• Industrializing Africa through agriculture and agro-industry

Industrializing Africa through agriculture and agro-industry

ADB’s 2017 Annual Meetings were held in Ahmedabad, India, from 22 to 26 May under the theme “Transforming agriculture to create wealth in Africa”, in the presence of the President, Akinwumi Adesina.

 

By Akinwumi Adesina, President of the African Development Bank (ADB)

No region in the world has ever been industrialized without transforming the agricultural sector. For African economies, agriculture – which represents 16.2% of the continent’s GDP and provides employment for more than 60% of population – is crucial to accelerate growth, diversification and create jobs. However, this sector has always performed poorly. Cereal yields are below the world average. Modern farming inputs, such as improved seeds, mechanization and irrigation systems, are still very poor.

In the past, agriculture was perceived not as a wealth-creating sector, but as a way for humanitarian development organizations to fight poverty. However, African agriculture has tremendous potential, especially in terms of investment. About 65% of all uncultivated arable land in the world is in Africa. Within a generation, when the continent can feed itself, it will also be able to feed the nine billion people expected in the world in 2050.

A $ 1 trillion market by 2030

Alas, to underestimate agriculture, Africa is wasting money and resources. Food imports, for example, account for $ 35 billion per year in foreign exchange, a figure that is expected to exceed $ 100 billion per year by 2030. As such, Africa is straining its economic future. It imports the food it should produce itself. It exports – often to developed countries – the jobs it should preserve and develop, and it pays high prices for basic foodstuffs, undergoing fluctuations in the world market.

The food and agro-business sector is expected to jump from $ 330 billion today to $ 1 trillion by 2030 – let’s not forget about 2 billion additional people who will have to feed and dress. African companies and investors must avail this opportunity and unleash this potential for Africa and Africans.

Africa must begin by treating agriculture as a sector of trade and learn from experiences elsewhere, such as in Southeast Asia, where rapid economic growth has relied on agro-business and agro-industrial sector. Here is the transformation formula: associated with industrial, manufacturing and processing capacities, agriculture reflects a strong and sustainable economic development, which creates wealth in all economy sectors.

$ 24 billion to “Feed Africa”

To stimulate agro-industrialization, we must be able to finance agriculture, unleash its potential and make it a sector of activity on the continent. As part of its “Feeding Africa” ​​strategy, the African Development Bank will invest $ 24 billion in agriculture and agro-business over the next ten years, that is, 400% more than the current level of funding, which is $ 600 million a year.

At the heart of such a strategy, $ 700 million will finance the major program “Technologies for the transformation of agriculture in Africa”, which aims to develop agricultural technologies so as to reach millions of African farmers within the next ten years. Thus, the Bank’s strategy also has as main objective to accelerate commercial financing of agriculture, because, despite its potential, the agricultural sector receives less than 3% of the total financing granted by the banking sector.

Risk-sharing instruments could solve this problem by classifying the risks related to commercial banks’ loans to the agricultural sector. Development financing institutions and multilateral development banks should create risk-sharing facilities in each African country to leverage agricultural finance. The African Development Bank is setting the tone by adopting a particularly compelling risk-sharing program I defended when I was Minister of Agriculture in Nigeria.

Agro-industrial zones must be established

Développer les infrastructures en milieu rural est capital pour la transformation du secteur agricole – accès à l’électricité et à l’eau, routes et voies ferrées pour le transport des denrées alimentaires brutes et transformées, notamment. Le manque d’infrastructures accroît le coût de l’activité économique, dissuadant les entreprises agro-alimentaires de s’installer en zone rurale. Les autorités doivent offrir à ces entreprises des avantages au plan fiscal et des infrastructures, pour les encourager à déménager dans les zones rurales, plus près des lieux de production que de consommation.

Developing infrastructure in rural areas is crucial for the transformation of the agricultural sector – access to electricity and water, roads and railways for the transport of raw and processed foodstuffs. The lack of infrastructure increases the cost of economic activity, discouraging agro-business companies to operate in rural areas. The authorities must offer tax and infrastructure incentives to encourage them to move to rural areas, closer to production and consumption sites.

This can be achieved through the creation of agro-industrial zones and food crop processing zones in rural areas.

Combined with improved infrastructure, such as roads, water and electricity, and appropriate housing, these areas will reduce operational costs for private companies operating in agro-business. They will create new markets for farmers, increase economic opportunities in rural areas, boost employment and attract domestic and foreign investment.

In addition to operational costs, this will also greatly reduce the high level of post-harvest losses in the continent today. As agricultural incomes increase, the rural areas now abandoned will turn into places of economic prosperity. Our goal is simple: support massive agro-industrial development across the African continent. Once this goal is achieved, Africa will have taken its rightful place as the global powerhouse of food production. It could just as well feed the entire planet. The economic transformation for which we are all working will then have been fully achieved.


 

Auteur : Akinwumi Adesina, président de la Banque africaine de développement (BAD // Photos : Akinwumi Adesina © DR

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