Agriculture has been a dominant part of Africa’s economy, being the biggest employer and indeed the biggest private sector segment. But poverty and food insecurity have been the bane of the continent. Africa now imports close to $35 billion worth of food. At the same time Africa has the greatest levels of uncultivated arable land in the world. Agriculture has the potential to create 310-350 million jobs, yet young people are dying in deserts and drowning in high seas in search of opportunity!
This is a contradiction signalling that agriculture’s potential still needs to be unlocked. The contradiction has not been lost on policy makers and other leaders including development partners. Indeed, the challenges of African agriculture are well known. They include low productivity, highly under-developed value chains characterized by high post-harvest losses, high transport costs and poorly developed processing sectors. Yet, though significant resources have been poured into agriculture over the years, mainly to improve productivity, the green revolution has remained elusive.
A new concerted effort backed by new research, new leadership and new approaches may provide missing pieces in the agricultural policy jigsaw puzzle. This was the key motivation behind the Leadership for Agriculture Forum held in Abidjan at the African Development Bank (AfDB) headquarters on 28 November. The forum aimed to unlock synergies from three crucial initiatives underway to unlock the potential of agriculture in Africa.
The first is ACET’s recently launched African Transformation Report, which takes a fresh look at the agriculture sector and points to what is needed to make agriculture the engine of growth that it should be. The report, titled Agriculture Powering Africa’s Economic Transformation, makes the point that land tenure security accompanied by a green revolution package of inputs are key to improving productivity, but also more crucially addressing risks and innovations in financing, which in turn is key to moving agriculture from a subsistence orientation to a modern business one.
In the second initiative, the AfDB has agricultural modernization and upgrading agricultural value chains as its centerpiece policy under its Feed Africa: Strategy for Agricultural Transformation in Africa 2016-2025. Through this effort, it will seek to mobilize $315-400 billion over the next 10 years to transform 18 most promising value chains.
Thirdly, the Rockefeller Foundation, which was behind Asia’s Green Revolution, as well as the establishment of the Alliance for a Green Revolution in Africa (AGRA), has created the Leadership for Agriculture Platform to help further drive transformation by bringing together key stakeholder actors to share learning and knowledge.
This partnership thus brings together three pieces that are key to transformation – solid research that points to clear policy options, a resource mobilization strategy and a leadership approach that is key to driving transformation. Added to these is the impetus brought by two other partners in the Leadership for Agriculture Forum initiative, the Initiative for Global Development, which seeks to harness the power of the private sector for sustainable development and inclusive growth in Africa, and Grow Africa, with its emphasis on private sector investment in African agriculture.
By bringing these crucial pieces together and creating a more enhanced platform, the goal of unlocking African agricultural potential is now much more feasible as the newly created forum creates the vehicle that was missing in the previous attempts. ACET has already recognised the need for such an approach and created the Pan-African Coalition for Transformation (PACT).
In addition, PACT recognises that there is much more to be done. Innovation is clearly the way forward. Challenges are well known, what we do not have is a good grasp of innovative solutions to address the challenges. Greater effort is therefore needed to search for new solutions being developed out there and work out a model to scale them up.
For instance, innovations in lending to agriculture are pointing to new lending models that follow farming cycles. One Acre Fund, for example, uses new intermediaries like middlemen to act as agency bankers and even governments are finding new vehicles for innovation. The Nigeria Incentive-Based Risk Sharing System of Agricultural Lending (NIRSAL fund), for example, de-risks agriculture by subsiding risk and thus catalyzing lending from commercial banks.
The government’s outlook on agriculture is at the center of their economic policies, much like fiscal and monetary policies are. Indeed, agriculture should not be seen as a sectoral policy. The macroeconomy is tied to the performance of agriculture as it determines the balance of payments position and crucial to wage levels since food is a key expense of households.
As we think of agriculture, nutrition must take center stage. Africa loses 1% of GDP growth from stunted growth due to poor nutrition, with the result that many children’s brains do not develop to their full potential. A tragic and permanent loss of human capital.
The untold story of agriculture is agribusiness, which is projected to grow to $1 billion by 2030. However, this will require significant investment to upgrade value chains. Thus, there is the need to catalyze private sector investment. This underscores the need for policies that make it easy to do business. To underscore the need for a focus on developing agribusiness, the World Bank has developed the Enabling the Business of Agriculture Index that measures and monitors key elements of countries’ regulatory framework and the impact of doing agribusiness.
Dr. Julius Gatune Kariuki is Senior Research & Policy Advisor at the African Center for Economic Transformation (ACET).