Africa’s ballooning cities – an opportunity for agriculture

Africa’s fast growing cities present a major opportunity for the continent’s agricultural sector, says Amine Tazi-Riffi, a senior partner at McKinsey & Company.

Lagos, Nigeria. Africa's rapid urbanisation is creating opportunities for the agricultural sector.

Speaking during a session at the recent New York Forum Africa that took place in Gabon’s capital Libreville, Tazi-Riffi said that McKinsey is currently working on strategies for investors interested in agriculture on the continent. He explained that the single biggest opportunity McKinsey has identified lies in supplying food to urban consumers.

“Feeding African cities with high value agriculture – veggies, fruits, everything related to this emerging middle class in African cities,” Tazi-Riffi noted.

“There are already 52 cities in Africa with more than one million inhabitants. This number is going to grow to 75 in the next few years,” he added.

It is estimated that around 40% of Africans currently live in urban areas, making Africa more urbanised than India, and slightly less urbanised than China. According to Standard Bank analyst Simon Freemantle “2030 will be the tipping point whereby more Africans will reside in urban than rural areas for the first time in the continent’s history”. By 2050 it is expected that more than 60% of Africans will be urbanised.

Tazi-Riffi’s comments came in response to a point made by Shanta Devarajan, chief economist for Africa at the World Bank, who said that the export of African agricultural produce should be encouraged because it boosts the earnings of farmers.

Tazi-Riffi said he is not against exports, but considering the logistical challenges of exporting from Africa, supplying the continent’s cities with food will offer the greatest return on investment.

A solution to increase bank lending to African farmers?

A lack of access to financing is one of the major challenges holding back the development of Africa’s smallholder farmers.

Devarajan said that this is because many of these farmers are illiterate and have no way of maintaining a business and repaying their loans.

He suggested that basic financial training could improve this situation. “One thing we found is training farmers on just bookkeeping actually increases their access to finance because then they can list their assets and then the banks are willing to lend to them. So there are small things that we can do that can have a big effect on credit to farmers.”