Why Africa needs more Agri-business
Africa’s economy has been steadily on the upward trajectory, reaching an average growth of 5%. If such growth is maintained the GDP should triple by 2030. Yet the impact of such growth has not been felt, in terms of job-creations or tackling inequalities. Beyond growth, the continents needs trans-formative sectors to achieve industrial potential. Overtime, the sector has been further hampered by economic structural adjustment programs and bureaucratic processes as opposed to value addition noting that the bulk of export revenues of Africa can be accounted from the agriculture Sector.
Agricultural production is one of the key economic sectors which contributes to the GDP of a majority of African countries. Most households rely on agriculture 75% for their livelihoods. Several opportunities for agribusiness exists that have potential to change our over-reliance on agriculture for primary products. Africa population growth is viewed as an asset by 2050 and agribusiness will meet the populations and consumer demand for food. The change will present immediate backward linkages with other thriving sectors of the economy through commodity based industrialization, increase in bulk revenues and will double employment opportunities. Despite possessing a huge percentage of arable land, it has the lowest output in agricultural productivity. Out of about 60 percent, Africa uses 10 percent of its global agricultural output potential.
More is needed in place other than good policies, since the continent is well endowed with numerous natural resources. Africa’s productivity can improve significantly for that matter if the necessary subsidies are made available. An example can be the provision of basic infrastructure to farmers and entrepreneurs to support them practice better commercial farming to enable a profitable and competitive agribusiness sector. We should also consider tapping into the huge water resources that exist to provide irrigation systems which has the potential to increase agricultural products output three-fold. Collaboration between governments and various stakeholders in the sector can also consider providing a stable market place and better financial amenities to make it more lucrative, which will make emerging countries increase their demand for farm products . A vast opportunity for better trade-links will also emerge from ensuring we put these measures in place. The change from primary production to modern integrated agribusiness will ensure lucrative opportunities for small scale farmers, a majority of whom are women. This will further generate job opportunities for them.
Growing opportunities invested in agribusiness will overcome current challenges created by poor-farm level production leading to a vibrant agribusiness sector by increasing high agricultural value-add products while the farmers still continue to engage in popular production of farm products, like fruit vegetables, coffee, tea, cocoa, livestock and honey products. It also helps to reduce transaction costs related to fragmented markets and price control. If governments and stakeholders concerned in the facilitation of the trade can remove tariff barriers and policies of banning and abandoning products to make domestic markets become more attractive. Sustaining the continent’s energy reserves is possible. Africa’s energy use per-capita is just under 2 percent. This is a quarter of the global average despite having a larger percentage of consumption throughout the continent. With a growing energy demand and falling energy costs, Africa has the potential to deliver competitive energy for rural and urban areas. Lighting up the rural communities will in addition to improving lives help scale up agribusiness prospects.
Fast changing technological inventions in Africa means it can change its agricultural outputs and the quality of the products. For example communication and banking applications are playing a crucial role in linking small scale traders to buyers. The know-how and innovation has the potential to change the competitiveness of agribusiness to a high level.
Lastly, there is need to put in place a clear and robust policy framework that will help overcome constraints on Agro-industrialization. This move will help encourage investments in the field of agribusiness. The above efforts should also include additional components for example:
- Ensuring the right combination of agricultural, trade and industrial policies to encourage enough production for raw material.
- Facilitate efficient distribution of produced products
- Ensuring the right to own property are enforced to boost investor confidence
- Pursuing varied sources of funding (sovereign and domestic.
- Creating incentives for private sector to invest in the agribusiness sector
- Using public-private stakeholder partnerships to enable capacity building through technical skills training.
