneurship is slowly taking place with the introduction of new processes and problem-solving approaches. Some African universities have revamped their curricula and partnered with private firms to provide the skills in demand.

6. Facilitate trade

Fully exploiting the opportunities in domestic, regional and international markets is essential for sub-Saharan Africa to be able to tap its agricultural potential.

Pursue regional integration

The diversity of Africa’s agriculture and climate provides major opportunities for regional trade – especially since spatial correlation around rainfall and production tends to be low, even within a sub-region. However, only about 10% of agricultural trade is currently from within Africa. Although member states of all sub-regions have agreed to pursue free trade, implementation remains slow. Rather than export and import restrictions in order to protect their vulnerable populations when markets peak or collapse, governments can use more efficient instruments, such as strategic reserves or enhanced social protection systems.

Border trade continues to incur high transaction costs from official red tape and bribes. It has been estimated that the Burundi-Rwanda border adds the equivalent of 174km in terms of effect on food prices, the DRC-Rwanda border 1,600km. Simplification, greater transparency and, within sub-regions, harmonisation of procedures (on export/import licences, certification of origin, standards and sanitary regulations) are required. A Ghanaian grain trader association negotiated an agreement with border officials to recognise its trucks, thus speeding up border crossing.

Tap opportunities in international trade

Global agro-industrial exports have diversified significantly over the last two decades, towards processed and high-value horticultural products – accounting in 2008 for around half of global agro-industrial exports, three-quarters if semi-processed commodities are added.

Opportunities for sub-Saharan Africa to enter high-value markets in traditional export markets include premium-quality coffee, cocoa, organic food and beverages and Fair Trade products.

The importance of sub-Saharan Africa’s trade with emerging markets is increasing, with China, India and Brazil combined buying a third of sub-Saharan Africa’s exports in 2012. China alone buying almost as much as the EU (around $100bn). In terms of agro-industrial exports, China’s imports from Africa increased tenfold from 1990-2008 to $3bn and India sixteen fold to $1.4bn.

Unprocessed commodities and horticulture consist the vast bulk of sub-Saharan Africa’s horticulture exports to these two countries – with unprocessed commodities accounting for 86% of these exports to China in 2008, horticulture 51% of those to India.

Trade reforms that lead to the removal of the most distorting policies that hurt African agricultural trade will help to expand export opportunities for sub-Saharan Africa.

This article is an excerpt from Agricultural value chains in sub-Saharan Africa.