Agriculture in Africa 2021 - In collaboration with April 2021 - United Nations Convention to ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Agriculture
in Africa
2021
In collaboration with
oxfordbusinessgroup.com April 2021
Content Guide
3 FACTS AND FIGURES 22 INTERVIEW: Sediki Cissé, Director-General, National Agency
for Rural Development of Côte d’Ivoire
OVERVIEW
5 Recent Performance Indicators FERTILISERS
6 Geography and Land Use 23 Adoption Boost
7 Crops 24 Consumption Drivers
8 Livestock and Poultry 25 Investing in Value Chains
9 Agro-industry
10 Agriculture Financing EMPOWERING FARMERS
11 Covid-19 26 Closing the Gender Gap
12 AfCFTA and Trade 27 Youth Participation
13 Food Security
14 Outlook 28 INTERVIEW: Joseph Aidoo, CEO, Ghana Cocoa Board
15 INTERVIEW: Mohamed Anouar Jamali, CEO, OCP Africa PROMOTING AGRICULTURAL ENTREPRENEURSHIP
29 Agri-food System Transformation
FOSTERING AN AGRI-TECH ECOSYSTEM 30 Improving Trade and Policy
16 Accelerated Use
17 Diversified Services FROM FARM TO MARKET
18 Future Transformation 31 The Supply Chain Picture
32 Navigating Logistical Hurdles
SUSTAINABLE AGRICULTURE DEVELOPMENT
19 Costs of Climate Change FARMING IN TRANSITION
20 Climate-smart Agriculture Solutions 33 Rising to the Challenge
21 Bridging Gaps in Funding 34 Programmes in Practice
2 OBG Agriculture in Africa 2021 April 2021
Facts and Figures
Agricultural production in sub-Saharan Africa
2017-19
2007-09 2029 Growth from 2010-19 2020-29
average Top regions for agriculture-related Top markets within these
average (000 projection base to 2029 average proj. average
(000 tonnes;
tonnes) (kt) (%) growth (%) growth (%) financing deals in Africa, regions (% of regional deals)
base)
2010-Jul 2020 (% of total deals)
Cereals 109,695 141,025 169,397 20.12 2.42 1.66
Roots &
56,740 86,825 112,016 29.01 3.67 2.28
tubers
Pulses 12,350 17,788 19,758 11.08 2.83 0.93
Meat 9080 11,715 14,675 25.27 2.36 2.21
West Africa 18% Nigeria 75%
Oilseeds 8044 11,149 13,288 19.18 2.26 1.58
Sugar 6445 7632 10,174 33.31 1.56 2.53
Fish 5626 7695 8291 7.75 2.84 1.07
Vegetable
4657 6855 8106 18.24 2.82 1.37
oil
East Africa 44% Kenya 60%
Agricultural trade in sub-Saharan Africa
2007-09 2017-19 2029 growth from 2010-19 2020-29
average average projection base to 2029 average proj. average
($ bn) ($ bn; base) ($ bn) (%) growth (%) growth (%)
Southern Africa 28% South Africa 54%
Exports 7.3 9.7 9.4 -3.1 1.8 -0.6
Imports 19.8 27.5 40.1 45.8 2.6 3.5
3 OBG Agriculture in Africa 2021 Source: OECD-FAO Agricultural Outlook 2020-29; Crunchbase April 2021
Facts and Figures
Area harvested by commodity group (m ha)
Cereals Pulses, roots & tubers Oilseeds Sugar crops Others
14,207
1 6
1361
2017-19 94,779 62,358 5945 Cocoa
Cotton
Beans
14,231
1445
2 7
2029F 96,011 64,399 5790
Cashew Sesame
Nuts Africa's Seeds
Top-10
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 (in shell)
Evolution of cocoa production, 2005-20F (000 tonnes)
500
Côte d'Ivoire Ghana Rest of world
Tobacco
3 Agricultural
Exports
8 Black
Tea
4 9
400 by Value,
300 Coffee 2016-18 Cocoa
Paste
200
5
100
-100
-200
0 Oranges
10 Fresh
Grapes
-300
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F
4 OBG Agriculture in Africa 2021 Source: OECD-FAO Agricultural Outlook 2020-29; Africa Agriculture Trade Monitor 2020; World Bank April 2021
Overview
Recent Performance Indicators
For many countries across Africa, agriculture remains one of There are significant regional variations in the relative size of the Agriculture, forestry & fishing's value added in
the most important sectors of the economy. Agriculture agriculture sector, as well as its employed population, value added sub-Saharan Africa, 2000-19 (% of GDP)
accounts for 14% of total GDP in sub-Saharan Africa, and a and productivity. In lower-income, landlocked countries such as
majority of the continent’s population is employed in the Chad, the relative size of the sector (over 50% of GDP) and the share 25
sector. In addition, export crops such as coffee, tobacco, of the population employed as subsistence farmers (over 75%) can
oranges, fruit and cotton are important sources of foreign far exceed the region’s average, while agricultural productivity and 20
exchange for every country on the continent. export earnings lag behind the continental mean.
15
In North and Southern Africa, improved irrigation and a high degree
10
of mechanisation have ensured greater productivity in certain
segments – far exceeding the regional average and on a par with 5
South-east Asia and Latin America. The relative importance of
agriculture in wealthier places such as South Africa is lower, at 3% of 0
GDP, according to the UN Food and Agriculture Organisation (FAO).
00
20 1
20 2
03
20 4
20 5
06
20 7
20 9
10
20 1
20 2
13
20 4
20 5
16
20 7
20 8
19
20 8
0
0
0
0
0
0
1
1
1
1
1
1
0
20
20
20
20
20
20
20
Overall, the relative size of the sector compared to the total Nonetheless, Africa’s overall agricultural production and export
economy has been gradually but steadily declining over the past figures have seen major improvements over the course of recent
decades. In 1990 agriculture accounted for one-fifth of the total years. According to the “Africa Agriculture Status Report 2020”
GDP of sub-Saharan Africa, declining to 18% by 2000 and 15% in published by the Alliance for a Green Revolution in Africa (AGRA),
2015. According to projections by the FAO, this figure will fall to 13% cropland expansion and improved access to inputs such as fertiliser
by 2029, even as agricultural trade and production are expected to and higher-yielding seeds helped gross production value increase by
increase over the same period. The percentage of the population 11% between 2010 and 2016. Looking further ahead, the FAO and
employed in agriculture has undergone a similar development, with the OECD anticipate a further increase of 21% in agricultural and
the World Bank estimating a drop from 62% in 1995 to 52% in 2020. fish production between 2020 and 2029 in sub-Saharan Africa.
5 OBG Agriculture in Africa 2021 Graph source: World Bank April 2021
Overview
Geography and Land Use Land use in sub-Saharan Africa,
2007-29F (000 ha)
3,000,000
average
The continent is agro-ecologically and One of the key factors perpetuating the new civil cases; and in Uganda land disputes
2007-09
climatically diverse, with agro-environmental relatively low levels of cultivated land is the represent about half of the total caseload, 2017-19 (base)
zones ranging from the tropical rainforests in challenge of obtaining access to land in the first leading to an estimated 5-11% loss in agricultural 2,500,000
West and Central Africa, to the dry and arid place. Much of the arable and cultivated land 2029F
production in the country.
zones of the Sahel. This diversity offers both remains unregistered, with the African Centre
opportunities and challenges: while a wide for Economic Transformation (ACET) estimating Transactions involving registered land also 2,000,000
variety of crops and commodities can be that just 10% of arable land on the continent is remain costly in many markets across Africa. The
produced across Africa, a range of different officially registered; this stands in stark contrast World Bank’s “Doing Business 2016” report
solutions are required in order to overcome the to 95% in Western Europe. In sub-Saharan Africa showed that the monetary cost and
varying bottlenecks that continue to limit the 90-95% of land falls under a customary tenure 1,500,000
administrative burden of land transfer for
agricultural potential of the different countries system, with largely communal and unregistered registered land were significantly higher in
and regions on the continent. ownership. In North Africa, by contrast, a sub-Saharan African nations than similar
majority (50-75%) of land is individually owned transfers conducted in OECD countries, taking 1,000,000
Africa also has an abundance of arable land, and registered under a modern tenure system. an average of 58 days and costing 8% of the
much of which is uncultivated. The OECD and property value in sub-Saharan Africa –
the FAO estimate that it accounts for 21% of As a consequence, disputes are common and compared to an average of 22 days and 4% of 500,000
pastoral land and 14% of cropland. While the expensive, with much of the judicial caseload in property value in OECD countries. According to
latest figures from the World Bank show that as countries with predominantly customary the most recent data available, sub-Saharan
of 2016, 9% of all sub-Saharan African land was systems stemming from conflicts over land Africa has seen some improvement in property
arable – an increase on the 5.7% recorded in ownership. The ACET estimates that in Ethiopia 0
registration procedures, with transactions Crop Pasture Total
1980 – the FAO estimates that Africa holds 60% 33-50% of all legal cases are land dispute cases; taking an average of 51.6 days as of May 2019, production land agricultural
of the world’s uncultivated arable land. in Ghana such conflicts accounts for half of all compared to 23.6 days in OECD economies. land use
6 OBG Agriculture in Africa 2021 Graph source: OECD-FAO Agricultural Outlook 2020-29 April 2021
Overview
Crops
While crop production is estimated to national and local production and central to the diet of those living in end of the period. At that rate, the as fertiliser, along with optimised
account for more than 75% of total consumption of crops. Wheat is the main Southern Africa. sub-Saharan African region alone would management practices and
agricultural production on the continent, staple in North Africa; Central and West account for an estimated 41% of infrastructure development, including
there is a large degree of variation Africa consume higher amounts of roots, As a general trend, the quantity of worldwide root and tuber production. irrigation schemes.
within Africa in terms of the regional, tubers and plantains; and maize is agricultural crops produced, the share of
land used for crop production and the Cereals, the most widely grown crop on Despite these improvements, however,
total harvest value have seen large the continent, also saw significant crop yields and productivity in Africa
Change in area harvested by commodity group, 2017-29F (m ha) improvements over the course of the growth in annual production over the remain low compared to the global
Sugar crops Cereals Pulses, roots & tubers Oilseeds Others past decade. The FAO registered 2.86% period, rising from an average of 109.7m average. For instance, average yields for
annual growth in the net value of crop tonnes in 2007-09 to 141m tonnes in maize are about 2.5 times higher in Asia
production during the 2010-19 period. 2017-19. With projected 1.66% annual and South America, and six times higher
growth between 2020-29, the expected in North America. Meanwhile, African
2017-19 The production of roots and tubers cereal yield in 2029 is 169.4m tonnes. rice yields are roughly half the levels
increased the most among all categories seen in Asia, and North American rice
of crops, with annual growth of 3.67% While land use for crop production has yields are close to four times higher.
between 2010 and 2019, resulting in an grown slightly over the past decade, According to data from AGRA, growth in
average annual yield of 86.8m tonnes in from 196.2m ha in 2007-09 to 210.1m ha average African yields for these two
2017-19, up from 56.7m tonnes per year in 2017-19, the FAO estimates that the staple crops remained relatively
2029F in 2007-09. The FAO projects that root next decade will see an annual reduction stagnant between 2010 and 2020, with
and tuber production will grow by an of 0.13%. The anticipated yield growth is the exception of the continent’s wheat
annual growth rate of 2.28% between instead expected to develop as a result yield, which rose to global levels in 2011
2020 and 2029, which would see yearly of improved access to higher-yielding before moderating below the world
0 20 40 60 80 100 1000 2000 3000 4000 5000 6000 production rise to 112m tonnes by the seeds and other important inputs such average in the years that followed.
7 OBG Agriculture in Africa 2021 Graph source: OECD-FAO Agricultural Outlook 2020-29 April 2021
Overview
Livestock and Poultry
Africa produced an annual average of 129.7m same period due to insufficient infrastructure, same period, with projections indicating that Africa trigger greater increases in consumption in
tonnes of meat in 2017-19 – an increase on 107.8m low-quality feed and inadequate storage capacity. could increase its share of global sheep and goat Africa than in any other region in the world,
tonnes in 2007-09 – to represent average annual production from roughly 1% of the global total at with demand for meat estimated to rise by
growth of 1.1% between 2010 and 2019. Beef FAO projections for 2029 indicate that a 17% present to as much as 14% within 10 years. 2.8% annually between 2007 and 2030.
production rose at more than twice the rate of increase in cattle and 5% growth in productivity
general meat production during this period, with will yield an additional 1.1m tonnes of bovine meat Poultry production has also seen significant Despite the growth in domestically produced
6.7m tonnes produced in 2018 for an annual in the region over the next decade. If those figures growth in recent years. The FAO reports that total meat products, the continent still imports
average growth rate of 2.5% since 2009, when are achieved, sub-Saharan Africa would contain poultry production for the continent stood at 5.7m $4.6bn worth of meat and edible offal every
5.4m tonnes were produced. However, the FAO 18% of the global bovine herd by 2029. The growth tonnes in 2018, up from 4.2m tonnes in 2009. The year. Local producers continue to struggle to
notes that beef yields declined by 0.5% over the in ovine meat will be significantly higher during the three largest poultry-producing countries on the compete with international exporters due to
continent – South Africa (1.8m tonnes), Egypt high transport and administrative costs.
Livestock production in sub-Saharan Africa, 2017-29F (m tonnes) (1.1m tonnes) and Morocco (720,000 tonnes) –
together account for 62% of Africa’s total output. According to the Institut du Sahel, livestock
Beef, veal Pork Poultry Sheep
produced in Burkina Faso for export to Accra
8 The FAO outlook for 2029 projects a 25% increase transits through as many as 50 different
7 of total livestock production in the next decade, checkpoints during the 1000-km journey to
6
primarily driven by poultry and milk production. the end market. Similar obstacles are noted in
5
4 the International Food Policy Research
3 As a consequence of rapid and sustained Institute’s “Africa Agriculture Trade Monitor
2 urbanisation and the continued growth of the 2020”, which estimates that livestock traders
1 African middle class, changing consumption pass through five checkpoints for every 100
0 patterns are expected to boost demand for all km of travel in Côte d’Ivoire. Between
2017-19 2029 2017-19 2029 2017-19 2029 2017-19 2029 2017-19 2029
Nigeria South Africa Ethiopia Least-developed Other developing types of meat. The Bill and Melinda Gates Mauritania and Senegal, meanwhile, livestock
Africa Africa Foundation projects that demand for livestock will traders paid $24 in bribes per 100 km.
8 OBG Agriculture in Africa 2021 Graph source: OECD-FAO Agricultural Outlook 2020-29 April 2021
Overview
Agro-industry
Agro-industrial development has been Agriculture value added* per worker in The International Trade Centre, which and industry and promote value chain
limited in most countries in Africa, with selected African countries, 2017 ($) tracks both the value of trade and the and market systems development is the
the bulk of agricultural exports made up potential for further trade in processed Agri-business and Agro-Industry
of raw products and the continent 20,000 and unprocessed goods, reports that Development Initiative (3ADI+),
importing large amounts of higher-value less than 2% of tea, sesame seeds and supported by the FAO, the International
finished agricultural goods. 15,000 cashew nuts were exported as Fund for Agricultural Development, the
processed goods in 2019. Its export UN Industrial Development
An analysis by the ACET shows that the 10,000 potential database highlights processed Organisation, the African Development
vast majority (75%) of sub-Saharan cocoa products, shea nuts, cashew Bank (AfDB) and the UN Economic
agro-processing enterprises operate on 5000 nuts, fertilisers and fruit products as Commission for Africa (UNECA).
an artisanal and semi-artisanal scale. At having some of the highest untapped
that end of the spectrum, characterised 0 export potential in Africa. An ACET At the national level, many countries are
by low productivity and limited market report on agricultural transformation promoting special economic zones
a
ia
ut les
t
r
a
au de
ia
te bia
ire
da
i
Bu o
i
al
nd
yp
ge
ric
an
g
er
an
access, such businesses struggle to
M
an
r
To
lists the same products as very-high- (SEZs), and offering incentives to
Ivo
el
m
ru
Eg
Ni
Ve
Af
Gh
g
rit
h
Za
Rw
Al
d'
yc
h
bo
compete with larger industrial and value, underexploited crops and agro-processing businesses in the form
Se
Ca
M
So
Cô
*2010 prices
semi-industrial international producers. products, along with flowers, meats, of tax and Customs benefits, and access
In addition, many face a scarcity of Mauritius and South Africa. However, crops with growing international yam, sorghum, oil palm and cassava. to infrastructure, power and trading
high-quality affordable inputs, resulting commercialisation of the agriculture demand. AGRA notes that Africa has platforms. Among them is the SKBo
in an inability to produce at capacity. sector, combined with greater linkages captured some of the processing value Cognisant of opportunities in the Triangle SEZ in West Africa, launched in
between farms and other sectors, could for grapes (where the value of sector, African governments and 2018 as the region’s first cross-border
As a result, the ratio of agro-processing help to facilitate the growth of export- processed to unprocessed products international organisations have SEZ. Jointly operated by Mali, Burkina
manufacturing value added to oriented agro-processing. Indeed, there stands at 71%), sugar (15%) and collaborated to achieve greater Faso and Côte d’Ivoire, the zone aims to
agricultural value added in Africa is are numerous opportunities for value tomatoes (11%). Most other agricultural agricultural industrialisation. A key attract private investment in agri-
below 50%, with the exception of addition within the sector, including for products remain underprocessed. initiative that seeks to link agriculture business and agro-industry.
9 OBG Agriculture in Africa 2021 Graph source: FAO April 2021
Overview
Agriculture Financing Regional patterns in food & agriculture
FDI in Africa, 2003-17 ($ bn)
As global food demands continue to rise, financial institutions. Innovations such as PE firms have raised generalist funds, Aggregate FDI per region
with the World Bank forecasting a 70% microfinance and mobile banking provide including some focused on agriculture.
increase by 2050, the agriculture sector will opportunities to boost African farmers’
require $80bn in global investments every access to loans. As mobile penetration has The approximately two dozen funds involved
year. African food demands are projected to increased in recent years, reaching 44% in in smaller deals with ticket sizes under $10m
grow more rapidly; the World Bank has 2017 in Africa, local entrepreneurs and are often specialised and provide capital to
estimated that the total size of the market international institutions have developed SMEs. They also facilitate impact investment
will approach $1trn by 2030. digital financial solutions aimed at and investment in frontier markets, with
8.1 6.8 5.1 4.6 2.9
supporting farmers. capital coming predominantly from
WESTERN EASTERN NORTHERN CENTRAL SOUTHERN
Difficulty accessing capital is one of the development finance institutions.
AFRICA AFRICA AFRICA AFRICA AFRICA
major challenges faced by agri-businesses Alternative forms of financing, including
across Africa. Commercial loans are private equity (PE), have become a small but Venture capital is also becoming an
expensive, and most businesses operating in growing source of funding for agri- increasingly important – albeit still relatively Top FDI destination countries
the sector are small and medium-sized businesses. Between 2010 and July 2020 minor – part of the funding ecosystem, as Nigeria 4.0
enterprises (SMEs) with little collateral. business information platform Crunchbase angel investors move to fund agricultural
Commercial bank loans to the sector also fall reported 242 agriculture-related deals in start-ups across the continent. Egypt 2.9
short; as of 2018 the proportion of loans Africa, raising $616m from entities such as
Cameroon 2.5
going to the agriculture sector was NGOs, foundations, banks, angel investor As of 2018 there were 82 African agri-tech
equivalent to 3% of total loan disbursements networks and private investment funds. PE start-ups, around half of which were South Africa 2.5
in Sierra Leone; 4% in Ghana, Kenya and funded 19.4% of the total. launched between 2016 and 2018. In 2017
Nigeria; 6% in Uganda; 8% in Mozambique; agriculture ventures raised $59m in capital. Ghana 1.9
and 12% in Tanzania. Moreover, estimates There are a number of private investment Agri-tech start-ups comprised $13.2m of the Angola 1.5
show that about 10% of African households entities focused on agriculture in Africa, with total, according to data from Crunchbase –
in rural areas are connected to formal varying deal sizes. In addition, large African an increase of 203% from 2016. Ethiopia 1.5
10 OBG Agriculture in Africa 2021 Graph source: AgEcon April 2021Overview
Covid-19
Cross-border maize trade relatively contained. According to the “East Africa however, it expects consolidation in the mid- and
Cross-Border Trader Bulletin” published by the downstream, alongside the shift to online trading
Q2 2020 (% change) 5-yr average (% change) Q3 2020 volume (tonnes)
Market Analysis Subgroup of the Food Security and platforms, to accelerate. However, reduced income
1400 70,000 Nutrition Working Group in the third quarter of growth in the near term will likely slow down any
1200 60,000 2020, Covid-19 measures implemented in the first major economic transformation in the sector.
quarter of that year delayed trucking and increased
1000 50,000
transportation costs and border screening The UN World Food Programme (UNWFP), for its
800 40,000 measures. However, while the 140,000 tonnes of part, estimates that 265m people could face food
600 30,000 maize grain traded in the third quarter was 29% insecurity, up from 135m in pre-pandemic forecasts.
lower than the five-year average, it was 130% higher
400 20,000
than in the previous quarter. Nevertheless, the long-term effects of Covid-19 on
200 10,000 the sector could prove to be more positive. The
0 0 Results from the African Fertiliser and Agri-business significant oil price decline has shifted attention
Partnership’s “Covid-19 Impact Assessment on the back to agriculture in oil-dependent countries like
-200 -200
Ethiopia- Kenya- Ethiopia- Tanzania- Tanzania- Uganda- Uganda- Agri-SMEs and Smallholder Farmers” concluded that Nigeria, where agricultural products are seen as a
Kenya Tanzania Somalia Rwanda Kenya South Sudan Kenya the supply of extension, mechanisation and farm source of diversification and foreign currency.
equipment and implement was more sensitive to International organisations have also responded
While Covid-19 negatively impacted the especially for export commodities like cocoa, coffee Covid-19-related shocks than core agro-dealer rapidly to the needs of the sector. The AfDB’s $10bn
performance of the agriculture sector in the initial and horticulture products, and for agri-businesses services. The crisis also had a significant negative Covid-19 Response Facility, for example, included
months of the pandemic, particularly during with strong ties to the hospitality industry. impact on sales and the broader customer base, the delivery of climate-smart agricultural
lockdowns, the fallout has been comparatively particularly in July and August 2020. interventions to avert hunger. Furthermore, the
contained. The top immediate concerns of agri- Although it is too early to assess the full extent of AfDB’s Feed Africa Response to Covid-19 looks to
businesses across the continent included the pandemic’s damage, the available data indicates AGRA anticipates that the pandemic will have major the post-pandemic period by aiming for regional
constrained cash flow and reduced revenue, that the impact on cross-border trade has also been lasting impacts on the sector. On the positive side, self-sufficiency in African food systems.
11 OBG Agriculture in Africa 2021 Graph source: ICPAC April 2021Overview
AfCFTA and Trade Share of average annual food trade by region, 2010-19 (%)
North Africa Southern West Africa East Africa Central Africa
Africa
Africa was a net exporter of food rice 27% and maize 20%. In terms of exports, The AfCFTA will result in the elimination of Imports
products up until the 1980s. High Southern and West Africa are the largest tariffs for 90% of products originating 6
food-exporting regions, with Central Africa from signature countries by 2021, and will 31
economic growth from the early 2000s
and rapid population increases drove up exporting the least. increase further to 97% by 2030. UNECA 14
domestic demand for food, while falling estimates that this will lead to $10bn-17bn
raw commodity prices along with weak The level of intra-regional trade in worth of additional intra-African trade in
infrastructure and low levels of agricultural products is lower in Africa than agricultural products – an increase of
investment in agricultural development in other regions of the world. African some 20-35% compared to current levels
contributed to reduced agricultural countries imported just 15% of all food from of trade across the continent. According to 24
exports. As of 2019 the continent’s other countries on the continent. With the the FAO, products that are forecast to see 25
agricultural trade balance was -$18.4bn, operational phase of the African Continental particularly significant rises in continental
with an annual food import bill of roughly Free Trade Area (AfCFTA) agreement trading include meat, milk and dairy
$68.5bn between 2014 and 2019. entering into force on January 1, 2021, it is products; sugar, beverages and tobacco Exports
expected that the share of intra-continental products; vegetables, fruits and nuts; and 2
Across the different regions, North Africa trade for all products will rise significantly. paddy and processed rice. 15
imports the largest amount of food, 21
accounting for 31% of all food imports in Benefits for agricultural trade are projected While the tariff reductions are likely to
Africa. Top imports include cereals (31% to be among the most significant. A 2020 have a positive impact on agricultural
of all food items imported by Africa), analysis by the IMF indicated that agriculture trade, non-tariff measures – in addition to
vegetable oils (12%), sugar (9%), dairy would amount to 16% of the welfare relatively high administrative and logistical
(6.8%) and meat (6.2%). Broken down changes anticipated to arise from the costs – continue to pose serious obstacles 31
31
further into subcategories, wheat agreement, with smaller countries in to trade on the continent, especially
represents 50% of all imported cereals, particular to see a large positive impact. between different economic regions.
12 OBG Agriculture in Africa 2021 Graph source: AGRA April 2021Overview
Food Security
Annual average major food imports to Africa, 2010-19 ($ bn) insecurity are in fragile and conflict-affected from 9% to 5%. Meanwhile, as part of the
states, particularly those affected by extreme Covid-19 economic recovery plan, the
weather events. In particular, climate change is government of Ghana executed an expansion of
poised to further exacerbate this insecurity. its food security programmes such as Planting for
Food and Jobs, including a number of initiatives
The International Development Association which are designed to provide better access to
19.1 22.8 Cereals Meat & edible meat offal reports that the frequency of climate shocks – important agricultural inputs such as seeds,
Vegetable oils Fish & crustaceans extreme weather events causing food production fertilisers and machinery.
TOTAL
declines of 2.5% or more – increased from once
3.4 $74.1bn Sugars Preparations of cereals & flour every 12.5 years between 1982 and 2006 to once International organisations like the World Bank
4.3 Dairy products Other food items every 2.5 years between 2007 and 2016. One of have also pledged their support, offering $5.3bn
8.5 the worst locust outbreaks in decades in commitments for short-term relief and
4.6
compounded the situation in East Africa in 2020, investment to address the driving causes of food
5.0 6.4
with Ethiopia, Kenya, Somalia and Uganda all hit insecurity on the continent. Among the longer-
by swarms, which damaged early harvests and term projects planned are numerous
caused $8.5bn in crop and livestock losses. partnerships with local governments and the
Covid-19 has weakened food security in Africa face acute food insecurity in 2020, bringing the private sector, including agri-tech start-ups.
through reductions in income and supply chain total to approximately 270m. In direct response to these challenges, Digital technology could play an important role in
disruptions, combined with food price inflation as government involvement increased in many strengthening local service delivery and the value
a result of lower availability of agricultural labour Food security was already a major concern in countries in 2020. For example, the Nigerian chain. Other key agricultural interventions that
and diminished liquidity for traders. In November Africa prior to the pandemic, with the continent government reduced fertiliser prices, increased could result in more robust food production in
2020 the UNWFP estimated that 137m more importing $35bn in food annually, according to intervention funding for the sector, and lowered Africa include more climate change-resistant
people – equivalent to an increase of 82% – could the AfDB. The most acute causes of food interest rates on existing intervention funding seeds and better irrigation technology.
13 OBG Agriculture in Africa 2021 Graph source: AGRA April 2021Overview
Outlook
Per capita value of net agriculture & fish production in sub-Saharan Africa, 2000-29F For those active in the sector in countries that have disputes, as well as underdeveloped linkages to
put food security high on their development agenda other sectors – are addressed. Key to unlocking the
1.2 or are looking for agricultural development as a opportunities provided by the continent’s young,
strategy to ensure greater diversification, however, growing and increasingly urbanised labour force,
the crisis could provide additional opportunities. developing middle class and abundance of arable
1.0 Accelerated adoption of digital technologies and land are technological leapfrogging, well-timed and
supply chain improvements are also likely to lead to stategic investments, and targeted incentives.
greater increases in productivity.
0.8
2020F
2021F
2022F
2023F
2024F
2025F
2026F
2027F
2028F
2029F
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
The implementation of the AfCFTA agreement, while
delayed due to the disruptions caused by the
Covid-19 pandemic, has also become an important
The pandemic has seriously complicated the short- and trade volumes by the third quarter of 2020, and focal point for many governments at a time when
and long-term outlook for Africa’s agriculture sector. forecast a recovery in agricultural product trade flows are regionalising. The countries on the
Employment, trade and productivity have recovered consumption for 2021. Similarly, global consultancy continent that take advantage of the opportunities
in some regions and subsectors, and government McKinsey concluded that Africa’s strong late-2019 for increased intra-continental trade and develop
and international support programmes have done harvests helped minimise the impact of Covid-19- stronger agro-processing industries are likely to
much to provide relief for the most severely related disruptions on the continent’s agriculture reap the most benefits.
affected segments. While exporters of commodities and food systems.
such as cocoa, flowers and coffee faced declining Value addition and commercialisation in agriculture
demand, some of the more severe projections about Nonetheless, the ongoing fallout from the global are instrumental to driving economic
agri-business disruption failed to materialise. economic downturn will likely make for a transformation and boosting employment levels
challenging environment for farmers and agri- once structural challenges – in particular,
Credit ratings agency Fitch Solutions noted a return businesses alike, compounded in some cases by infrastructure deficits, skills gaps, financing
to pre-Covid-19 levels for certain commodity prices issues like locusts, conflict and extreme weather. shortages, lack of access to key inputs and land
14 OBG Agriculture in Africa 2021 Graph source: OECD-FAO Agricultural Outlook 2020-29 April 2021Interview
Mohamed Anouar Jamali
CEO, OCP Africa
To what extent has the Covid-19 pandemic What measures has OCP Africa taken in How has the pandemic prompted governments
impacted agriculture across Africa? response to pandemic pressures on farmers? to improve agricultural supply chains?
The pandemic has had a significant impact on We took several steps to help mitigate major The pandemic has forced governments in Africa
almost all business sectors and companies around impacts in order to keep the African agriculture and many international organisations to rethink
the world, yet agriculture has shown resilience as sector running during the pandemic and meet food how food supply chains function to ensure food
evidenced by increased yields thanks to government consumption needs on the continent. Building on can still reach consumers. Over 60% of Africa’s
support. The agriculture sector accounts for around our experience in farmer-centric activities, and population live in rural areas and are dependent
15% of the continent’s GDP and employs six out of with continued effort to assist local governments on smallholder or family farming. Therefore,
10 people. The heightened risk of food insecurity and public institutions, we scaled up our flagship movement restrictions, disruptions to food supply
due to the pandemic has led governments and Agribooster programme that offers a holistic and limited market access can have devastating
businesses to boost efforts to keep agricultural approach centred around smallholder farmers. effects, such as heightened food insecurity. We
operations running smoothly and safely. According It helps them to raise their income through a believe that investment in technology and training
to the World Bank, the global market for agricultural sustainable increase in yield via capacity-building can lead to improvements in supply chains across
products proved more resilient than overall trade, programmes, agronomic training, high-quality input Africa. Digitalisation will help smallholder farmers
thanks to national and local government support packages, supply and financing mechanisms, and protect their operations against other future crises.
to address the risks related to food insecurity. market linkages that teach farmers about market Sensors, drones and satellite imagery could assist
Although the sector had a relatively strong year in demand in terms of quality and price. Based on the with farming or delivery, ensuring that food systems
2020, social-distancing measures made it difficult Agribooster model, our Covid-19 initiatives have continue to operate despite major disruptions.
for farmers to connect with customers directly; reached more than 350,000 smallholder farmers in During the Covid-19 pandemic, an increased
finding seasonal workers became more difficult; and four countries. In Côte d’Ivoire, for example, OCP number of farmers used their phones to contact
cooperatives struggled to secure enough buyers, Africa supported the national Plan d’urgence Riz input suppliers, receive advice and learn new skills,
given that large customers such as hotels and through a comprehensive approach that includes proving that digital technologies and smartphones
restaurants were unable to operate as usual. supplying adapted inputs to rice farmers. are changing the agriculture industry for the better.
15 OBG Agriculture in Africa 2021 April 2021Fostering an Agri-tech Ecosystem
Accelerated Use Mobile connections in low- and middle-income countries of sub-Saharan Africa, 2019 vs 2025F (%)
10 3 12
45 27
The disruptive and transformative potential of agricultural 2G
technologies (agri-tech) has become increasingly apparent in
recent years, and Covid-19 has further accelerated the trend 3G
towards greater use of ICT in Africa’s agriculture sector. During 2019 2025
4G
the pandemic, digital solutions that enable a continuation of
business while allowing customers and employees to adhere to 5G
social-distancing measures have boosted the adoption of 45 58
technology across many sectors, including agriculture.
A 2020 report on success stories from smallholder farmers and
small agricultural enterprises published by the African Fertiliser Although these relatively basic forms of technology were already Widespread use of mobile money has enabled the provision of
and Agri-business Partnership highlights some of the immediate available to many smallholder farmers prior to 2020, the many other digital services to farmers and agri-businesses in
applications of digital service delivery during the pandemic. USSD pandemic seems to have accelerated their adoption in rural areas Africa. The number of agriculture-focused digital financial
codes, WhatsApp group messages and other mobile phone- and boosted the availability of innovative digital services. In the services across the continent has increased rapidly: from 52 in
enabled communication methods were used by small and “Digital Agriculture Maps 2020” report on the state of the sector 2015 to 150 as of 2019. The majority of these services in sub-
medium-sized agricultural operations to provide basic digital in low- and middle-income countries, mobile operator association Saharan Africa are based in the east, where mobile money has
extension service delivery, while e-payments allowed merchants GSMA notes that Covid-19 resulted in a dramatic spike in mobile achieved the greatest degree of penetration to date. According
to conduct cashless transactions. In a similar vein, Ghana-based money usage in a number of countries. For example, in Rwanda to the Technical Centre for Agricultural and Rural Cooperation’s
agri-advisory service Farmerline – which, prior to the pandemic – where the government encouraged the use of mobile money 2018-19 “Digitalisation of African Agriculture” report, nearly half
focused on providing training and information to farmers, in for cashless transactions – network operators recorded a five- of sub-Saharan Africa’s solutions for the digitalisation for
addition to enabling access to credit – provided Covid-19 updates fold increase in transactions during the lockdown and record agriculture were headquartered in East Africa, with almost
to its network through a series of voice messages. numbers of new subscribers on mobile money platforms. two-thirds of farmers in the region using such services.
16 OBG Agriculture in Africa 2021 Graph source: GSMA April 2021Fostering an Agri-tech Ecosystem
Diversified Services
Broader financial inclusion also allows for greater the continent. With Covid-19 demonstrating the Active digital agriculture services in sub-Saharan Africa by type, January 2020
adoption of e-commerce, with agri-tech company Twiga vulnerability of the agriculture sector to local, regional
Foods proving one clear example as a service that allows and global disruptions, along with climate change-
smallholder farmers to sell directly to customers. During induced weather risks that are expected to become
the pandemic the company teamed up with the pan- more common in the coming decades, the demand for
African e-commerce platform Jumia, considerably insurance is likely to grow.
expanding the reach of its customer base in Kenya. The
total number of agricultural e-commerce services in As the traditional finance sector is meeting less than 3%
sub-Saharan Africa has grown exponentially, from three of the global needs for smallholder financing, 184 111 71 55 16
in 2009 to more than 70 as of 2019. crowdfunding is becoming an important digital solution Advisory Financial E-commerce Procurement Smart
to the lack of investment in African agriculture. Nigerian services farming
Insurance is another service that is becoming start-up Farmcrowdy, founded in 2016, offers double-
increasingly available to smallholder farmers as a result digit returns on investments directly allocated to Top-five countries by number of digital agriculture services, January 2020
of digitalisation. Almost all (97%) of sub-Saharan African individual farms. Through this model, the company has
smallholders were uninsured in 2018, according to raised more than $15m for 25,000 farmers since its
GSMA. This compared to Asia, where 78% had no creation. Tapping into its network of farmers and
insurance, and Latin America, where 67% were investors, the firm has expanded its services to provide Uganda
uninsured. High costs on the side of the provider and insurance and information products to farmers, while 43 services
low trust and awareness of smallholders have ensured also venturing into logistics activities. Kenya
the persistence of this large gap, but index-based mobile Nigeria 95 services
micro-insurance is opening doors. Companies such as Other crowdfunding platforms have sprung up in recent 47 services
Agriculture and Climate Risk Enterprise Africa – which years, with particular success in Nigeria, where Ghana Tanzania
has insured over 1m farmers in Kenya, Tanzania and companies such as Thrive Agric, Payfarmer, Porkvest, 45 services 28 services
Rwanda – are seeing opportunities for expansion across FarmFunds Africa and PorkMoney compete for investors.
17 OBG Agriculture in Africa 2021 Graph source: GSMA April 2021Fostering an Agri-tech Ecosystem
Future Transformation
While digital advisory and digitally enabled financial services are revenue. The TCA estimates the potential market revenue to be
the most common types of agri-tech currently deployed on the between €2.3bn and €5.3bn, with only €127m currently captured.
continent – with the Technical Centre for Agricultural and Rural
Cooperation (TCA) stating that advisory services alone make up Governments have been leveraging digital tools as well: leadership
two-thirds of all registrations – more complex agricultural in Mauritius, Uganda and Rwanda are using ICT solutions to update
technologies provide great opportunities for long-term and improve their land information systems. In Rwanda the use of
transformation of the sector. Smart and precision farming using drones and GPS has enabled the government to register
the internet of things (IoT) leverage drones and sensors to monitor approximately 11.3m parcels of individually owned land and 8m
and improve the productivity of crops, livestock and aquaculture, title deeds between 2010 and 2014 at an average cost of just $8
which could help close the continent’s yield gap. However, as the per parcel. Widespread adoption of such solutions could formalise
GSMA points out in its 2020 report, Africa has few scalable IoT much of the agriculture sector, since most African countries
networks and many farmers operate on too small a scale to make currently face challenges in ensuring rapid and accurate land
many of the services commercially viable. In 2019 the African administration. An ill-administered land registration process poses
Development Bank noted that the majority (54%) of all digital a major obstacle to commercial farming.
agriculture solutions were still used by commercial agribusinesses,
with many services remaining unaffordable to small-scale farmers. Governments will also play an important role in creating an
enabling environment for both agri-tech start-ups and established
Nonetheless, the wide range of agri-tech products and services companies. The success of the mobile money incentives introduced
that have seen commercial success is only expanding. According to by some African governments during the pandemic demonstrates
the TCA, 60% of the 390 active digital agricultural solutions that the power of conducive policies. With more investment in digital
were available in Africa in 2019 were launched after 2016, and 20% infrastructure, digital education and the clarification of digital
since 2018. More than 33m smallholders have used at least one of regulations, the current momentum for agri-tech innovation is
these services, and an estimated 70% of service providers generate likely to lead to substantial long-term benefits across the sector.
18 OBG Agriculture in Africa 2021 April 2021Sustainable Agriculture Development
Costs of Climate Change
With the negative impacts of climate change on African 50% of surface area and 40% of the continent affected by
agriculture becoming more apparent, efforts to improve desertification. In 2019 Mozambique, Malawi and parts of
sustainability are increasingly putting climate Zimbabwe were hit by cyclones Idai and Kenneth, while
considerations at the heart of interventions. The main droughts affected harvests in the Sahel and the Horn of
threats to the sector include more and longer droughts, Africa. Storms and floods are also damaging the
higher frequency of climate-induced disasters and ecosystems many farmers rely on. “Climate change will
extreme weather events, and accelerated desertification. have an impact on the availability of water and land, as
Much of Africa is vulnerable to droughts due to the well as the variability of growing conditions from year to The frequency of
predominance of rain-fed agriculture. An estimated 6% of year,” Aniss Bourraqadi, head of agronomy at OCP Africa,
the continent’s arable land is irrigated, which means the told OBG. “We have to develop a culture of producing
climate shocks – extreme
majority smallholder farms are highly sensitive to more more with less and using innovative approaches, weather events causing
unpredictable seasons, as well as prolonged periods of combined with more diversification in terms of cropping food production declines
excessive heat and erratic rainfall. On the University of systems, to ensure greater resilience in agriculture.” of 2.5% or more –
Notre Dame GAIN Vulnerability Index, which tracks the
countries most vulnerable to climate change, eight of the Biodiversity loss – which result from both climate change increased from
top 10 are located in Africa. The 2016 droughts in Eastern and deforestation caused by intensive production of once every 12.5 years
and Southern Africa, for instance, led to significant crops such as cocoa, rubber and oil palm – is another between 1982 and 2006
harvest reductions and greater food insecurity. major concern. The Covid-19 pandemic has created
additional urgency to halt this process. Recent studies on
to once every 2.5 years
Rising temperatures are also contributing to pandemic prevention indicate that loss of forest cover between 2007 and 2016
desertification, affecting yields in places such as Senegal, can lead to a much greater likelihood of contact between
Mali, Burkina Faso and Niger in the Sahel, and in North humans, wildlife and livestock, which can result in the
African countries including Morocco. Africa is already the spread of zoonotic viruses such as Covid-19 and Ebola.
second-driest continent, according to the UN Food and Investment in tropical forest preservation has therefore
Agriculture Organisation (FAO), with deserts making up been increasingly seen as a global priority.
19 OBG Agriculture in Africa 2021 Infographic source: International Development Association April 2021Sustainable Agriculture Development
Climate-smart Agriculture Solutions Distribution of climate finance by region
of destination ($ m)
In response to the evolving nature of guides the bank’s climate change and green International Fund for Agricultural
environmental challenges, stakeholders in growth interventions, has the promotion of Development (IFAD) is another major global 3
198
Africa and around the world are increasingly CSA as the first of its six priorities. The AfDB development partner focused on mobilising
deploying climate-smart agriculture (CSA) as also provides some of the much-needed climate and environmental finance for the
both a solution and a model for sustainable climate financing required to maintain agriculture sector. Among the agency’s
9
agriculture. The FAO defines CSA as “an sustainable agriculture development on the agricultural sustainability programmes is the
153
approach to developing the technical, policy continent; it pledged to mobilise $25bn in Adaptation for Smallholder Agriculture
and investment conditions to achieve 2020-25, for example, and invested some Programme (ASAP), which directly assists
sustainable agricultural development for $3.6bn in 2019, equivalent to 35% of the smallholders with irrigation, land use system
1219
3582
food security under climate change”, which institution’s investments. management, poverty reduction and climate-
incorporates both adaptation (building resilient farming practices. With $300m in
resilience in the face of the inevitable Overall, however, the continent struggles to donor financing, ASAP has directed funds
83 2
consequence of climate change) and attract sufficient climate finance. This is in and support to 8m vulnerable smallholders in 08
3
mitigation (reducing or removing greenhouse part explained by the overarching bias in 43 countries, primarily in Africa. 5 Middle East & North Africa
38
gases released via agricultural production). climate financing towards mitigation Central Asia & Eastern Europe
strategies, which account for roughly 90% of Other continent-wide projects, such as the
Latin America & the Caribbean
Major development institutions such as the current financing. Africa faces a Sustainable Agricultural Mechanisation in
Transregional
African Development Bank (AfDB) have disproportionately higher impact of climate Africa framework led by the FAO, provide
incorporated CSA into their climate change change and has relatively low greenhouse further support to African farmers in South Asia
agendas. For example, the AfDB’s Second gas emissions, requiring proportionally more addition to ensuring improved environmental East Asia & Pacific
Climate Change Action Plan (2016-20), which funding for adaptation. The UN’s practices and climate resilience. Sub-Saharan Africa
20 OBG Agriculture in Africa 2021 Graph source: “Examining the Climate Finance Gap for Small-Scale Agriculture”, November 2020, IFAD April 2021Sustainable Agriculture Development
Bridging Gaps in Funding
Investors see climate-related opportunities for Africa in Nevertheless, there are funding gaps that agriculture accounts for just 2% of all much as 30% in 2020. This demonstrates
energy, agriculture & water remain to be addressed. An analysis of electricity consumption, despite employing the potential for declining costs and
some 4000 agricultural loans worth a roughly half of the continent’s workforce. opportunities for commercialisation at
Where do you see the most opportunities for climate investments in Africa? combined $2.7bn conducted by the Council scale to facilitate the rapid adoption of
(% of respondents) on Smallholder Agricultural Finance in 2019 The growth of renewable energy, renewable energy in the agriculture sector.
100 identified several areas where further particularly in the form of decentralised
subsidies would be advantageous. These solar power, could enable greater Indeed, the International Renewable
include smaller loans, loans to African agricultural productivity in Africa – for Energy Agency has noted significant
80 businesses, new borrowers, informal value instance, by providing electricity to solar reductions in the cost of all commercially
chains and long-term loans. water pumps for crop irrigation, or by available renewable power generation
60
deploying agro-photovoltaic (PV) projects, technologies over the course of recent
Blended finance, a strategy which involves whereby crops are sheltered beneath years, particularly for solar. Figures from
the use of concessionary development- elevated solar PV panels. 2018 show a 26% decrease in the cost of
40 oriented funding to mobilise private concentrated solar power, with solar PV
capital, is increasingly being used for A recent example of these potential declining by about 13%.
fundraising in this sphere. benefits can be found in the South African
20
maize industry. A partnership between Investors have also taken note. The solar
Solar energy is one area of sustainable Jaguar New Energies and a Netherlands off-grid technology vertical received the
0
agricultural development where private government fund provided financing for second-largest amount of funding among
and development finance have already the initial set-up costs of solar power for venture capital-funded projects in Africa in
forged fruitful collaborations in Africa. farmers. The International Food Policy 2019, receiving $247m and accounting for
Bu g
ies
gy
re
er
Fo e
ry
ac e
Tra gs
To t
ism
als
r
t
nc
rin
po
st
as
tu
at
er
in
er
er
ur
M Fina
re
tu
W
ul
ild
W
En
ns
Research Institute estimates that the 12.2% of all venture capital tech funding on
in
et Fish
ric
m
uf
Ag
&
The South African Institute of International resultant green energy rollout boosted the continent that year, according to
an
als
Affairs notes in a 2020 policy brief that maize production in the country by as investment platform Partech.
M
21 OBG Agriculture in Africa 2021 Graph source: Survey of 176 energy professionals conducted by April 2021
African Business magazine, published August 2020Interview
Sidiki Cissé
Director-General, National Agency for Rural Development of Côte d’Ivoire
To what extent has assistance been provided to What steps should be taken to ensure that more attractive. We must also take into account the
farmers in Côte d’Ivoire during the pandemic? the continent is well positioned to meet the need to modernise agricultural practices, and this will
challenges of food security? require adhering to new standards for the production,
The government of Côte d’Ivoire took a number of preservation, pricing and distribution of crops at both
measures to support agricultural production and Africa will double its population in 30 years, and a regional and continental level.
avoid a drastic decline after the outbreak of the food security measures must be implemented at the
Covid-19 pandemic. For example, it launched the continental level. Emphasis should be placed on post- In what ways can new technologies help
Agricultural Emergency Programme, which supported harvest activities because there are a lot of issues modernise and improve the agriculture sector
more than 100,000 farmers across the country. related to the processing and preservation of certain across different stages of the value chain?
Farmers were provided agricultural inputs and products that have not yet been resolved. Particularly,
materials free of charge, and received support for the we need to have a closer look at the redistribution of New technologies have become an essential and
commercialisation of their products. produce. To this end, research is now focused on the efficient tool in the agricultural production chain for
quality and productivity potential of certain crops. various steps such as processing and commercialising
Meanwhile, revisions were made to existing This is a path that needs to be explored further in products, as well as providing advice to farmers,
programmes to ensure that they adhere to sanitary order to improve agricultural practices and harvests which can now all be done online. ICT tools, such as
measures and social-distancing rules. While remote in Africa. Other aspects that must be discussed drones, can improve productivity, for example. ICT
work was adopted, communication continued via include the reduction of transport costs and the could also modernise farmers’ financing methods
telephone calls and text messages due to the fact that commercialisation of products. and enable payments via e-banking platforms. We
not many people in rural areas have internet access. need to promote this kind of practice in Côte d’Ivoire,
More broadly, we built on the knowledge gained from Food security will be an increasingly challenging issue particularly because it can help reduce the risk of
our previous experiences with outbreaks such as in the years to come, which is likely to see people theft. Furthermore, the use of ICT is important for
Ebola and malaria to raise awareness and inform our seek job opportunities in agriculture. Therefore, traceability at the production level, from the geo-
partners of the measures they need to take to reduce we need to incentivise the younger generation to referencing of production plots to the final product
the pandemic’s impact on agricultural activity. participate in the sector by making agro-industry that will be or has already been processed.
22 OBG Agriculture in Africa 2021 April 2021You can also read
