Africa: Realizing the Potential to Become the Breadbasket of the World
The commentary is well-known about the potential for Africa to become the breadbasket for the world amid the wide-spread need for food security. However, despite this widely regarded potential, not very many countries in Africa have addressed the equally well-known challenges to making this more than a catchy phrase. These fundamental challenges to making the agribusiness sector in Africa a viable alternative to oil dependence include the following:
- Lack of adequate local financing to fund operations
- Access to seed varieties and fertilizer for some crops that could help reduce costs;
- Poor infrastructure to improve access to reliable power, irrigation methods, transportation to markets; and
- In many instances, archaic and investor unfriendly land ownership laws.
Even despite the challenges, agribusiness often remains the key sector behind oil (or in the case of Kenya, tourism) as the second or third largest industry in many African countries. The goal for most African countries, however, is to move the agriculture sector from a local consumption based sector to one which can fully commercialize and monetize the potential to benefit the farmers and the national economy. There are a few bright spots that could provide guidance to other countries trying to diversify their economies and become less reliant on sectors such as oil and mining and mineral extraction: Uganda and Nigeria offer two approaches to successfully facing these challenges in their respective transformations of these sectors.
According to the 2014 U.S. Commercial Service Guide, agriculture accounted for 22.9 percent of Uganda’s GDP in 2012 and 46 percent of its export earnings, and an estimated 66 percent of Ugandans are tied to the sector for employment. With 80 percent of the land considered arable and a great climate and rainfall to support development, the potential is undeniable. There is a unique opportunity in the organic agriculture sector because of the lack of access to artificial fertilizers. An Africa Agribusiness magazine article reported that Uganda has over 400,000 certified organic farmers, the largest number in Africa and second largest in the world, behind India. By 2013, Uganda had around 350,000 hectares of land under organic farming covering more than 2 percent of agricultural land. The article sites the coordination among various governmental offices and adoption of a clear policy to push organic farming as a subsector within agribusiness as key to the success seen thus far.
The Nigerian Federal Government’s Agricultural Transformation Agenda is another example of how a broad-based governmental approach can yield results. After just a relatively short period, the strategy has resulted in innovative methods to help increase productivity by focusing on a Growth Enhancement Scheme, which is designed to “designed to enhance agricultural productivity through timely, efficient and effective delivery of yield-increasing farm inputs while also subsidizing the costs of major agricultural inputs, such as fertilizer and seedlings for farmers” and mechanization to increase productivity. As part of the overall strategy, the Federal Government reformed the seed and fertilizer supply chain which had been previously been controlled by the Government and has now ensured subsidies were directly provided to the farmers. Along with other reforms aimed at increasing access to agricultural input production, primary agricultural production, agricultural processing and agricultural storage activities, the agricultural sector has purportedly brought in $6 billion in investment across various segments in three years.
Both Uganda and Nigeria have shown how a clear governmental strategy can yield such impressive results. Despite the vastness of the arable land across many countries throughout Africa, the investment opportunities for foreign investors in agribusiness are clearest in these types of environments where government policy is aligned with the goal of commercializing the sector.