Scaling up productivity and prosperity in agriculture

Excellencies, Distinguished Delegates, Respected colleagues, Ladies and gentlemen,

It is an honour to be here today to “plant the seed” for this session on Scaling up Productivity and Prosperity in Agriculture. The choice of topic is highly appropriate, given that this is the African Union’s Year of Agriculture and Food Security, as well as the United Nations’ International Year of Family Farming.

Whenever I speak on the topic of agriculture in Africa, I am filled with pride and fear. Pride, because our continent has achieved so much in recent years, and because it has the most extraordinary potential. And fear, because there is a very real danger that it will not fulfil this potential.

Today, Africa’s middle class is burgeoning. Consumer spending is expected to reach US$1 trillion — and by some estimates US$1.4 trillion — by 2020, and consumer spending is expected to double over the next 10 years. It is little wonder that the continent attracted US$52.6 billion of foreign direct investment just last year.

In fact, foreign direct investment has tripled over the past decade.

But in the areas of poverty reduction and chronic hunger, our continent is failing abysmally. Sub Saharan Africa dominates the bottom of the UNDP’s Human Development Index.

In Eastern and Southern Africa, ten countries have serious levels of hunger, six have alarming levels and two have extremely alarming levels of hunger.

Yes, it is also true that Africa’s extreme poverty rates have fallen, from 58 per cent in 1999 to 48 per cent in 2010, but this 17 per cent improvement  cannot compare to the 50 per cent advance in Latin America, or the 63 per cent improvement in East Asia and the Pacific.

Indeed, sub Saharan Africa is the only region where the absolute number of people living in poverty has risen steadily between 1981 and 2010. This is not a distinction we can be proud of.

Yes, many African economies are growing strongly, but too often this is on the back of extractive industries that do not yield jobs and income for Africa’s poor and hungry. GDP doesn’t mean much when you are talking about indicators of personal poverty.

GDP may have risen in the double-digits for many oil-exporting countries, but paradoxically in the rural areas of the same countries people are as poor today as they were when the first barrel of oil was pumped.

You cannot eat oil – at least not crude oil. You cannot eat diamonds either.  You cannot eat gold.  Money from extractive industries has not transformed African agriculture over the last 30 years. It has not fed hungry people or developed rural areas.

I am proud that many African nations are becoming economic powerhouses, but without a viable agricultural sector and strong rural economy, I do not see a viable future for Africa.

Scaling up productivity in African agriculture –so that it contributes to the health and prosperity of the poor women and men living in rural areas — is an absolute pre-requisite of prosperity for our continent.

We must also ensure that higher productivity and income translates into better nutrition. All too often it is African smallholders and their families who are hungry and malnourished.

It is estimated that today’s childhood malnutrition will cost the global economy $125 billion in forgone GDP growth by 2030.

Clearly, there is a moral, economic and social imperative to ensure that agricultural growth is also sensitive to nutrition.

Today, around two-thirds of Africans earn their living from agriculture, livestock and fisheries. It is time for them to benefit from the continent’s economic gains and to contribute to its food and nutrition security.

But first there is need for a major shift in our mind-set in the way we look at farming. Farming, particularly for smallholders, is an economic activity, a business enterprise that feeds people and generates wealth. Most importantly, it is a dignified profession, and needs to be treated as such, and not just an activity of the rural poor. It is us who have to change our mind-set and not them.

We have no excuse for neglecting agriculture. Africa has the largest share of uncultivated land with rain-fed crop potential. Only around five per cent of cultivated land in Africa is irrigated, compared with 41 per cent in Asia. On the average, we apply only 10 to 13 kg of fertilizer per hectare of cultivated land compared to more than 100 kg in South Asia.

It would not take much for Africa’s productivity to double in the next five years.

Certainly, there is no shortage of demand. Today, Africa imports US$35 billion worth of food every year. Why? This is food that can be and should be grown in Africa by Africans. This is money that should be flowing in to support African businesses, not out.

And why are we creating jobs for people in other countries when some 21.6 per cent of our young people are unemployed or under-employed?

Not only is agriculture a well-documented engine for economic growth and poverty reduction in developing nations — there is evidence that growth derived from staple crop production has a higher impact on poverty reduction than growth from export crops such as coffee, tea and tobacco.

In other words, we can grow more food, feed more people and reduce poverty in the process. It seems like such an obvious solution.  What I am saying is not new. It has worked in Asia, in places as varied as China, Thailand and Viet Nam. So why aren’t we doing it in Africa?

Let me be blunt.  In our pursuit of short-term gains, I fear that we are ransoming the future of our children and their children. In essence, they are being held hostage.

At a time when arable land is becoming an ever-more valuable commodity — and when we know that climate change will make it even more valuable in the decades ahead — we must learn to value what we have. Our 800 million hectares of arable land is our strategic reserve.

Opportunity draws foreign investors. And there is nothing wrong with foreign investment. But it has to be managed, to the benefit of all. Our land should be valued as a strategic reserve.

Africa has more than enough rich agricultural land. But three things must improve across the continent in order for agriculture to generate enough food to eliminate hunger and enough income to eliminate poverty. Let me share them with you.

Number one: we must have a supportive policy environment for inclusive growth. Every country – whether in Africa or elsewhere – needs policies that offer incentives that reduce the risks of investment in agriculture for farmers and private sector partners alike.

A supportive policy environment includes policies that encourage inclusive business models. Policies that facilitate the ability of poor farmers to access finance and technology, and policies that support poor farmers’ rights to water and land. These are fundamental to establishing and strengthening inclusive public-private and producers partnerships for agricultural value chains.

Within this context, there are two major groups that demand our focus. Firstly, there are women, rural women, who play a large role  in African agriculture and who are critically important to the nutrition and wellbeing of the family.  Their empowerment is a vital component of successful agricultural transformation.

Similarly, Africa’s youth – our young women and men aged 14 to 25 – this group constitutes a teeming 200 million in need of work. But with youth unemployment and under-employment rates above 20 per cent, their potential to contribute to society is being squandered. For them, developing the whole agricultural value chain – from production to processing, marketing and consumption – is a key element in creating jobs, wealth and the self-esteem that having a good job brings.

Now to number two:  The second requirement for agriculture to meet its potential is investment in rural infrastructure. This includes processing plants, warehouses, roads and ports – and getting affordable electricity and clean water supply into rural areas.

Infrastructure also includes ICT and services such as schools, medical centres, clinics and recreational facilities that can make the rural space attractive for youth.

And it also includes the infrastructure of markets — ensuring that farmers have market information and where appropriate removing the middlemen so that farmers are linked directly with markets and can obtain real value for their produce.

It is not enough to encourage farmers to produce more. If they cannot sell what they have produced; if they are forced to leave produce to rot on the road-side or on the farm because they cannot get it to market, then they will not produce next year.

Today, more than one third of the rural population of sub-Saharan Africa lives five hours from the nearest market town of 5,000 people. Across the continent, badly maintained roads are the norm. This is no way to develop markets. And it is no way of creating the jobs and conditions that would encourage our young people to invest their energy and efforts in building their own communities.

Equally important are processing and storage facilities. An estimated 10 to 20 per cent of crop production is lost in sub-Saharan Africa because of deterioration after harvest. On a continent where millions of our children go hungry every day, these post-harvest losses are a disgrace.

We often say that the hand-held hoe is a symbol of an antiquated, obsolete form of agriculture. But how often do we ask ourselves whether the policy and market environment is favourable enough for small farmers to move up the ladder, commercialize agriculture and invest in machinery and technology?

Why should a new generation go into family farming if all they see is their parents, aunts and uncles engaged in back-breaking work with so little return and no prospect of growth?

Of course, building infrastructure does not come cheap. It is estimated that it will cost around US$38 billion a year to fix Africa’s infrastructure deficit, and another US$37 billion for maintenance and operations. That amount of money seems daunting until you consider how much is lost every year through tax evasion, and illicit financial flows.

This leads to the third and final requirement – we need better fiscal management and enforcement of regulations. According to this year’s Africa Progress Report, illicit outflows cost the continent some US$50 billion. This is money that should be building the future of Africa.

Excellencies, ladies and gentlemen,

I do not wish to under-estimate the achievements of many African nations over the past decade, which are truly worthy of praise. Africa is home to some of the world’s fastest growing economies. Life expectancy is improving, child and maternal mortality rates are falling across the continent. More of Africa’s children now have access to education. In some countries, it is cheaper and easier to do business on the continent. Even creative industries are booming, such as my own nation’s Nollywood film industry.

And I am glad to say that agricultural growth is strong in countries like Ethiopia, Ghana, Mozambique, Rwanda and Tanzania. And initiatives such as the FARA led Science Agenda for Agriculture in Africa indicate a growing commitment to home-grown solutions instead of relying on others. Many studies have shown that returns on investment in agricultural research are very high, and African research is best placed to develop the varieties and technologies needed for the local environment.

But our pride must be tempered by reality. As long as Africa remains home to hundreds of millions of the world’s poorest, sickest, hungriest and most desperate of people, it will be known more for its failures than for its achievements.

As we debate how to transform African agriculture, we must think not only of today but of the years to come. Do we want to go down in history as the generation that allowed Africa’s economic success to benefit just a select few, while hundreds of millions of our people remained desperately hungry and poor? Or do we want to be remembered as the generation that transformed African agriculture and in the process built inclusive economies and opportunities for our children and grandchildren?

For their sake, I hope that the seeds of change that I have shared with you will be planted and nurtured — like the walnut tree, whose fruits are harvested after many generations, not by the person who first did the planting of the tree but by those who come after him or her.

We know what needs to be done. Let us do it now.

Thank you.

Addis Ababa, 3 September 2014