Redefining African Agribusiness
African countries’ government must work with private and social sectors to capture the optimal potential of their agricultural capacity and development.
- Sep 16, 2019
- 10 min read
African agriculture has proven to be a fundamental changing point, paving the way for the much anticipated “green revolution”. Most countries within the African continent are embracing market-responsive practices and dedicating more resources in the agricultural sector. The traditional large-investing countries are increasing their spending on this sector along with other major developing countries also commencing to participate in the industry. Private sector involvement in agricultural investment in Africa is increasing at an accelerated rate. Raised, fluctuating food prices accentuate the significance of these development endeavors, generating pressure as well as political room for policy makers to act.
In order to allocate and invest additional resources intelligently and accomplish Africa’s agricultural potential, effective planning at national level will be needed. Efforts have been made to support these advances. For instances, African Union’s Comprehensive Africa Agriculture Development Program (CAADP) focuses on aiding countries in acute assessment of their conditions and recognize investment prospects with maximum effect and profits. However, the introduction and implementation of cost-efficient agricultural development policies will pose a challenge. In order to achieve success, nations will have to deal with several technical obstacles in terms of restricted human resources, political demands, corruption, changing urgencies and deficient infrastructure.
Significant work has been done in recent years in the field of agricultural planning and employment improvement in more than ten African countries in the social, private and public spheres. The insights generated from these efforts can be categorized in four modules: focus on specialized, higher influence projects; divert greater consideration to final market agricultural products; Ensure well defined roles for private sectors; and envisage implementation from the initial phase. The problems associated with African agricultural development should be question of “what” to “who” and “how”.
Concentrate on Higher-Effect Plans
The programs devised by most countries are wide and dispersed, trying to encompass several industries and regions without committing adequate assets to the attempt. Agricultural investment programs in West Africa, for instance, have several initiatives spanned across several subsectors, consisting of 3 to 6 tasks per initiative. For any setup, such practice would cause management challenges, but it is particularly true for an organization existing in a post conflict region attempting to reconstruct elementary public facilities and depending on substantial donor assistance. The Majority of CAADP regions aims to establish productivity and production goals, however, in many cases, these objectives are not presented in a manner that governments can achieve – like quantity of warehouses to construct, lengths of roads to built or figure of commercialized farms to setup.
Governments must devise their action plans in an optimally focused and unambiguous manner. They should focus investment towards value chain, breadbasket areas situated for greater productivity expansions, or infrastructure corridor. Nations should follow a sequential flow, gaining insights from accomplishment in a sector or region and then move to investing in other areas.
For instances, an African country moved its attention from investment in staples to a small number of high-value harvests so that GDP growth can be accelerated along with increased revenue for small scale farmers. In a few years, half of its intended cultivated area has been successfully transferred from cereal crops to citrus and tomato harvesting, among other high-value yields.
The breadbasket methodology focuses investment effort within a specific geographical region. Multiple African nations, in last few decades, have started concentrating their investment effort in infrastructure, soil restoration and agricultural research. The approach is being adapted to current agricultural sectors and focuses on small scale farms. For instances, Mali is planning to undertake a model breadbasket scheme for Sikasso area. The objective is to significantly improve cereal productivity through improved yields and controlled expansion to unused land. Additionally, they also aim to focus on export efforts, construction of new warehouses and roads, and climate modification methods.
The Agricultural Improvement Corridor is another method used to develop industrial-level farms and support storage and processing capacity with a key infrastructure project at the center. In such schemes, investment in infrastructure and mining can provide momentum in agricultural development, endorsed by government which desire to develop overlooked area in their country.
Create Markets to Support Supply Measures
The majority of agricultural development programs concentrate on supply centric improvement like enhanced fertilizers and seed. Appropriate focus is not paid on the demand side, where value-added products end up. Planners must address this critical factor in order to increase production on profitable markets, otherwise it will be difficult to maintain a profitable economic activity.
After meeting the producer’s needs for household survival and the needs of local community, the three main sources of demand emerge – export markets, both national and international, local city marketplaces and food processing plants. For example Northern African governments assisted in high profit crops export to Europe by integrating technical support, political and economic measure and a pact with European Union to increase tax-free products for agribusiness producers.
The food processing industry holds appeal for various governments due to its dual benefit – it creates demands for agricultural goods and generates employment opportunities. US and European tariff countries may deter downstream processing for export goods, as they prefer raw over processed products. However, African nations can deal with this issue by reducing export tariff on such goods. Additionally, as urbanization increases in African countries, the domestic demand for processed goods will likely increase. The main concern is to certify that quality specifications and infrastructure support the competitiveness of the industry.
Countries with inadequate transport links are more likely to have limited export capacity to deliver their agricultural products. For instances, in East Africa, enhanced seed and favorable weather resulted in drastic increase in maize product. However, as the region lack export capability, farmers were unable to sell the excess crops. Additionally, higher domestic transport expenses and limited purchasing ability made it expensive to transfer the crop to urban centers or food shortage areas. As a result, the maize price dropped significantly, and farmers had no choice but leave the crops to rot in the fields. Any objective set by the government to improve cereal production, therefore, requires adequate investment in storage, transport and processing.
Generate Well-Defined Roles for Private Sector
It is not possible for governments to achieve their targets alone. Evidence shows that agricultural development schemes requires the enthusiastic participation of private sectors such as farmers’ organisations, warehouse operators, material suppliers, buyers and traders. Development schemes often disregard agri-dealers or middle personnel, but they do undertake vital coordination activities such as connecting small-scale farmers to end markets or offering appropriate information regarding soil environments. Governments and investors usually lack local data or abilities for such tasks. In addition, international trading companies can offer technological and managerial capabilities as well as buyers with more purchasing power. In what concerns to infrastructure private investments in this area, have an essential role to play in agricultural development.
There are numerous benefits associated with private sector agents, such as buyers and suppliers. These agents have means to gain organizational knowledge and capital. They must compete in a competitive market and learn swiftly to endure and generate profits. Private sector agents can connect smallholder farms to end markets efficiently. Large farmers, warehouses and agri-dealers can market product from several small-scale farmers at once, generating economies of scale with potential to provide smaller farmers with superior prices than manageable by themselves. Farmers’ group can provide similar service with good success rate.
Incorporating private sector agents in the agricultural development plans is not a quick remedy. When government’s capabilities are lacking, so are ones of social and private sector. In the previous years, governments have utilized this case to validify overlooking private sector. In Malawi, government introduced voucher-centered fertilizer subsidy, but farmers were only able to redeem them at government delivery locations. As a result, the private agri-dealers participation was reduced, and few dealer centers were ultimately closed. In short, private sector may create abilities if their plans are allied with government’s strategy.
Incorporate Execution within the Strategy
In order to implement agricultural development programs, governments must combine efforts with private sector agents and farmers in all departments. The majority of African countries experiences challenges with capacity restrictions, governments must devise definite and straightforward plans. They can decrease the agent strength by collaborating with aggregators.
Efficient employment of such programs commences with clear allocation of responsibilities. Corresponding departments at central government level has three major responsibilities: managing agricultural development schemes within the unit, coordinate efforts with other governmental divisions, investors, social and private sectors and supervising the implementation strategy progress, intervening if required. As every country is represented by different abilities and institutions, there can be no standard solution. The performance of each agency is more relevant than that of the government division they represent.
One method is to assign employment responsibility to the division that initially devised the strategy – usually agriculture ministry – financing capacity and using external experts per requirement. In this method, current institutions can be utilized without undercutting their performance. The challenge is that it is hard to modify the philosophy of large-scale institutions – to create the necessary effect, both private and public. In Africa, as capacity building programs have a varied track record, utilizing current facilities is probably the most suitable solution especially when the program includes reinforcing or increasing a strategy the governments have proven to have capability to undertake.
An alternative methodology is the establishment of a specialized delivery division for direct implementation. The approach is suitable when the government feels that the current ministry capacity is lacking or that the plans is innovative to an extent that it will serve better to establish a division with a clear agenda. This type of division is seldomly responsible for programs, but they do define goals, monitor progress and resolve coordination issues. As such unit is characterized by better salary packages and intriguing work, it may undermine the capacity of other departments. However, it has a potential to develop capacity in governmental organization.
Many countries are contemplating employing delivery-unit framework to support agricultural evolution. Such divisions can prove to be a contact for investment and government institutions, monitor performance of critical schemes and serve as an intermediate agent between private and public sector.
In view of the capacity constraints faced by the majority of African nations, successful agricultural development programs must be more focused and less ambitious. These plans must be different for every country based on their capacity conditions; hence a common standardized employment is not practical. However, agricultural development can reach new heights if government collaborated with all relevant stakeholders, focusing on few promising plans with recognized sources of demand and suitable investment opportunities regulated by an agile implementation unit.