SMEs: Seizing the agri-food opportunity in eastern and southern Africa

 

A market in Kenya in April 2020. Photo: Sambrian Mbaabu, World Bank via Flickr

Summary

·         The African agricultural economy is the fastest growing across all continents: it has witnessed a 4.1 per cent growth from 2000-2020 compared to 2.7 per cent worldwide, with East Asia and Pacific at 3.5 per cent; Latin America at 2.6 per cent; and South Asia at 3.0 per cent.

By Victoria Kwakwa

Confronted with a set of challenges that is threatening hard-earned development gains, the African continent remains resilient and endowed with rich creativity and innovation that has the potential to turn around food insecurity, generate jobs, promote trade, and create more prosperous livelihoods for its people. With more than 66 million people  projected to experience food stress, emergency, or famine this year across Eastern and Southern Africa, it is imperative that we help unleash the potential of the agri-food sector—to not only put an end to hunger, but to also establish economic prosperity across the region.

The African agricultural economy is the fastest growing across all continents: it has witnessed a 4.1 per cent growth from 2000-2020 compared to 2.7 per cent worldwide, with East Asia and Pacific at 3.5 per cent; Latin America at 2.6 per cent; and South Asia at 3.0 per cent.

By 2050, the food industry in Eastern and Southern Africa is expected to see an 800 per cent increase in the value of food, and trade in processed foods could increase by up to 90 per cent. Africa at large will be a $1 trillion food market by 2030, with consumption in cities driving the demand for more products.

The agriculture and food sector accounts for 15 per cent of the GDP of countries in Eastern and Southern Africa in 2020. As much as 59 per cent of the region’s population was employed in agriculture in 2019, with some countries like Burundi and Somalia touching 86 per cent and 80 per cent respectively.

 

Increased productivity

In Eastern and Southern Africa, agricultural productivity could increase by up to 2–3 times if better farm inputs and production technologies are adopted, water and soil resources are used more efficiently, and natural capital and ecosystems are restored.

Africa’s population is expected to double by 2050, when 1 in 4 people worldwide will be living in Sub-Saharan Africa. With a doubling in mouths to feed and 140 million people already facing food insecurity today, Africa must move up the value chain in agriculture now and become more self-reliant. The question then is: how can this vibrant potential be bolstered? How can Eastern and Southern Africa continue to tease out its potential and show growth in agriculture and food systems?

Let us start with the elephant in the room: the climate crisis and the need for food systems to adapt to it. Consider these facts:

Climate-induced shocks to the food system used to occur once every 12 years on average in Africa; they are now occurring about every 2.5 years. This is too frequent for countries, regions, or farms to sufficiently recover between the shocks.

Food security declines by 5–20 per cent with each flood or drought, while the region experiences about a 1.4 per cent reduction in food calories per year from key food security crops. The Horn of Africa is set to miss its 5th rainy season in a row, making it the worst drought in 40 years and South Sudan is facing record-breaking rains and floods for a fourth consecutive year as the climate crisis accelerates.

It’s been estimated that the global food system is responsible for about a third of greenhouse gas emissions—second only to the energy sector; it is the number one source of methane and biodiversity loss. Climate smart agriculture is known for its triple benefits of higher productivity, climate adaptation, and emissions reduction, and was high on the world’s agenda at COP27.

The cost of making food systems resilient right now is $1.8 billion/year. However, if we do not invest in climate action now, it will cost $200 billion/year. The cost of inaction is high. Adapting Africa’s food system to climate change is imperative, not optional.

Getting its policies right

Since food security across Africa is compounded most by the effects of climate change, declining agricultural productivity, and rapid population and urbanization growth, policy priorities centered around leveraging science and digital technology, and addressing fragility hold the greatest promise across the African continent.

There are bright spots in Eastern and Southern Africa where policy actions and innovations are bearing fruit.

Tanzania

Despite many challenges, has witnessed the emergence of medium-scale farmers, and it is estimated that 13 million days of additional work annually for hired agriculture labor have been created between 2008 and 2014 by the new 368,000 medium-scale farms. This is equivalent to a total worth of US $225-300 million. This growth has boosted income for many Tanzanians, especially youth. The World Bank has had a long-standing analytical and advisory engagement with the government and is mobilizing resources in support of the Agricultural Sector Development Programme Phase II (ASDPII) focused on the commercialization of agriculture.

Policies drive innovation and lead to better food and nutrition for all. These country initiatives prove that despite the challenges of climate change and state fragility in parts of Africa, the continent has the potential to not only achieve food and nutrition security, but to also leverage the food sector for its overall development.

Zambia

Zambia has the potential to become a significant exporter of food for the Eastern and Southern Africa region, given its large land and water resource base for agricultural production and its strategic location bordering eight countries. The Zambia Growth Opportunities (ZAMGRO) Program, a US$300 million effort funded by the World Bank is putting policy reforms and institutional enhancements at the center stage of agricultural growth.

The new Zambian government is committed to developing the potential of the agri-food sector to meet its national development goals of promoting inclusive growth and creating jobs. The country is moving from supporting agricultural subsidies to redirecting its public expenditures to subsectors such as irrigation and agricultural extension. It is also reaffirming its commitment to food exports and the improvements of its grain marketing arrangements. In the process, Zambia is accelerating diversification, climate resilience, and inclusive agricultural growth.

It is clear, the agri-food sector has tremendous potential to create wealth across Eastern and Southern Africa, provided the right support and investments are in place. However, to harness the untapped potential of the sector, its leaders and citizens must address the existing challenges and invest in sustainable and innovative solutions in food and agriculture. Africa’s past is not its future, and nowhere is this more apparent than in the agri-food sector: it is a space that is not ridden with poverty and gloom but lit with opportunity and optimism for Africa to shape its own development path. It’s a path that is self-determined and locally rooted, yet internationally connected. It is a path of hope for what is there today and the prosperity that is yet to come.

 

Victoria Kwakwa is WB Vice President, Eastern and Southern Africa