World Bank | 16 April 2011
by Obiageli Ezekwesili
There is a jobs cow waiting to be milked in Africa. It is agriculture and agri-business.
In its initial condition, Africa’s agriculture bears a striking resemblance to its telecom sector in the late 1990s. A decade on, a combination of right policies and strengthened regulatory framework has seen the sector open up to free enterprise, attracting about $60 billion in private investments and leading to today’s ICT boom: 450 million mobile phones in Africa, which is more mobile phones than Canada, Mexico and the USA combined.
As with telecom, the “early movers” into Africa’s agriculture are likely to reap the most rewards. And we are seeing significant interests from Middle Eastern, North African, South African and Asian firms seeking to establish commercial farms and agri-businesses along the value chain.
With only one-fourth of Africa’s arable land (50% of global arable land) currently in use accounting for a mere 10% of global food production, an agriculture and agri-business sector in full bloom is likely to result in even more transformational change in the lives of the world’s bottom billion than ICTs.
This is not some distant, future dream. Even diehard afro-pessimists now concede that the global tide is turning in Africa’s favor, revealing a virgin market of one billion people, and a potential trillion dollar economy with enormous staying power and no less than 29% of the world’s youth by 2025.
But timing matters, and huge windows of financial and economic opportunity are open to the pacesetters. Agriculture, I must reiterate, is not only Africa’s “next big thing.” It is already its life wire: it is Africa’s leading private sector. Some 70% of Africans depend on it for their livelihoods, and it accounts for about 40% of the region’s GDP.
During my dialogue last week with hundreds of young civil society leaders from 18 African countries, I was not surprised by their optimism about agriculture. Their eagerness to be involved in the sector was as infectious as it was enlightening for me and my colleagues. However, they were very clear as to what must be done by their governments and partners, to make agriculture work for jobs. I would summarize their views in four major areas.
First, governments (traditional, local and national) need to guarantee land rights for farmers, ensuring that large commercial farms – which are bound to employ fewer people -- co-exist with the millions of smallholder farms – which preserve and maximize the job opportunities the sector offers, as well as provide the nucleus for establishing small and medium-size agri-businesses along the value chain. Attention must also be paid to ensure that male farmers – often the first to hop on a tractor and the ones most likely in rural areas to manage the money flowing from agriculture -- do not marginalize women farmers, who hold the key to food security.
Valorizing land and ensuring that Africa’s banking and financial sectors recognize it as one of the most tangible economic assets of Africa is just as important as building and maintaining adequate infrastructure like farm-to-market roads.
Second, young Africans do not want to be the farmers their grandparents were: hoe in hand, tilling the soil in scorching sun all year round, harvesting barely enough to feed, shelter and house their families. Making the sector more attractive to the African youth – seven-to-ten million of whom join the labor force each year – must entail modernizing agriculture, raising productivity, boosting incomes, and expanding links to export markets.
Smallholder farmers would need access not only to more productive seeds and other farm inputs, but also to irrigation, research, technology and finance. Seed funding, notably in the form of grants, patient capital or loans from commercial banks guaranteed by some facility or the valorized farmland could make the difference between a farm start-up failing or prospering. Obstructionist policies, such as price controls, food export bans, and restrictions to cross-and within-border trade, need to be eliminated.
As one participant from Sierra Leone put it: “The market is the problem,” he said, complaining about the ban on his country’s food exports to such neighboring countries as Gambia, Liberia and Senegal.
A third priority must be that of linking farmers to markets, including the sale opportunities that school feeding or food voucher programs can generate by buying from local farmers. Pilot initiatives like the World Food Program’s “Purchasing for Progress,” which has sourced about $1 billion worth of humanitarian food directly from African farmers over the last three years, would need to be expanded. Electronic vouchers, provided through “scratch cards” similar to prepaid phone cards and mobile phone-enabled platforms, have offered funding for food purchases for the poor in Liberia.
Connecting African farmers to Internet-based platforms such as the Ethiopian Commodities Exchange, which made deals worth $1 billion in its first three years of existence would be as essential as linking these farmers to giant global retailers like the U.S.-based Walmart, whose foundation plans to plow about $1 billion in Africa in order to have direct influence over its supply chain. So, too, would be an integrated approach to infrastructure development that combines highway or railroad construction with the setting up of vast agricultural plantations under the so-called “development corridor” model.
Devising these and other smarter ways of reaching markets and consumers would help trim the estimated 35% of food supplies lost on the continent during the post-harvest, transport to market, storage, processing and conservation phases.
Fourth, reforms across Africa will work only if global food markets work for Africa and unfair trade practices are ended. The issue of subsidies by developed countries -- currently estimated at $360 billion – will need to be resolved. Young African farmers entering the sector will prosper not only if they can trade, but if trade is fair and if mechanisms to promote transparency on existing stocks help prevent speculators from using food as a commodity to make money on the backs of farmers.
Success would require an integrated approach such as that offered within the Comprehensive Africa Agriculture Development Program (CAADP) framework – with the strategic pillars of land and water management, markets and infrastructure, food security and vulnerability and agricultural technology. It would also require significant investments. The Food and Agriculture Organization (FAO) says the $22 billion pledged by the G20 at the Pittsburgh Summit barely gets things started. However, while foreign investors and donors can help, African countries which committed in Maputo in 2002 to devote at least 10% of their national budgets to agriculture are those who must step up to the plate.
Mali, which currently devotes 13% of its national budget to the sector, is one of very few countries that have either met or surpassed this target. Too many other countries invest far too little. Cameroon, for example, devotes an estimated one percent of the national budget to the agriculture sector, although the sector employs 70% of the population and accounts for 40% of the country’s GDP. Without significantly higher investments, the sector will not deliver on the millions of jobs it promises. Much worse: the 2002 World Food Summit warned that business as usual in agriculture could mean that the aim of halving world hunger by 2015 will only be met in 2150.
