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August 4 | east africa investment | 923 views | 0 Comments

The recent African Union (AU) summit in Equatorial Guinea concluded with a “unanimous” call for agricultural transformation to drive development in Africa. Heads of state and other African leaders called for increased investment in agriculture, new technology, better access to land and inputs, and peace and security to allow markets to expand unhindered.

We strongly back this call. It makes sense. Agriculture already contributes significantly to African gross domestic product and employs 60% of the population. More than two-thirds of Africa’s poor live in rural areas, and agriculture is their most important economic activity.

It stands to reason, then, that making agriculture more efficient, more modern and more inclusive will bring myriad benefits. Investment in agriculture would increase wages, reduce poverty and inequality, and reduce Africa’s reliance on food imports. The Africa Progress Panel was right in its recent report to say that Africa has the potential to feed not just itself, but the world.

Our African Transformation Report, launched earlier this year in Johannesburg, makes similar points. We identify agriculture — and in particular an increase in agroprocessing — as one of the most promising potential drivers of transformation for African countries. By moving up the value chain from smallholder agriculture to increased agroprocessing, Africa could not only reap higher value, but also generate more employment and therefore better utilise the comparative advantage that comes from a large workforce and abundant land.

If successful, this African green revolution would have substantial spillovers for other sectors of the economy. Agroprocessing would drive skilled employment, and increase income and foreign exchange, which in turn could be invested to help domestic players overcome the barriers that prevent them from competing globally.

There are three particular areas with obvious and easily fulfilled potential: first, the processing of traditional exports such as coffee, cocoa and cotton, where Africa has already demonstrated its global competitiveness. The scale of the commercial opportunity in processing is typically many multiples of the present raw production opportunity, making this a particularly high-value area.

Second, scaling up promising nontraditional exports, such as fruit, by upgrading the supply chain from farm gate to factory. At present, much of the tropical fruit grown in Africa is wasted, with estimates ranging from 10% to 80%. Troubles along the entire supply chain contribute to the waste, either directly — from poor handling, transportation and storage to retail loss — or indirectly, predominantly through low farm-gate prices for farmers that make it commercially unviable for them to harvest their crops.

Processing this fruit would mitigate waste, add value, increase incomes for smallholder farmers, and create employment in factories and allied industries. This is an area in which South Africa has done well but, at a continental level, there is a broad range of potentially very high-value but underexploited crops for which there is growing international demand.

Third, Africa could boost its farming sector by using substitutes for agricultural imports, the value of which rose 62% between 2007 and 2011 to reach $37bn. Some of the fastest-growing products are poultry and associated inputs such as soybean cake. These products are set to continue their rapid upward trajectory as incomes and the consumption of meat rise. Upgrading the domestic supply chain to put local players on a competitive footing with importers would be a way of reaping the economic opportunity.

The potential is clear. A more modern and efficient agricultural sector in Africa would increase incomes in rural areas, boost exports and provide the foreign exchange needed to import machinery and inputs for industry. It could supply the raw materials to support agricultural processing industries, and ultimately release labour from agriculture to manufacturing and other sectors. It could boost the supply of food to the growing urban areas and the industrial labour force, thus moderating rises in the cost of living and wages.

A revolutionised agriculture would expand the markets for inputs and consumer goods and services in nonagricultural sectors. If we can realise this opportunity, Africa’s natural resource abundance will benefit all Africans, particularly the poorest and most vulnerable. It is a goal worth aiming for.

GPS would like to extend an invitation to those involved food manufacturing, and/or agri processing in East Africa to join the East African Delegation as we travel to be a part of the Gulfood Food & Manufacturing exhibition in Dubai, UAE. The week will include the exhibition, a conference, an East African focused forum featuring trending topics in this industry from across the region and an East African based networking event. Join other leaders in the food and beverage processing industry across East Africa for this exciting week of event. Write us at to receive more information.


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