Why African Governments Must Focus On Agri-business As The Catalyst For Africa Growth

In Africa, the Population Reference Bureau estimates that Africa’s population will to rise to as much as 2.4 billion by the year 2050 – with the youth accounting for about 40 percent of this number. The number of African youths by this time will constitute over a quarter of the world’s labour force.

The good news is that Economists have deduced that Africa’s booming population could be to Africa’s advantage, especially because of the continent’s great agriculture potential and the viable investment it presents in this present age of consumerism.

The United Nations Food and Agriculture Organization estimated that of the nearly 870 million people in the world suffering from chronic undernourishment in 2010-2012, the number of hungry people grew in Africa over the period, from 175 million to 239 million, with nearly 20 million added in the last few years

Yet the agricultural growth is not as rapid as expected. It is yet to reach the full growth potential in addressing unemployment and other social deviances as well as in contributing judiciously into the national incomes – compared to other nations like China and Brazil where agribusiness and agro-industry are the chief driver of their economy.

Bunmi Ajilore, a Nigerian Agriculturist and soil scientist says a cursory look at the agri-sector of most developed nation will prove that issues with agricultural development stems from the wrong image and perception of young people towards agriculture.

He confessed that when he was much younger, he had a negative impression about agriculture as a profession but now his views have changed, thanks to education.

“In school, I started seeing agriculture in another light …as a viable, lively, practicable and profitable profession,” he said.

Other issues like access to land, credit facilities/resources are other factors that stand in the way of agribusiness growth in his country.

Bunmi is from Nigeria, Africa’s most populous and biggest economy. The Western region country is blessed with a considerable vast amount of land but its major economic concern till now in terms of GDP revenue has been on oil production.

Like Bunmi, Ngouambe Nestor, a Cameroonian agricultural economist and consultant with experience in agricultural extension and rural advisory services says young people are no longer interested in agriculture.

“In my Country (Cameroon), the key challenge is to move from subsistence agriculture to strong agribusiness. But as in many emerging countries, we still lack a strong agriculture policy to better manage and exploit all resources we have.”

Nestor complained that most political, social and cultural consideration are still limiting investment in agricultural sector with women and youth as the most concerned and that even with the various strategies defined like the Cameroon 2035 vision, these projects are not turned to concrete actions.

Other challenges faced includes “Land grabbing, limited access to credit, limited access to agricultural advisory services or extension services, massive importation of food stuffs,” he said.

The issue is not that far-fetched from that of Zimbabwe where Raymond Erick Zvavanyange, a professional agriculturalist in public and private enterprises and the country’s representative under the Young Professionals for Agricultural Development (YPARD) identified lack of technical and professional training; deterioration of ethics in business and professional engagements; socio-political Interference, as well as general business and production challenges such as high staff turnover rate as some of the challenges facing agribusiness.

Prospect and opportunities

While confirming that Africa is the only continent able to produce various agricultural produce they want, Nestor says there are a lot of opportunities in agribusiness in Africa with great land cultivation surface potential as well as water resource to help modernise and transform agriculture.

Kenya’s Grace Wanene, the co-founder of “Agrinovations Enterprises”, an agribusiness company based in Kenya with interests in youth and agribusiness says one area of agribusiness that is flourishing in Kenya is the areas of seed, fertilizers and agrochemicals, as large number of companies are seen trading in this sector as well as the large number of new entrants into the field.

Companies that deal in agricultural technologies, especially greenhouse and irrigation technologies are also flourishing and there are several new entrants into this field as well.

Grace however said agribusiness opportunities in Kenya, especially those relating to agro-processing, haven’t been fully exploited.

There are two reasons for this, she said.

“First, most of Kenya’s farmers are small holder farmers and they usually cannot meet the demand for raw materials for processing industries. Therefore, the few processing companies who have succeeded in this area often have to enter into some kind of contract farming agreement with the farmers. Secondly setting agricultural up an agricultural processing plant is also rather costly.”

Another unexploited opportunity is in produce aggregation. There are several companies who aggregate produce for export but few who do it for processing companies, she said.

Investors willing to invest in Zimbabwe agricultural sector can look into the areas of Horticulture, Agronomy enterprises, crop and livestock production, Information and dissemination (Esoko & Econet Wireless), Consultancy services and Aquaculture; Raymond quipped.

However, Nestor argued that while Africa still has the best opportunities in agricultural production worldwide with more agribusiness opportunities, more investment should be made in the agricultural sector by creating more opportunities for young people willing to enter within the sector.

“To make agribusiness more vibrant there is the necessity to develop public-private partnership in one hand and private-private partnership in other hand. Because these partnerships creates more business opportunities and can be more benefit to all actors implied along the subsectors concerned,” he said.

Grace Wanene also supports this assertion, saying, African countries must focus on agriculture entrepreneurship because subsistence and non-commercial agriculture hasn’t worked out so well so far.

 

The Role of Government in Promoting Agribusiness (Government vs Private individual) 

In Africa, most of the investments in agri-business are through private sector.

In Cameroon, Nestor says agribusiness is dominated by the big foreign enterprises involved in food production, food processing, etc.

“Government has less than 10 big agriculture enterprises. And others services offered by state are no longer adequate with the actual context of agribusiness, which is why many enterprises choose private sector as their priority,” he explained.

“To make agribusiness more vibrant there is the necessity to develop public-private partnership in one hand and private-private partnership in other hand. Because these partnerships creates more business opportunities and can be more benefit to all actors implies along the subsectors concerned.”

He argued that African governments cannot talk about economy emergence without infrastructure as Infrastructural facilities are the key for agribusiness.

What can you do if your potatoes enterprise cannot respond to market demand because of lack of road, lack of communication facilities? Most production enterprises   are based in rural areas victim of poor infrastructure facilities. That is why Government and development partners must take this issue as priority to develop agribusiness in Africa.

Nestor posits that with new agri-policy, couple with the involvement of State in the promotion of the creation of cooperative societies, agribusiness will be at the top in the next 10 years.

Already, Cameroon has a new law facilitating the process for creation of enterprise to enable individual formally create an agri-business enterprise under 48 hours.

In neighbouring East Africa’s largest economy, Kenya, the situation is almost the same. Grace says although there are some government-owned agri-business in Kenya, the East African growth in agribusiness has been fuelled mainly by private companies.

For example, some government owned agribusiness companies such as the Kenya Meat Commission and New Kenya Co-operative Creameries Ltd are expected to be privatised soon.

Grace said government can help to develop basic infrastructures to increase farmer’s access to processors and markets which will in turn lead to production of value added products at a better price.

According to her, “Financial investment in agribusiness companies and commercialisation of family farming for instance through producer groups” are what is needed for sustainable growth in Africa agricultural sector.

Zimbabwe’s Raymond Zvavanyange also believes that the government can transform the face of Africa through agriculture.

He explained that governments by virtue of its establishments are supposed to facilitate and uphold the nation’s conscience and compass-to promote citizen growth, free enterprise, economic freedom, and nurturing of businesses but in a number of cases, the entrepreneurial spirit of African people’s (as well as suffering) who have limited economic choices, is taken advantage of.

He however noted that private organisations and individuals have a role to play in moving agri-business forward in Africa.

According to him, “Individuals have many interconnected and important roles that work closely to promote agribusiness. First, is personal initiative and drive. This will fall into the personality, character and motivation category. Secondly, individuals have an obligation to obey the laws of business and trade, including remitting taxes and other legal burdens from respective governments. Thirdly, individuals have a role in understanding and dealing with risk in agribusiness.”

Citing an example of the global food crisis of 2008, Raymond argued that “without a sound education on risk and how it affects businesses in Africa, millions of lives can be put at risk over night in the face of surprises in current business frameworks.”

The Future

Although Bunmi said people’s reaction towards agribusiness is now changing as there is tendency for Nigerians to pick up agribusiness nowadays better than it was in the past; he said people still sometimes pick up agribusiness as “a last resort…not a plan A.”

Bunmi said after decades of under-investment in agriculture by Nigeria and other African governments, agri-business has come back to the forefront and with the launch of CAADP in 2003 by African leaders and more funding is coming into the sector.

He sees his country Nigeria playing an active and leadership role in that regard and being major exporter of agri and agro-allied products by 2050 while meetings it own needs. He also expects African agriculture to have grown so much to enable Africa to adequately feed itself and become a net exporter.

He advocates for a rethink in the way agriculture is being practiced in Nigeria as more work and incentives are needed to be put in place to make agriculture a first and viable option for more young people.

“With better productivity and better marketing structures, will come better incomes for farmers,” Bunmi said.

One of the most important relevant solutions to promoting agri-business in Africa is the application of ICT into the sector. Countries like Nigeria, Ghana, Kenya, Ethiopia, Rwanda and Botswana are already adopting this culture and the positives are becoming palpable.

Continentally, Nestor believes that “there is a strong necessity of agriculture reform in many African countries. Many countries have signed CAADP in Maputo in 2003 in which it was recommended to all government to allow at least 10% of their budget to agricultural sector” but he says “it is time to seriously take into account this recommendation.”

Agriculture must be considered as a profession and farmers as rural or agri entrepreneurs. This, he says, will incite people to return to their primary job of agriculture.

 

 

Busayo Sotunde is a prolific writer with special focus on Business, Entrepreneurship, Reproductive Health and other development issues in Africa. Her articles have been published by different outlets including Investing Port and Ventures-Africa.com. She has a penchant for reading and sustainable development. Follow Busayo on Twitter @BusayomiSotunde

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