AFRICA: Ploughing A Plethora of Opportunities

  • October 12, 2016

“The soil is the great connector of lives, the source and destination of all. It is the healer and restorer and resurrector, by which disease passes into health, age into youthand death into life. Without proper care for it we can have no community, because without proper care for it we can have no life.” – Wendell Berry

Agriculture, a Part and Parcel of African Economy

Agriculture  significantly contributes to the economic prosperity of a nation and its role in economic development of the developing countries is of vital importance. Increased per capita income of the poor section and increase in agricultural production along with urbanization and industrialization are the key factors which lead to upliftment of demand in industrial production. Hence, emphasizing on development of agriculture sector is a cognitively wise decision of a nation. For Africa, adequate food production is an indispensable condition for development. Agricultural development is the backbone of an economy; economic development leads to increasing demand of food supply which if not fulfilled can deter the process of development. A large population of farmers in Africa are smallholders and are subsistence based. To achieve a sustained agricultural production, projects that promote agriculture, increased productivity and develop innovative financial tools to expand access for small scale farmers and businesses must be supported. Agriculture is the foremost important sector of African economy and accounts for nearly half of the continent’s GDP. Farming being the primary source of employment provides up to 65 per cent of the total jobs in Africa and 75 per cent of its domestic trade.

“Agriculture is the most important sector of the African economy and will have to be its driving engine out of poverty. It accounts for 65% of the continent’s employment and 75% of its domestic trade,” saidKandeh K. Yumkella, former Director-General of the UN Industrial Development Organisation (UNIDO)

Exploring the Potential is the Need of the Hour

Urbanization in Africa is taking place at a very fast pace indicating increase in number of employment opportunities among the young generation of the continent. Agribusiness in Africa has a substantial amount of potential to grow in coming years. According to the World Bank, it may potentially become a US$1 trillion industry by 2030. Africa accounts for half of the world’s fertile but unused land possessing a plethora of business opportunities to grow and support country’s food security and reduce the food imports.In spite of the enormous productive potential of their land, struggle of a small holder farmers to make the ends meet is extremely hard. Majority of the young Africans grow up watching their parents working tirelessly on their farms with old methods of farming which explains their unwillingness to not wanting to become a smallholder farmer. Now the question is, how to make agriculture engaging, easy and attractive for the current farmers as well as the younger generation?

“The combination of digital technology and human creativity in deploying it will revolutionize life for Africa’s farmers by overcoming isolation, speeding up change, and taking success to scale.” — Kofi Annan, Sir Gordon Conway and Sam Dryden

The use and penetration of digital technology in rural areas along with providing enabling environment and support to the small scale farmers should be the most important task on the priority list of the policy makers and the regulatory framework builders. Facilitating farmers with digital technology will require designing and enforcing sustainable technology solutions. Radical redesigning of the business models is required.

Bridging the Gap between Smallholder Farmers and Multinational Agribusinesses for Increased Productivity

Approximately one third of the world population lives on small farms.About 85 per cent of the farmers in Africa are smallholder farmers. Affording modern and technologically advanced equipment is financially a viable option for them attributing to their small scale of farming operations hence their dependency on traditional methods of working results in low productivity of the sector against its huge potential. Connecting big businesses to small scale producers is emerging as a market trend of market-based development. Bridging these two sectors is a huge challenge undoubtedly. Consistency in quality, supply and sustainability is a matter of topmost priority for the multinational businesses whereas small holder farmers are directly dependent on the climatic conditions which are at times unpredictable. This gap of linkage can be fulfilled by introducing a new lineage of middlemen into the supply chain system who can monitor and channelize the complex process of clustering and grading of the produce by small holder farmers so that the multinational businesses do not have to compromise on their demands.

Ghana has set excellent examples for the fellow African countries as its graph of development has been intrinsically tied to sectoral reforms.The proportion of the population living below the extreme poverty line declined from 36.5% to 18.2% over the same period against the 2015 target of 19% (2008 Ghana MDG Report, NDPC and UNDP). Agriculture was accountable for 56% of employment and 30% of GDP, was the driving factor of this change.

“Just as the industrial revolution did a century and a half ago, the digital revolution is reshaping the way we live our lives and the way we work; it’s also forcing a fundamental transformation of business – changing the relationship with customers, bringing new entrants and their disruptive technologies, driving new channels, products and services, breaking down the walls between industries and, in many cases, forcing a basic rethink of the business model.” (PwC, 18th Annual Global CEO Survey – 2015).

Agribusinesses in Africa―an Investor’s Hub

“Africa’s future billionaires and millionaires will make their money from agriculture.”AkinwumiAdesina, President (ADP)

Investment in agriculture is the key factor in making a big difference in the lives of poor. Maximum poor population of the world comprises of farmers. Farmers who depend on their small plot of land and have to deal with the uncertainties of the climate for their yield therefore out of all the methods to reduce poverty, investing in improvement of agricultural productivity is the best. Agriculture businesses in Africa are undergoing a process of entrepreneurial advancement and success powering agriculture with potential to boost economic drive but the challenges raise questions about its sustainability. Let’s now talk about the areas which need to be focused on, inorder to fill the gaps and are also going to be the primary factors to attract private investment and capitalize on the opportunities that flourish in Africa’s agricultural sector.

Moving Up the Global Economic Ladder

To sustain growth and development critical attention must be given to the changes required by the agricultural sector along with the adoption of those changes. The agricultural sector of Africa needs the investment of businesses that are strategic with a keen focus on the current and expected trends in agriculture.

“African farmers need more investment, better access to financial services such as loans, and quality inputs such as seeds and fertilisers” – Kofi Annan

It is interesting to know that Africa is meticulously working on reducing the gap between economic dexterity with the leading world economies. US$ 1 trillion is the combined GDP of twelve biggest economies in Sub Saharan Africa which is more than combined GDP of Greece Finland, Austria Ireland Portugal and Ireland. Africa with its vast opportunities and potential is ready to overcome existing challenges and explore the trade links and deliver economically competitive market for the investors from the globe. The continent is all set to power its way through the technological and agricultural revolution.

Analytical Outcome: what to do and how to do?

Revenue growth and better consumer reach

Incorporation of ICT and smart machinery

Improved storage and transport technologies

Increasing the GMO crop production and implementation of biological farming practices

Focus on corporate social investments and multinational businesses

Reduce the regulatory barriers to trade and competition

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