Could Africa feed the world? Investment Monitor

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From an agribusiness perspective, Russia’s recent invasion of Ukraine has highlighted the fragility of agricultural value chains and the reliance on so-called “breadbaskets” for food imports. .

For a particular region to qualify as a “breadbasket”, the requirements are simple: to produce a surplus of a particular crop or agricultural produce which is then exported around the world to countries that do not produce enough of that food to meet their national needs. request.

What is Africa’s place in this chain? For now, it’s about the continent’s potential, according to Virginie Ticha, president of the International Federation of Consular Chambers for Africa.

The development of national agribusiness sectors across the continent is necessary, but for this to happen, countries need to focus on their industrialization processes, which are largely in a weak state, she says.

Improving infrastructure and accelerating the process of industrialization are essential for agribusiness in Africa to reach its potential. For this to happen, Ticha says strong, high-quality value chains are essential if the continent is to move from mainstream agriculture to value-added agribusiness opportunities.

However, this is not something a commercial investor can achieve on their own, according to Ticha. Working with government and local communities or authorities offers the best chance of success.

Agriculture as a sector can greatly involve communities, according to Ticha, who cites the example of France, where farmers organized themselves into cooperatives and saw their business grow rapidly.

However, the number of new foreign direct investment (FDI) agribusinesses in Africa has not been particularly high in recent years. In 2019, according to our database of FDI projects, there were 1,093 agribusiness FDI projects across the world, but only 22 on the African continent (a market share of 2.01%). In 2020, the numbers declined both globally (to 976) and in Africa (to 14, a market share of 1.43%) due to the effects of the Covid-19 pandemic.

Risks of developing large-scale agriculture in Africa

Figures show that in the sphere of agribusiness FDI, there is considerable potential across the African continent, but these types of ventures can come with risks.

Talk to Investment MonitorMargaret A Rugadya of the non-governmental organization (NGO) Landesa explains that in Africa the predominant type of agriculture is smallholder production, with products tied to local demand and household needs, based more on the subsistence than in larger markets.

However, things are starting to change and as urbanization spreads, smallholder farmers are starting to turn to these markets, according to Rugadya. In addition to this, many countries – in Africa and around the world – are focusing on strengthening their food security, which leads them to think about food production both at the national level and beyond their national borders.

This is where foreign investors and large-scale land investments come in, says Rugadya. Smallholder farmers are not the target of major food exports, but they do own the land, which is often the first point of friction between investors and farmers. This is why land regulation is of great importance, and organizations such as Landesa are at the heart of ensuring that small farmers are not the losers in agricultural deals, given the work the NGO is doing with governments and local communities.

Landesa specializes in cases where there is no specific regulatory framework, and where investors are looking for large land, but the mechanisms for acquiring this land are not enshrined in law. It is in such cases that Landesa gets involved to organize a fair outcome. Rugadya cites Ghana and Kenya as countries where there has been substantial development in these areas.

Small-scale farmers sometimes have land that may seem unused, that is fallow or that is used for grazing, Rugadya explains, and this is sometimes taken up by large-scale land investments. This created widespread resentment among farmers and “a lot of fear around all the other announced projects in agriculture”. [in Africa], [as they are] as an opportunity for land grabbing,” she says.

Another problem that tends to arise is when communities “attempt to organize themselves and join such arrangements for large-scale production”, she adds, in which case farmers tend to raise funds with their land as collateral, but don’t often see that. subsequently passed on to production profits.

These problems exist even in countries like South Africa, which has developed a strong agricultural sector which, in 2020, has contributed to about 10% of the country’s total export earnings (citrus fruits, wine, table grapes, corn and apples representing the main exports in value). However, more positively, Rugadya says that while land grabbing issues continue to be a problem across Africa, cases are increasingly being brought to court, leading to the restoration of land rights, and sometimes even to appropriate land negotiations at a later stage. .

The opportunities for Africa to become a breadbasket are still there

The problem of land grabbing shows that the development of a robust and productive agricultural sector on the African continent is beset with problems, but it is by no means impossible for the continent to fulfill its potential and become the breadbasket of the world.

“It is entirely possible to make Africa the largest food producer in the world,” says Rugadya, but she adds that large-scale land investments are not necessarily the way to achieve this goal in a sustainable way.

Smallholders already own the land, says Rugadya. She therefore believes that to develop the agricultural sector they are key, but they need the support of governments to access wider markets, ideally through access to better infrastructure.

“The infrastructure that supports a farmer’s access to market is usually the missing link,” she adds. In this vein, technology can help fill some gaps and motivate younger generations to seek careers in agriculture.

“I saw in Kenya groups of young people joining the agricultural sector [through using their] smartphones,” says Rugadya. “They have access to markets that use it. They use online platforms for their products. They have delivery systems that are coordinated on land.

Such examples are promising signs for the future of agriculture in Africa, and indeed of the wider agribusiness sector.

They also offer genuine hope that it is possible to transform the continent into a global breadbasket and show that there are myriad opportunities for foreign investors to achieve this. However, foreign investors would be well advised to work with, not against, smallholder farmers, for whom it is not just their livelihoods that are at stake, but their ability to feed their families.

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