The World Bank estimates that Africa holds 60% of the world’s uncultivated arable land. Coupled with a youthful workforce and water resources, the potential for agribusiness in Africa cannot be ignored.
This week, the 24th annual International Food and Agribusiness Management Association (IFAMA) World Forum and Symposium, held in Cape Town, explored the opportunity for increased crop and food production on the continent, as well as some of the obstacles that need to be overcome.
How we made it in Africa looks at some of the key points raised at the event.
1. An investment of US$55bn needed in agriculture
“Africa exports US$45bn worth of agriculture produce. Unfortunately it imports $81bn worth of agriculture produce,” said MD Ramesh, Olam International’s president and regional head for southern and east Africa.
He noted that 70% of Africa’s population relies on agriculture for their income, and that a considerable portion lives in poverty, with little or no support to help increase productivity. In order to feed Africa and the world, significant investment will be required to meet Africa’s agricultural potential.
“Our calculations say it will take about $55bn worth of investments in the agricultural sector in Africa to transform agriculture on the continent,” explained Ramesh.
2. Informal markets dominate
Some 90% of all food in Africa (excluding South Africa) is purchased through informal markets, according to David Tschirley, professor at Michigan State University’s Department of Agriculture, Food and Resource Economics.
While there is an increasing demand for formal retail shopping and processed food, driven by rising incomes, Tschirley said that informal food markets will not become obsolete in the next 10-30 years. Nevertheless, his projections suggest that informal trade will decrease from 90% to around 65%.
Tschirley noted that traditional retailers will have to modernise their services alongside consumers’ demand for better quality products.
“So we need transformation not just in the modern sector, but also in this traditional sector… there needs to be a whole food system supply chain transformation.”
3. Technology can leapfrog infrastructure deficit
Lack of access to finance and market related information is a major limitation that small-scale farmers face in rural Africa. However, mobile penetration and innovations in mobile money technology can help reduce these challenges.
Thad Simons, IFAMA’s board president and senior executive advisor for Novus International, said mobile phones can assist the agricultural supply chain.
“In Kenya [Novus International] actually communicates with all of our poultry farmers – of all different sizes, across the country – through text messaging. The SMS system allows us to provide information to them on things like price of eggs and meat in Nairobi. But more than that, if [farmers] asked a question with regard to their productivity, if they started to see a problem with their flock, we can address those. It’s a way of delivering a service without necessarily going to the remote location where the farmer is,” Simons explained.
4. Majority of arable land situated in only a few countries
According to Milu Muyanga, assistant professor at Michigan State University’s Department of Agriculture, Food and Resource Economics, most of sub-Saharan Africa’s arable land lies in just a handful of countries.
“Most of these countries are fragile states… we are talking about DRC, Republic of Congo, Cameroon, Mozambique, and Zambia.”
While these countries hold the greatest potential for crop land expansion, Muyanga noted that much of this arable land is inaccessible due to poor infrastructure.