Agriculture in Africa: Great Hopes and Great Challanges

Agriculture in Africa: Great Hopes and Great Challanges

Agriculture in Africa may prove to be pivotal in the continent’s development, much more so than oil, gas or minerals. It has the potential to transform Africa’s role in the international economy and its internal political cohesion. But this potential comes with huge challenges, because before agriculture can be transformative for African societies and economies, it needs to be transformed itself.

“Agriculture is sexy”, at least according to Bruno Wenn, managing director of German financial institution Deutsche Investitions- und Entwicklungsgesellschaft, speaking at the International Economic Forum on Africa in Paris in October. Practically all international organisations tend to agree with that statement, although it is usually framed in more technical terms.

Speaking at the same event, Carlos Lopes, executive secretary of the United Nations Economic Commission for Africa, nicely summed up the reason for everybody’s hopes for the African agricultural sector: “We have the largest reserves of arable land in the world, 60 percent, and the lowest productivity where it is already used. That results in an enormous potential to feed the world.”

A Moral Imperative and Good Business

Feeding the world is high on the international agenda because while we produce enough food for everybody at the moment -- hunger is a problem of distribution, not production -- this could change over the coming decades. The world population will grow by another two billion people until 2050 and with increasing wealth in countries like China and India, many more people will demand resource intensive foods like meat. While there is enormous potential in reducing food waste, increasing production will likely be necessary to ensure continuous abundance.

This makes developing the agricultural sector in Africa both a moral imperative and lucrative business. Additionally, increasing food production in Africa would have many political advantages for the continent. It would cut dependence from outside powers like the United States for basic foodstuffs, allow for a strengthening of regional trade networks and secure political stability. “Bread riots” due to high prices and governments’ inability to continuously subsidize imported grains are a common occurrence in many countries across the continent.

Apart from foodstuffs, there is also a great global appetite for agricultural commodities. Cut flowers for the European market, cocoa and coffee for the world’s café’s and cotton from West Africa all promise earnings for governments and businesses on the scale of oil and gold.

The development community is also pushing for the transformation of the agricultural sector. Africa’s agriculture is dominated by smallholders and increasing their income potential could contribute enormously to lifting broad sections of African societies out of poverty. Lastly, while economic reserves of “hard” commodities like oil, gas and gold are limited to relatively few African countries, agriculture is possible across the continent and will still be when all current oil fields have long been depleted.

Challenges Not Taken Seriously

But the transformation of the agricultural sector is also fraught with challenges that make the common “resource curse” look like a minor policy issue. And while problems associated with the extraction of hard commodities are commonly accepted and high on the international agenda by now, many issues of the agricultural sector are still treated like second-class citizens in the realm of policy making.

The raw potential of agriculture in Africa is also one of its main weaknesses. The reason for the continent’s low agricultural productivity are decades of neglect and mismanagement, reaching back to colonial times. The necessary infrastructure to develop the sector -- roads, storing facilities and ports -- are mostly in a desolate condition and rebuilding it will take much more investment and time than constructing that one pipeline or rail track to exploit the latest oil or mineral deposit, due to the decentralized nature of agricultural production.

For example, food worth $4 Billion is wasted in Africa annually due to insufficient processing, storage and infrastructure. This corresponds to enough food to feed 48 Million people.

African states will also need to figure out their individual agricultural strategy. Some, like Côte d’Ivoire, are already major players in producing commodities like cocoa. All countries will have to balance the temptation of producing hard-currency-earning export products with the necessity of providing basic food security for their population. A possible solution to make this policy decision less of a dilemma would be a tighter regional integration of agricultural trade and production, but this process has just started and will probably need decades to come to fruition.

Governments will also need to make policy decision about their place in global agricultural value chains. As little as 40 per cent of the world market price of cocoa makes it into the hands of cocoa farmers, for example, severely limiting the potential profit for countries exporting the raw product. Similarly to recent “local beneficiation” legislation introduced by Botswana and South Africa for hard commodities, developing policies to capture a greater share of value added on “soft” agricultural commodities needs to reside high on Africa’s political agenda to enable a true transformation of the sector.

Betting on the production of soft commodities for export also reintroduces the question of economic independence into the debate. As Bruno Wenn pointed out in Paris: “Whenever we in Europe decide to change regulations [on agricultural production] due to health policies, it might be a nightmare for small farmers in Africa to comply.”

This can turn out to be a real problem, especially because protectionism is well established in international agricultural politics. If the European Union for example decides that it needs to protect its domestic production of fruits from cheaper Kenyan exports, all it potentially has to do is change some of its regulations in a way it knows smallholders in Africa will have a hard time complying with. This type of behaviour is certainly not without precedent and presents an enormous risk for producers.

Another sensitive issue that has already made into the reports of several large advocacy organizations is the practice of land-grabbing. Commonly only discussed in the context of foreign investors buying large tracts of land in Africa for rock-bottom prices, there are also a few famous cases of African elites themselves developing a taste for land ownership. The Kenyatta family in Kenya for example is probably the largest landholder in the country and many open questions remain about the legality of these acquisitions. With prices for virtually all agricultural products set to rise on the world market, we can expect more investors -- from Africa and abroad -- to develop a taste for land ownership. And because large-scale farming is often associated with increased productivity, although there is no inherent causation in reality -- governments and international institutions might be happy to support this process from a policy perspective.

African societies will need to work out for themselves how to deal with this dynamic. In the context of still unclear ownership, pervasive corruption, high level of distrust towards authorities and the emotional component that connects land issues and identity, this is certainly not a trivial task.

Finally, much of the “green revolution” that has made transforming agriculture in India and other developing countries possible over the last decades relies on extensive use of fossil fuels for fertilizing, intensive use of soil and water resources and formerly pristine habitats as well as genetically modified organism. Everything on this list presents serious environmental concerns and using the same methods to develop the agricultural sector in Africa would have profound consequences on local ecosystems.

Charting a New Course

It is about time for African governments, societies and businesses to solve these issues and in some respects, progress has already been made: large sums are invested into infrastructure by those countries who have the money to do so; Countries like Kenya, Ethiopia, Morocco and South Africa are already reaping the literal fruits of successfully positioning themselves as extensions of European agricultural markets; Mobile technology delivers the foundation for an ongoing revolution of financing small-scale farming and homegrown and international banks start to take investing in the sector seriously.

Too much of the debate is still fragmented, though. Issues of finance, poverty reduction and environmental concerns are still treated as different subjects by governments, NGOs and investors. But agriculture, much more than any other human activity, connects social, economic and environmental issues and to successfully transform the African agricultural sector all actors will need to recognize this.