Six ways Africa can unlock its agricultural potential

Agriculture holds the key to broad-based economic growth, poverty reduction and food security in sub-Saharan Africa. This is according to Deutsche Bank senior analyst Claire Schaffnit-Chatterjee, in her report on agriculture for the bank. The following excerpt looks at how sub-Saharan Africa can unlock its agricultural potential.

1. Developing smallholder agriculture is crucial

Smallholder farming accounts for 80% of all farms and most of the land cultivated in sub-Saharan Africa. These 50m small farms produce the majority of agricultural goods and contribute in some countries to 90% of production. More than 75% of agricultural outputs in Kenya, Tanzania, Ethiopia and Uganda are produced by smallholder farmers. Some countries, such as Zambia, Mozambique, Kenya, Rwanda and Nigeria, have a relatively large number of commercial farms with some very large corporate farms in addition to a majority of small farms.

Farms are very small, on average, in most of sub-Saharan Africa. In West Africa, sizes tend to be slightly bigger but households as well.

The process of increasing the size of these small farms is slow, and various countries are experiencing a decrease in farm size. This is due to several reasons such as insufficient growth in urban jobs, inheritance systems that lead to sub-division of farms, land right systems that limit opportunities for consolidation, etc.

Given that small farms are here to stay for quite some time still, agricultural growth must include their transition to commercial farming. Agricultural growth that includes smallholders boosts food availability and incomes, and thus generates demand for locally produced goods and services, resulting in broad-based socio-economic development in rural communities.

2. Broader, more sustainable input use and irrigation

Low, inconsistent use of agricultural inputs is a crucial reason for low yields in sub-Saharan Africa. Low fertiliser use undermines not only the upcoming crops but also future ones since soil nutrients are continually mined.

Improving farmers’ incentives to use adequate amounts of fertiliser is key. In order to be effective, this has to go hand in hand with appropriate water management since faulty drainage leads to fertiliser washing away and applying fertiliser without adequate water amounts to burnt crops. The latter is of particular concern in a region where close to 75% of the surface area is dry land or desert. Climate change exacerbates the problem in a region highly vulnerable to drought and floods. Plant varieties also need to be adapted to prevent fertilised plants to develop stalk at the expense of grain, thus toppling over and being destroyed, as was the case in India for wheat and rice before high-yield varieties were developed.

Increasing the use of farm inputs has to be done sustainably. Excessive use of fertiliser during the Green Revolution in India and China led to soil depletion and drinking water contamination. This issue has acquired a new dimension with climate change. Agriculture is a heavy emitter of greenhouse gases (14% of all greenhouse gasses emissions are attributed to agriculture production, 25% if agriculture-driven deforestation is included). The main sources of agricultural greenhouse gasses are emissions of nitrous oxide from soil, mostly through fertiliser use and manure being transformed by soil bacteria.

A particular challenge in sub-Saharan Africa, dominated by fragile ecosystems, is to improve irrigation and fertiliser use without harming soils. Incentives for fertiliser use need to be designed to avoid leakages and distortions. Often linked to production, subsidies and pricing policies of agricultural inputs usually lead to overuse of pesticides, fertilisers, water and fuel or encourage land degradation.

Better farming methods

Changing the incentive structure can be achieved by increasing the efficiency of the use of agro-chemicals and promoting their replacement by agricultural practices which enrich the soil, reduce emissions and lower both agricultural production costs and import bills (e.g. multi-cropping, crop-livestock integrated production, use of bio-fertilisers and bio-pesticides, agroforestry).

Small-scale farmers in developing countries often do not have stable land tenure and this is not conducive to investing in soil fertility and other sustainable agricultural practices.

Use of machinery is also very low in sub-Saharan Africa. However, simple techniques are sometimes particularly appropriate for smallholders. As an example, “micro-dosing” – applying one bottle cap’s worth of chemical fertiliser – is cost-effective and avoids excessive use damaging soils.

3. Political commitment and public investment

In 2003, African heads of state pledged to allocate at least 10% of their national budgets to agriculture through the Comprehensive Africa Agriculture Development Programme (CAADP) and the Maputo Declaration. They also committed to achieving at least 6% annual agricultural growth. This has successfully guided actions to stimulate economic growth and reduce hunger and poverty through increased investment in agriculture even though Africa as a whole has not met the CAADP targets.

Agricultural spending has grown steadily (on average by 7.4% annually between 2003 and 2010) and quite a few countries are now meeting or surpassing the budget target. However, some countries still spend less than 5% of their national expenditure on agriculture, e.g. Sierra Leone and Uganda. In comparison, Asian governments during the Green Revolution spent more than 20% of their budgets on agriculture and the EU’s Common Agricultural Policy amounts to around 40% of the total EU budget. Ethiopia is one of the countries with the highest public expenditure on agriculture, both as a share of total public expenditure and per capita of rural population.

The agricultural growth rate improved to 3.8% per year on average – still well below the 6% target. A few countries have exceeded the growth target since 2003: Angola, Ethiopia, Guinea, Mozambique, Nigeria and Rwanda.

African governments have a key role to play all along the agricultural value chain since erratic government interventions are recognised as a constraint.

4. Closing the infrastructure gap

Lacking infrastructure is a well-known constraint to any operation in sub-Saharan Africa, particularly agriculture.