Africa’s broken food security value chain: unravelling the hidden fortune

Building on what has proven to work in Africa will go a long way in ensuring that agriculture not only feeds Africa, but promotes inclusive growth and livelihood generation

Despite holding 65 per cent of the world’s arable land and ten per cent of internal renewable fresh water sources , Africa’s food import bill, excluding fish, was at US$35billion in 2011 and imports of food exceed exports by thirty per cent . In addition, post-harvest losses (PHLs) alone account for food losses worth US$4 billion annually . This is food enough to feed 48 million people annually . It is estimated that the annual PHLs in cereal grains, roots, tubers, fruits, vegetables, meat, milk and fish for SSA were valued at more than US$48 billion in 2010 . When juxtaposed with Africa’s US$35 billion food import bill , recovering these losses would essentially eliminate the need for imports without increasing production. Optimising this food value chain could be the next cash cow for unleashing jobs and paving the way towards real inclusive growth in Africa.

Africa: a continent at a cross roads
The duality in African growth is worth pointing out. Over a decade, Africa has sustained an average GDP growth of 5.1 per cent projected to increase. In addition, the middle class in Africa is reported as expanding, with approximately twenty per cent in the continent having daily incomes exceeding US$ 10. However, amidst this impressive postulation, tremendous challenges remain. Poverty levels have hardly shifted . Almost one in every two Africans lives in extreme poverty and most of the world’s poor will be living in Africa by 2030 . The youth age 15 – 25, who are at a population count of 200 million , are projected to double by 2045 and are largely unemployed and constitute an impending threat to stability in the continent, a possibility acknowledged by the African Union . Exacerbating all these challenges is climate change, which threatens to reverse all developmental gains and stifle further progress according to the 2015 Africa Adaptation gap report .

The optimisation of a broken system
The 2015 Africa Adaptation gap report clearly pointed out that climate change will reduce up to forty per cent of yield in major staples across Africa, with serious implications on food and nutritional security. But working with nature and applying Ecosystem-based Adaptation (EbA) techniques can reverse this trend, and by embracing ecosystem-based approaches and technologies on African farms we could ensure sustainable increases in yields of up to 128 per cent. This sector has immense unexploited socio-economic potential and is the only sector that is two to four times more effective in reducing poverty than other sectors. The African food market is projected to grow from US$ 50 billion in 2010 to US$ 150 billion by 2030 . However, the full potential of this sector needs to be optimised.

Improving market and population access to food through better roads

Poor roads not only contribute to post-harvest losses , but also limit access to available food , further compounding Africa’s food insecurity. In rural Africa, less than fifty per cent of the rural population lives close to adequate roads, which compounds transportation of inputs and produce. Reliable transportation in rural areas is critical in connecting farmers to markets and social service networks, hence ensuring growth and inclusivity through agriculture. Considering that in sub-Saharan Africa up to seventy per cent of the population resides in rural towns and villages, investment in rural roads as opposed to highways will have a higher benefit-cost ratio . Therefore, to optimize agricultural production, investment should focus on enhancing the connectivity of the rural towns and villages where farmers reside with profitable urban markets.

Innovative mobile technologies that link rural farmers with large-scale buyers with potential to deploy effective vehicles ensuring minimal loss on the road (e.g. refrigerated trucks for perishables, or heavy duty trucks that can withstand poor roads) present a potent solution. This has real potential, given that Africa is the fastest-growing mobile phone market in the world . To date, a number of agro-based mobile innovations linking farmers to potential markets already exist. These can be modified to incorporate transport dimensions.

Reform trade practices and policies to unlock Africa’s trade potential and enhance inclusivity

Africa can earn an extra US$ 20 billion annually from agriculture if it reforms handicapping trade policies and practices. Among practices the region should reform are production practices that cause Africa to produce what it doesn’t consume and consume what it doesn’t produce . By removing a range of non-tariff barriers to trade , including restrictive rules about origin of goods, import and export bans and costly licensing, costs can be significantly reduced. In addition, it currently takes an average of 38 days to import and 32 days to export goods across borders in sub Saharan Africa—two of the longest wait times in the world.

Addressing these bottlenecks will go a long way in ensuring that the region will benefit from trade in its agricultural produce, hence boosting the agriculture sector which currently employs up to sixty per cent of labour in the continent, and thereby enhancing economic inclusivity.

Africa can earn an extra US$ 20 billion annually from agriculture if it reforms handicapping trade policies and practices. Photo: AfricaGreenMedia.co.za

Leapfrogging and expanding opportunities for Africa: airing opportunities through African airspace

While inadequate road, port, and railway infrastructure often constrain the rapid and efficient transportation of export goods as well as passengers, reforming air transport policies to facilitate an ‘open sky’ model for the African commercial airspace could offer an alternative through the implementation of the Yamoussoukro decision to set the legal basis for a liberalised commercial air space in Africa. The Second Africa Adaptation gap report projects, among impacts to African cities, increased risk of flooding and sea level rise which will potentially displace millions and damage infrastructure and disrupt road and rail transportation.

This could spiral, impacting trade infrastructure and routes and causing potential losses to African economies that could range in the millions or billions of dollars. In such a scenario, affordable air transport will go a long way to ensure that intra-regional connectivity and mobility is not completely paralyzed. A liberalised air space will result in air traffic growth, which has wide-ranging benefits including expanding investments, trade, and tourism, which translates into enhanced economic growth, productivity, and job creation in the long run. With African open skies, aviation represents an authentic tool for growing domestic and international trade, including trade in agriculture and affordable transportation in the continent, thus contributing toward optimizing the sector.

ICTs: improving market access and finance
Mobile innovations not only enhance access to markets but also finance and inputs. Testaments of how application of mobile technology is improving productivity of the agro-value chain in Africa have been demonstrated in several countries. In Kenya, the M-Pesa innovation has promoted financial access to over 15 million Kenyans in just six years. In a continent where up to 75 per cent of population has access to a mobile phone while just about 25 per cent have access to formal bank accounts, mobile innovations represents a great opportunity by which financial inclusion in Africa can be fostered to enhance agribusiness. The MLOUMA in Senegal connects farmers to food purchasers; M-FARM in Kenya help farmers collectively buy inputs directly from manufacturers and sell produce directly to markets; and E-VOUCHER in Zimbabwe helps cash-strapped small scale farmers access agricultural inputs, among other innovations. Going forward, the contribution of these innovations to optimizing agribusiness value chains in Africa will grow as innovations are up-scaled.

Photo: MFarm
Engineering an entrepreneurial spirit in African youths

Youth engagement in agribusiness has potential for unleashing job opportunities along the value chain. Examples from Ethiopia, Lesotho, Nigeria, and Tanzania, among others, substantiate this. In Ethiopia, a young farmer is applying irrigation, and in the process, produces fruits and vegetables on 25ha and cereals on another 12ha, and employs fifty young persons. In Lesotho, a young entrepreneur is leveraging livestock production to generate income, create employment, offer training services and expand into additional businesses in other sectors. In Nigeria, an entrepreneur who started off by processing fruits into snacks and packaging them attractively expanded business and within three months opened an additional twenty REELFRUIT retail outlets in Lagos and Abuja. In Swaziland, a woman entrepreneur is producing drought-tolerant satisfied seed. In Tanzania, three entrepreneurs in milk processing have expanded their enterprise from a processing capacity of 30 litres to a capacity of 750 litres, with over two hundred milk suppliers. These are among the many examples of agro-enterprises that are creating jobs and expanding incomes within communities in Africa.

Unravelling the Hidden Fortune
Building on what has proven to work in Africa will go a long way in ensuring that agriculture not only feeds Africa, but promotes inclusive growth and livelihood generation. Though this sounds like a dream come true, it is imperative that we all commit ourselves at all levels of policy–institutional, regulatory and in financing–for the poverty, malnutrition, food loses, poor markets, and poor roads that we see today must be transformed into the wealth and fortunes of tomorrow.

Dr. Richard Munang is Africa Climate Change & Development Policy Expert. He tweets as @RichardMunang

Mr. Robert Mgendi is the Adaptation Policy Expert