This article first appeared on the Chicago Council Blog.
Accounting for 32 percent of Africa’s gross domestic product and employing over 65 percent of its labor force, agriculture represents Africa’s greatest opportunity to drive inclusive, broad-based growth, and is probably the only sector with the potential to lift millions out of poverty within this decade. Achieving this feat calls for more cohesive local agricultural value chains that leverage technology, processing, manufacturing, and industry to transform raw material into sophisticated semi-finished and finished products, ultimately earning farmers higher and more stable incomes. It is pleasing to see that there have been positive trends. Agriculture is becoming a hotbed for entrepreneurs with new ideas for higher-quality products and advanced methods, sustainable processes in food production and distribution, integrated supply chains, value-added exports, and a variety of other lucrative business opportunities, as evidenced by an in-depth study of over 300 Tony Elumelu Agricultural entrepreneurs.
On December 1, 2015, the Tony Elumelu Foundation launched the most comprehensive entrepreneurial ecosystem improvement program in Africa—the Tony Elumelu Entrepreneurship Program (TEEP). Backed by a financial commitment of $100 million to fund, train, mentor, and provide networking opportunities to 10,000 African entrepreneurs over the next decade, the program’s goal is to create jobs, increase revenue, and boost shared prosperity. Among the selected Tony Elumelu entrepreneurs involved in agriculture is Sammy Githongo from Kenya, whose cheese factory sources inputs locally and provides a steady income for rural dairy farmers in Central Kenya and the Rift Valley. A former IT salesman now cheese manufacturer, Sammy supplies cheese to 13 hotels in Mombasa (where he has a cold room), and several hotels and international schools in Nairobi. As he expands his operations into new cities, his business will provide even more opportunities for smallholder farmers he works with to increase their own incomes.
Benedicte Mundele Kuvuna, a 22-year old agri-business entrepreneur from the Democratic Republic of Congo, is an agro-processor that adds value to crop produce supplied by small farmers who she not only pays, but trains on sustainable agricultural practices and techniques to minimize farm waste. Benedicte’s company, Surprise Tropical, manufactures and sells chips (plantain, taro, coconut, and ginger), juice, and paste (safou and avocado) in stores in Kinshasa suburbs that previously stocked only imported snacks. Mavis Mduchwa from Botswana, recently featured on CNN, started the first feed manufacturing plant in her area after noticing that poultry farmers were shutting down due to high prices of imported animal feed. Egypt’s Ahmed Abbas uses solar energy to power irrigation channels that serve local farms, and Calleb Otieno from Kenya employs greenhouse technology to assist farmers to produce at least two types of crops a year, even in the dry season when low yields threaten farmer incomes.
These are but a few out of over 300 Tony Elumelu Entrepreneurs who are leading the revolutionary advancement of the agricultural landscape in Africa. Our entrepreneurs are pursuing opportunities along the value chain despite a myriad of constraints including a difficult business terrain, unavailability of inputs (fertilizer and improved seeds), lack of access to finance and insurance, high taxes, poor transport networks, few advanced technology options, absence of affordable field equipment, lack of access to markets, and a dearth of quality extension, advisory, and training services. However, extensive analysis of the sector reveals that well-targeted investments, combined with regulatory reforms, will transform the lives of some of the continent’s poorest and most vulnerable, while strengthening Africa’s capacity to absorb and engage the wave of young talent entering the job market in Africa. Some of our proposed recommendations to improve the sector’s competitiveness include:
- Improvements to fractured value chains: Fragmented value chains are the single biggest impediment to the commercialization of agriculture across the continent. To reduce fragmentation and the isolation of different elements of the value chain, stakeholders, including government and development institutions, must combine efforts by engaging and investing across the chain—from planting to harvesting, to storage, processing, distribution, and up to the table—while facilitating the free flow of information, especially on pricing.
- Investment in processing: The processing capacity amongst small and medium-sized enterprises (SMEs) is critical to food security and sufficiency. African governments and development partners must work to strengthen the processing sector by specifically targeting a network of traditional and industrial processing businesses which source supplies locally.
- Access to finance: The biggest challenge to many agricultural entrepreneurs by far is funding and financing. Lending to the agriculture sector requires a unique approach since the traditional funding model will not work for agriculture entrepreneurs, as many African banks are uncertain about how to lend to agriculture businesses. One way to address this is for national governments to put in place risk mitigation products in order to lower the effective cost of capital needed for small farmers to expand.
- Training: Over 20 percent of our entrepreneurs desire some form of training in farm operation management and farming techniques. To build the capacity of small-holder farmers, we advocate for more agriculture training schools focused on the practical issues farmers face, in addition to more extension training programs accessible to farming cooperatives to enable farmers deliver standardized products. As the article in the link shows, smallholder farmers can benefit tremendously from small improvements in farming techniques.
Over the last several decades, the international development and global philanthropic communities have considered the agriculture sector a key point of intervention through aid and subsidies, targeting primarily poor, rural, subsistence farmers. Although this support has been welcome, to change Africa’s development path, this approach needs to change from viewing farming as merely an aid program, to capitalizing on agriculture as a lucrative business capable of harnessing functions in energy, technology, processing, manufacturing, and distribution for increased efficiency. Like the President of the African Development Bank and former Nigerian Minister of Agriculture, Dr. Akin Adesina always says, we must begin to view agriculture as business and not as charity.