Outlook: Africa's changing agriculture landscape

Public expenditure is the main driver to reduce poverty, fight hunger and accelerate the transformation of the agriculture sector

Image used for illustrative purpose.

Image used for illustrative purpose.

Getty Images

Surging commodity and food prices are hurting sub-Saharan African countries at a time of weak growth. As more go hungry and malnutrition continues, achieving the United Nations’ Zero Hunger initiative to eradicate poverty from the continent by 2030 will prove even more challenging.

Even before COVID-19 decimated economic growth and pushed millions of Africans below the poverty line, some 690 million of the continent’s citizens were struggling with undernourishment, according to a new report by the United Nations Food and Agriculture Organization (FAO). The African Development Bank expects the continent’s $35 billion food import bill to rise to $110 billion by 2025.

In the continent, public expenditure is the main driver to reduce poverty, fight hunger and accelerate the transformation of the agriculture sector, but the FAO report has found that the sector remains underfunded.

“On average, 21 percent of budgets devoted to food and agriculture were not spent, suggesting that large financial commitments are not sufficient to enable a country to transform its agricultural sector,” says the report, which focuses on 13 African states including Ethiopia, Uganda and Tanzania.

COVID-19 further exacerbated the situation with an economic downturn, and the number of undernourished Africans increased over five times higher than the highest peak in undernourishment over the last two decades.

“About one in five people (21 percent of the population) was facing hunger in Africa in 2020, more than double the proportion of any other region,” the FAO said in a separate report titled “The State of Food Security and Nutrition in the World”. It added: “This represents an increase of 3 percentage points in one year.”

In addition, global supply chain issues mean that Africa, which remains reliant on cereals, vegetable oil, dairy products and meat, suffered from tight inventory levels and shortages of certain foods. While undernourishment is set to recede in other parts of the world next year, it will remain stubbornly high in Africa and could even rise.

Gateway for growth

Against this backdrop, governments, domestic stakeholders and international businesses have to find ways to expand the continent’s food basket. The recently concluded 54-member African Free Trade Area could serve as the gateway for growth in agriculture products.

“The African Free Trade Area (AfCFTA) has the potential to lift millions of people out of poverty and end food insecurity in Africa,” the FAO noted. “One African market has the potential to create a better, more competitive business environment for agriculture, encourage more investment and ultimately a modern, dynamic, productive, inclusive, sustainable and sustainable agricultural sector that can lift millions of Africans out of poverty.”

The continent is not without its opportunities: It is home to 60 percent of the world’s arable land, an especially prized resource given that climate change is changing the environments of many other regions. However, funding, technological innovations in irrigation, best practices in agriculture and access to markets are vital for the continent’s food industry to realize its potential.

“Much investment will also be needed in basic infrastructure, such as roads, ports, and electricity, plus improvements in policies and regional trade flows,” McKinsey&Company observed in a 2019 report, which estimated that $65 billion will needed in the sub-Saharan Africa region to meet irrigation requirements along with another $8 billion in investments in basic storage facilities.

The Alliance for a Green Revolution Africa (AGRA) is looking to address such needs. The fund has mobilized $1.4 billion since 2006 and aided 25.1 million small farmers, 30 percent of whom are women.

Its successes include the Southern Highlands of Tanzania, whose poor crop yields were transformed with a $2 million investment to facilitate the integration of core agricultural systems including seed, fertilizer, agro-dealership, inclusive finance.

Meanwhile, Kenya’s Smallholder Horticulture Empowerment and Promotion Approach offers technical and soft skills training to influence farmers to change their mindsets and behaviour towards market-oriented horticulture.

But much more needs to be done.

The FAO recommends strengthening each state’s capacity for food and commodity production, as regional markets will provide a solid foundation for nations to boost regional trade. “Policies and programs should encourage the private sector to increase new investment, add value to products, compete with imported goods, and create jobs,” it noted.

The McKinsey report identified Ethiopia, Nigeria and Tanzania as some of the most promising Sub Saharan Africa agricultural markets, given government involvement in agriculture, a favourable environment, and factors such as improved input adoption.

Digital disruption is also helping change Africa’s agriculture landscape and drive innovation and growth. There are more than 280 agritech ventures in Africa, according to Briter Intelligence.

“Blockchain, artificial intelligence, and other innovative frontier technologies are improving the efficiency and transparency of transactions and exchanges along the agro-food value chain,” says the African Development Bank. “3D-printed and lab-grown foods have opened up possibilities for more sustainable and ethical food chains, which should put less pressure on environmental resources.”

(Reporting by Syed Hussain, editing by Seban Scaria)

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here

© ZAWYA 2021

More From Global