Value Chain Evaluation, Capacity Building Recommended for Disruption of Africa’s Agribusiness Environment

AGRF 2020

KIGALI, Rwanda – Whilst agriculture remains responsible for 15 percent of Africa’s total GDP and accounts for more than 20 percent of its annual economic growth, it remains vastly underexploited.

Almost 80 percent of the food produced in the continent is generated by smallholder farmers, most of whom lack the necessary resources and technologies to turn their ventures into meaningful businesses.

For a turnaround, experts at the 2018 African Green Revolution Forum (AGRF), in Kigali Rwanda, recommend a re-think of how business is conducted in the continent.

“What is required in agribusiness is less disruption and more effort on the basics, such as increasing market accessibility by improving the roads and provision of better implements,” said William Asiko, Grow Africa’s Executive Director.

Asiko’s sentiments are shared by Joshua Rugema, the Head, East Africa, and Rwanda Country Director, East Africa Exchange, who notes that there is a need for investment in Africa’s agricultural values chains in a bid to ensure that the production matches the needs.

“We need great partnerships in developing strong value chains, going further downstream to ensure that farmers have access to everything from inputs to markets,” said Rugema.

Other challenges that agribusinesses in Africa grapple with, and which the AGRF experts agree require immediate attention, include a lack of capital, stringent licensing and regulatory requirements, as well as trade barriers.

These shortfalls have left the continent with a growing food import bill of $35 billion per annum, which is estimated to rise to $110 billion by 2025.

This is even as the continent holds 60 percent of the world’s uncultivated arable land and 10 percent of renewable fresh water resources.

The 2017 Africa Agriculture Status Report (AASR) by the Alliance for a Green Revolution in Africa (AGRA), further reports that the continent has about 51 million farms, of which 80 percent (or 41 million) are smaller than 2 ha in size.

Grant Brooke, CEO of Twiga Foods, says that commercialisation of these available, and accessible, resources could help structure meaningful agribusinesses.

“A good amount of the land in Africa is held by people who live in cities, and it is now important that strategies be developed to ensure that these resources are well used by those who can,” said Brooke.

To deal with the challenge of access to finance, Peter Veal, Syngenta’s Head of Business Development, in Africa and Middle East, recommended that local financial institutions critically re-work their strategies to embrace farming, a move, he says, could help farmers get more funding, while guaranteeing longevity for such institutions as banks.

“Agriculture has for long been viewed as a riskier investment compared to mortgages and car loans, but if these institutions spend time to study the market, they will realise that farming has unending business potential,” said Veal.

For a start, Elizabeth Nsimadala, the president of Eastern Africa Farmers Federation, says that data-informed strategies can ensure that the professionalism is injected into the industry.

“The challenge that we have in the agricultural sector in Africa is the lack of coordination. This is especially because 70 percent of Africa’s population is employed in agriculture. By using available data, all available resources can be well utilised, creating an industry that eliminates all doubt for potential investors,” said Nsimadala.

The specialists, who were speaking at a panel discussion on emerging models disrupting agribusiness in Africa, all agreed that the potential for African agriculture is vast, and a disruption ultimately stands to change the overall economic well-being of countries in the continent.