Is it true that Agricultural industrialization can be game changer for Africa?
According to the African Economic Outlook for 2019 published by the African Development Bank, the size of the Food and Agricultural industry in Africa will be worth a whooping $1 trillion by 2030.
This means that the next millionaires and billionaires of Africa will come from the Food and Agriculture industry. It also means that Africa can build globally competitive economies purely based on agriculture.
But, is Africa well positioned to create these billionaires through agriculture? The answer: an unequivocal yes.
That’s because according to the Food and Agriculture Organization (FAO), 65% of all the arable land left to feed over 9 billion people of the world by 2050 resides in Africa. This means that Africa already enjoys a land-based competitive advantage in Agriculture.
Unfortunately however, Agriculture has failed to work for Africa because other components of the agricultural value chain are not available.
And so, even with our huge arable land resource, over 250 million bellies across Africa sleep hungry each day. This means that unless we make Agriculture work for us, we will never optimize or in fact leverage our competitive advantage to build a food secure continent and by extension, world.
How can we make Agriculture work for us in Africa?
Essentially, the question is: how can we make Agriculture a game changer and a true source of African prosperity?
Or put differently, how can we make the business of agriculture lift hundreds of millions of African people out of poverty into wealth? The imperatives are detailed below.
We must change the way we look at Agriculture
Indeed, we must change the lenses with which we look at Agriculture in Africa. So says Dr. Akinwumi Ayodeji Adesina, President of the African Development Bank.
We obviously cannot keep looking at and treating Agriculture as a social sector and expect it to function as a business.
We must stop looking at Agriculture as a development activity. We must consider and treat agriculture as a wealth creating business.
In the words of President Adesina, “we must make agriculture cool and sexy”. Once we begin to treat Agriculture like any other wealth creating business, we will invest heavily in developing it.
We must invest across all aspects of the agricultural value chain
No business functions well or yields the desired profits if certain aspects of its value chain are left unattended to. The same applies to agriculture.
We must invest heavily in sound technologies and processes from the cultivation to storage of our agriculture commodities.
It’s already too bad that a number of commodities produced in Africa, especially grains, are being rejected in the international markets due to poor handling and use of harmful chemicals for preservation.
This certainly must stop. We must adopt and promote technologies that will allow farmers preserve their crops without using harmful chemicals.
It’s in the light of this regard that I commend the efforts of the African Development Bank through its TAAT initiative. TAAT stands for Technologies for African Agricultural Transformation.
It’s a $1 billion fund put in place by the Bank, the Bill and Melinda Gates Foundation and the Rockefeller Foundation to take viable agricultural technologies siting on the shelves to millions of farmers across Africa to enable them to be more productive and competitive.
We must innovate similar programs that can allow Africa transform every aspect of its agricultural value chains.
We must Accelerate African Agricultural Industrialization
For agriculture to be the game changer for Africa, we must industrialize our agriculture. We can’t remain stuck at the bottom of global value chains and then expect to benefit from agriculture.
The very fact that Agriculture engages over 70% of Africa’s labour force means priority should be given to the sector.
It also means that if Africa is to create wealth and indeed prosperity that is shared, then, Agriculture is the tool to employ.
But, obviously, Agriculture the way it is being practiced cannot create such wealth that will lift hundreds of millions of people out of poverty into wealth.
We must therefore aggressively build industrial value chains across all the commodities Africa produces. To do this successfully, there are two key challenges that must be addressed.
First, Africa must fix its infrastructure issues. As we know, food and agricultural businesses will not be comfortable doing business in an infrastructure constrained business environment.
Therefore, Africa must devise a means of providing the necessary infrastructure investment to encourage agricultural businesses to locate and thrive on the continent and help Africa to locally develop globally competitive industrial value chains.
It’s in this regard that I commend the effort of the African Development Bank with its Africa Investment Forum which is mobilizing domestic and foreign capital to fix Africa’s infrastructure deficit.
Secondly, apart from fixing Africa’s infrastructure deficit, policy and regulatory barriers to entry must be lifted to allow food and agricultural businesses come in and invest heavily in establishing industrial clusters that will allow us build industrial value chains.
The African Development Bank is executing a program which I believe all African countries to latch onto. That’s the Staple Crop Processing Zone Program. An initiative that aims to take Africa from the bottom to the very top of global value chains.
Here, apart from providing infrastructure such as roads, electricity, water, ICT etc. in an optimal manner in identified rural areas where staple crops are produced, African governments can provide fiscal incentives that would encourage food and agricultural businesses to locate in rural areas of Africa.
They will buy the commodities directly from these farmers and process these into finished or semi-finished products. This way, post-harvest losses will reduce precipitously, bringing more earnings to the farmers who by the way are mostly women.
Thus, household incomes will be tremendously improved and higher disposable incomes created for investment in education for children, healthcare and nutrition.
Also, raw materials will no longer leave our rural areas, but, finished and value added products. Most importantly, Africa’s rural communities will be transformed from zones of economic misery to zones of economic prosperity.
This will usher in preconditions for the attainment of the United Nations’ Sustainable Development Goals and the Agenda 2063 of the African Union.
By accelerating agriculturally-based industrialization, Africa will no longer produce 75% of all the cocoa beans in the world, but yet, enjoy only 2% of the over $100 billion chocolate market. Africa will not be producing over 60% of the coffee beans in the world, but yet, suffer from dwindling commodity prices while the price of coffe at Starbucks keeps soaring.
Agricultural Industrialization in Africa: A Global Imperative
We must therefore be fully committed to transforming Africa’s agriculture from a social sector to a profitable business. The task of transforming Africa’s agriculture should however not be left to Africa alone. The whole world must demonstrate adequate commitment too.
Why? Because, on the African continent lies over 65% of all the arable land left to feed over 9 billion people of the world by 2050. This means that what Africa does with its agriculture will directly determine the future of food security in the world.
Therefore, everyone including governments within and outside Africa, international development partners and donor institutions, the private sector etc. must commit to promoting agricultural industrialization in Africa.
It is worthy to mention that the Bill and Melinda Gates Foundation and the Rockefeller Foundation are doing a lot to promote agricultural transformation in Africa.
We however need more hands to accelerate agricultural industrialization and by extension take African Agriculture from its current marginal position to a highly profitable and competitive position in the interest of global food security.
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