TAKING ADVANTAGE OF OPPORTUNITIES IN AFRICAS’S AGRIBUSINESS

Reflex Eco Group – Africa news

by Charles Yeboah Frimpong (Ghanaian Financial Analyst)

Agribusiness plays an important role in economic development as it contributes a major portion of GDP, foreign exchange earnings and employment in many developing countries.

Agriculture and business combined in selling the foods grown in Africa, now accounts for nearly 50 percent of the continent’s economic activities. According to the World Bank, Africa’s Agriculture and food market is worth 310 billion US Dollars and has the opportunity to grow to 1 trillion US dollars by 2030.

Agribusiness forms an integral aspect of the development of African economies to the extent that agriculture employs 65% of Africa’s labour and accounts for 32% of the continent’s gross domestic product. The sector also plays a significant role in enhancing food security on the continent and also helps alleviate poverty through wealth creation.

Despite being home to half of the world’s fertile uncultivated land and abandoned water resources, African farmers still record the smallest amount of produce from crops globally.

It is saddening to hear about the fact that Brazil, Indonesia and Thailand alone export more food than that of all Sub-Saharan African countries combined.

Africans import half the rice they eat and pay 3.5 billion US dollars and even more every year for it- which is such a great and huge amount to spend on just one variety of food.

Although Agribusiness currently contributes a lot to the economies of African countries, the fact that its potentials remain greatly untapped remains inarguable. The agribusiness sector of the majority of African countries faces numerous challenges.

Within the various African countries, businesses are unable to maximize their potentials because of high transportation costs, poor infrastructure, lack of capital, and poorly functioning input markets; including for seeds and for fertilizers among other challenges.

In many African countries, most crops are produced by small-sized farms with limited mechanization and capacity, resulting in very low yields. For instance, Senegal with all its efforts in trying to remain competitive among its neighbours is unfortunately still held back by the difficulty farmers have in accessing capital, land, finance for irrigation expansion and purchasing appropriate crop varieties.

Another case in point is that of Ghana. Although Ghana as an emerging economy is doing so well in some sectors, the country’s agricultural output is still below expectation. For instance, although Ghana produces rice locally, its output in the rice production sector is characterized by poor grain quality, lack of cleanliness and poor packaging which serve as deterrents to consumers and this is inhibiting the performance of the sector, partly accounting for why there is so much importation of rice into the country. And this is all because not much attention and investment has gone into the sector to get the best out of it. Also, Ghana as one of Africa’s largest producers of cocoa although has upgraded technology and management in cocoa production, but is still experiencing low yields because of ageing farmers, ageing trees, old and tedious methods of farming resulting in the disinterest of the youth in getting involved, among other factors.

It is estimated that there are about 50 to 60 percent post harvest losses in the production of Agricultural products in Africa. If there can be value addition, if there would be investment into energy so as to provide reliable energy sources to help farmers and communities to be able to process their foods, store it, before they are taken to markets, hunger would be reduced- because it will probably make 50 to 60 percent more food available in the supply chain and a lot of income will be generated through that.

Seizing emerging opportunities for promoting agribusiness in the new global context is imperative for Africa’s prosperity. Economic performance over the years and its impact on poverty in the continent has shown that prosperity is not only due to resource endowments, and that poverty and slow economic development is not due to the lack of resources. Several African resource-rich countries have remained poor, while other resource poor countries have become rich by climbing the ladder of value addition and inclusive business. Such developments demonstrate that prosperity and poverty are the results of policy choices. There is therefore the need for greater interventions in developing the informal valid chains and also linking them with the formal valid chains. There should be purposeful policy reforms to open up and restructure African economies along market-oriented lines to improve linkages to global trade networks.

The United Nations Industrial Development Organizations (UNIDO) in its book titled “Agribusiness for Africa’s prosperity” presents seven strong actions that should be taken to grow Agribusiness in African countries to skyrocket the development of African economies. These pillars as the organization suggests are “enhancing agricultural productivity”, “upgrading value chains”, “exploiting local, regional and international demand”, “strengthening technological efforts and innovation capabilities”, “promoting innovative and effective sources of finance, stimulating private sector participation”, as well as “improving infrastructure and energy access”.

An African agribusiness revolution is within reach, provided the continent can focus on supporting small-scale farmers and also set up large scale commercial farms to help meet national and regional demand for food.

Agriculture is one of the areas which Africa has competitive advantage, but unfortunately this advantage has not been well utilized. But there is hope! Much can still be done to harness the opportunities in the sector. There will great results if governments and business people will start investing into Africa’s agribusinesses to ensure that the necessary conditions are put in place to promote effectiveness in the sector.

Africa’s agribusiness sector if given much attention to ensure efficiency in the sector, could increase incomes, boost jobs and reduce hunger and environmental degradation while building shared prosperity.

Charles Yeboah Frimpong

University of Ghana

Member, The Institute of Chartered Accountants (Ghana)

Tel: +233-246-542-642

Email: fycharles.7@gmail.com

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