Green Revolution in Africa’s (AGRA) annual Africa Agriculture Status Report (AASR) says agriculture will be Africa’s quiet revolution.
According to the report focus on SMEs and smallholder farmers is poised to create high productivity jobs and sustainable economic growth that failed to materialise from mineral deposits and increased urbanisation.
AGRA says the power of entrepreneurs and free market is driving Africa’s economic growth from food production, as business wakes up to opportunities of a rapidly growing food market in the continent.
The industry is anticipated to be worth more than $1 trillion each year by 2030 to substitute imports with high value food made in Africa.
Despite 37 percent of the population now living in urban centres, most jobs have been created in lower paid, less productive services rather than in industry, with this service sector accounting for more than half of the continent’s GDP.
AGRA believes smart investments in the food system can change this picture dramatically if planned correctly.
Dr. Agnes Kalibata, President of AGRA said the continent has the latent natural resources, skills, human and land capacity to tip the balance of payments and move from importer to exporter by eating food made local.
“This report shows us that agriculture involving an inclusive transformation that goes beyond the farm to agri-businesses will be Africa’s surest and fastest path to that new level of prosperity,” Kalibata said.
She said Africa’s agricultural revolution needs to be very different to those seen in the rest of world.
“It requires an inclusive approach that links millions of small farms to agribusinesses, creating extended food supply chains and employment opportunities for millions including those that will transition from farming.”
Kalibata said the new approach is in contrast to the model often seen elsewhere in the world of moving to large scale commercial farming and food processing, which employs relatively few people and requires high levels of capital.
The report says to feed the continent is an opportunity that can be met by many of the continent’s existing smallholder farmers.
Currently part of this growing demand for is met by imports on the continet.
“These amount to $35bn p.a. and are expected to cost $110bn by 2025 unless Africa improves the productivity and global competiveness of its agribusiness and agriculture sectors.”
The report acknowledges that the private sector holds the key to the transformation of the food system so far.
“Impressive value addition and employment is being created by SMEs along value chains in the form of increased agricultural trade, farm servicing, agro processing, urban retailing and food services.
Large agribusinesses like seed companies, agro processors and supermarkets are also playing an increasing role in the food value chain in many regions,” said Peter Hazell (IFPRI), the technical director of the report.
However, the study is clear that governments support is needed to both stimulate and guide the transition.
“As a high priority, governments need to create an enabling business environment and in particular, meet targets to invest ten percent of GDP in agriculture, agreed at the 2003 African Union (AU) Summit as part of The Comprehensive Africa Agriculture Development Programme (CAADP).”
The authors also call on governments to stimulate new private public partnerships for more innovative financing and insurance provision which can lead to increased resilience for farmers and their households.
While globally agricultural insurance is a $2 billion business, Africa accounts for less than two percent of the market.
Other fiscal stimulus measures suggested include improving financial regulations, developing better credit-reporting processes, opening up special economic zones, supporting digital warehouse receipt systems and sharing risk with lenders through credit guarantees and matching funds.
The report also points out opportunities to target presented by digital technology such as satellite tracking and big data.
“These can help locate new high value agri-economic zones and smarter financing and food security polices, especially in the face of climate change.”
AGRA says the private public partnership will be essential to provide the trinity of high productivity employment, sustainable economic growth and food made in Africa for Africa and the world.