Progress that attract the private sector
The huge growth potential of African agriculture is also attracting private operators: more than 60% of the globe’s unexploited arable land is on the African continent, and the African market – buoyed up by urbanisation and the emergence of a middle class – is set to represent nearly one and a half billion consumers by 2050. The improvements made to regulatory frameworks, the efforts that have been made to stimulate agricultural production, and the transformation of the distribution system are finally making this sector more attractive.
Significant progress in the area of regional integration and the regulation of commerce – together with production support measures – would support the development of intra-African trade.
An insufficient crop production
Despite this progress, however, agricultural production and yields in Africa are significantly below international standards. Isolation, gaps in energy supply, limited access to agricultural inputs, shortcomings in land administration, and market inefficiencies are hampering the sector’s development. Moreover, the positive knock-on effect on upstream industries (fertilisers, machinery) and downstream sectors (processing) is limited. Nearly 65% of the sector’s value is still produced at farm level, as compared with 10% in industrialised nations. Agribusinesses face high prices for basic foodstuffs, deficiencies in the supply system and regulations that are at times inadequate. Infrastructural weaknesses and difficult access to transparent market information, combined with a lack of capital, represent major entry barriers.
Some ideas for a successful African agriculture
To make the most of its agricultural potential, and to make this sector more competitive and attractive, Africa needs to develop its transport, storage and communications infrastructure. It also needs to invest more in agricultural and agribusiness research – an area that is frequently neglected. In addition, Africa needs to focus on developing high-quality agricultural services. Better access to agricultural inputs, professional training and technical advice could bring about a marked improvement in the sector’s productivity.
Contract farming is another promising avenue for African agriculture: delivery contracts between farmers and businesses would make it easier to manage product quality and product flow. The financial services available to farmers and agribusinesses need to be improved and diversified. The growing use of leasing1, warehouse receipt system2 and insurance products should make it possible to improve risk management and to protect the sector. Finally, significant progress in the area of regional integration and the regulation of commerce – together with production support measures – would support the development of intra-African trade.
Only an integrated approach – combining public initiatives and private investment – will turn the promising prospects of agriculture in Africa into reality. There is a need for concerted agricultural policies to gain the support of private economic stakeholders in the interests of food security; it is time to reinvent an effective, equitable public-private partnership. It is this vision that the G20, under its French presidency, promoted to the international community in 2011. It is a condition that must be met if Africa is to benefit from its agricultural potential in terms of growth, employment and sustainable development. And here, the role of the international financial institutions is fundamental. They can promote private investment at all stages of agribusiness industries and promote the development of sustainable agriculture.
Ed.: This opinion piece is taken from issue No. 13 of Proparco’s Private Sector & Development magazine.
The opinions expressed on this website are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.