In Lagos, it can be cheaper to source tomatoes from countries in southern Africa than from 90km outside of the city, according to Omri van Zyl, CEO of AgriSA. Why? Because infrastructural inefficiencies in markets like Nigeria raise the costs of both production and getting produce to market.
This is just one example of the challenges that commercial farmers face in many African markets. A lack of access to finance, insurance, quality and affordable inputs, market information and secure land tenures also stand out as limitations to unlocking the continent’s potential. As a result, agribusiness investors face higher risks. This can lead to divestment, as seen in South African Tiger Brands’ recent selling off of operations in Ethiopia and Nigeria.
What needs to take place to solve these challenges? A panel of experts and policy makers shared their thoughts on the topic at yesterday’s African Agri Investment Indaba in Cape Town.
Build skills and know-how
“I don’t think there is one silver bullet – there is a whole package of issues that need solving. But I think the issue of skills to increase productivity and provide competitiveness in Africa is absolutely core, no matter what size [the farmer] is,” said John Purchase, CEO of the Agricultural Business Chamber (Agbiz) in South Africa.
Nigel Chanakira, chairman of the Zimbabwe Investment Authority, agrees. He argued that smallholder farmers should be taught conservation farming practices, which minimise the disruption of soil composition and natural biodiversity to improve crop yields and financial sustainability. These practices prove to have a strong impact on productivity.
“The experimentation that we have done with Foundations for Farming [an organisation in Zimbabwe that teaches these practices] … shows that a small, well-mentored and tutored farmer can produce a locally competitive project.”
Enable the private sector to do what they do best
“Coming from government, I have to say that I think it is all about African states building strong capacity within the state to enable the private sector,” added Nigel Gwynne-Evans, chief director for African industrial development at South Africa’s Department of Trade and Industry.
Most panelists shared the view that unlocking Africa’s agricultural potential lies in enabling the private sector. This means eliminating some of the deterrents for investment, such as corruption, and allowing the companies to feel more secure about putting their money in the sector, said Van Zyl.
And as Ferdinand Meyer, director of the Bureau for Food and Agricultural Policy (BFAP) in South Africa explained: “I think we just need to trust the private sector… Whether small or large there are wonderful business people out there. Governments should realise that and put the business and productivity growth back into the hands of people who can actually drive it. Create a stable environment…. Give that small business the best chance to survive.
“You really don’t want to be in this business as government.”
Implement predictable, harmonised policy
For Motsepe Matlala, president of the National African Farmers Union (NAFU) in South Africa, the answer lies in harmonising policy.
“If you want to be productive… the harmonisation of policies, particularly in agriculture, security and matters that govern the economy, becomes absolutely central to driving the economies in Africa to be competitive. Africa must be open for business. And I believe we have enough scientists, economists, engineers and technical know-how in Africa to change who we have been in the past,” he said.
“We should be competitive against the superpowers of the world.”
Purchase agrees that policies in African markets could be better geared towards supporting the agricultural sector.
“The World Bank has brought out a number of reports that say by 2030 [African agriculture] should be a US$1tn business. It’s only about a third of that now. We need better policy, better predictability of policy, better skills, better productivity, and only then are we going to make a difference.”