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We need more agribusinesses in Africa

African countries need to view agriculture as a business  and proactively identify and create markets for its products. 

By SCOVIAN LILIAN

Over a very long period of time, agriculture in Africa was regarded as a subsistence activity whose major aim was food security for households. Indeed, a big percentage of families across Africa produce food on small-scale for household consumption. However, there is much bigger potential for embracing commercial agriculture.

Modern farm inputs, including improved seeds and mechanisation, are severely limited with very unpleasant infrastructure, and this has given agriculture a bad name – a perception that farming in Africa is for the poor. Yet, Africa has fertile land for trillion-dollar agribusiness opportunities.

Africa is rising and a lot has been done and more is yet to come, but agricultural productivity is still underdeveloped in comparison to global standards. Family farms can now be the source and hub for a new generation of young entrepreneurs delivering innovations across the food system. Young entrepreneurs are very vibrant in the competitive world, embracing agricultural opportunities for business, for example in rearing; processing and discovering new farm inputs and innovations.

Wealth creation

Infrastructure in agriculture is a key pointer for wealth creation to leverage the continent’s existing assets and catalyse economic transformation. Vital infrastructure including electricity, water, roads and rail to transport agricultural and processed foods are critical for the transformation of the agricultural sector of Africa, mainly in rural areas.

This is because lack of these crucial infrastructure skyrockets the cost of doing business and has discouraged food-manufacturing companies from setting up in rural areas. African Governments should major in fiscal infrastructure incentives for food manufacturing companies to move into rural areas, closer to production zones. This can be achieved by developing agro-industrial zones and staple crop processing zones in rural areas.

Collaboration between governments and the private sector for incentives and agribusiness partnerships can boost agriculture too. With this, youths with innovative ideas will get platforms to try fresh ideas. This will also maximise output while spurring inclusive growth and development.

It is also important to learn the market curve in order to excel in agribusiness. With more than two-thirds of Africans relying on agriculture, many farmers lack knowledge on proper farming techniques and end up growing the same food crop year in year out. Some have land lying fallow not knowing what treasure lies therein.

The growth and adoption of technology has enabled end-to-end solutions to procuring inputs, linking producers to buyers, and making payments hence creating an open market for business to thrive. ICT is no longer a luxury in Africa, as Africans have begun to leverage new technologies and innovations in their daily lives.

Sustainable financial products

As agriculture is subjected to high systemic risks, engaging with the sector has traditionally been challenging for financial institutions, which are unable to adequately conceptualise and assess risk. As a result, these institutions have been unable to develop sustainable financial products for actors in the agricultural value chain.

According to a World Bank report, in 2009, only about 10 per cent of the total portfolio of commercial banks in Africa goes to agriculture, including agro-industries, and rarely extended loans to smallholders. This means that this is another untapped potential that Africans ought to embrace to help them yield high farm produce for business.

Consequently, farmers, notably smallholders, lack access to adequate financial services and this has left them to fully depend on meager savings and informal sources of credit. As a result, they face severe growth constraints.  As can be seen under its “Feed Africa” strategy, the African Development Bank will invest USD24 billion in agriculture and agribusiness over the next ten years, amounting to 400 per cent increase in financing, from the current levels of USD600 million per year.

Nevertheless, a growing number of farmers are turning around their fortunes by embracing improved seeds and inputs, value addition and plugging into global value chains. Farmers are increasingly viewing farming as a business and not just a way to subsist.

African countries need to view agriculture from an entrepreneurial perspective. They need to proactively identify and create markets for fresh produce and processed food products. If this is done, Africa will have taken its rightful place as a global powerhouse in food production.

It could well also be feeding a population expected to exceed 2 billion by 2050, mostly youths that might well turn agriculture into an entrepreneurial endeavor.

Scovian Lilian is a freelance journalist and writer based in Nairobi. Email: lscovian02@gmail.com

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