Africa’s growth lies in agribusiness

As Africa embraces the wind of industrialisation, nations are determined to seize the emerging industrial development opportunities as an effective and sustainable means towards economic transformation of its raw materials.

Most countries in Africa depend on the production and export of unprocessed agricultural products as their main foreign exchange earner.

However, reliance on such exports is not only vulnerable to international price fluctuations but also to the vagaries of the weather.

Thus, a well developed and competitive agro-industrial sector in Africa will have a huge potential of generating income and providing employment opportunities not only in farming, but also in related activities like processing, handling, packaging, transporting and marketing of products.

In addition, the sector can contribute to reducing poverty, which is one of the key UN Millennium Development Goals.

The Assembly of the African Union Heads of State and Government in January 2008 endorsed and adopted a plan of action for the accelerated industrial development of Africa, which was developed with the support of UNIDO, UNECA and other partners.

This plan forms the basis for Africa’s industrial transformation and draws lessons from the previous industrial development decades of Africa.

It is structured into seven programme clusters, one of which covers the development of sustainable agribusiness and agro-industries as well as small and medium enterprises (SMEs).

In the last decade, many African countries registered significant progress in adopting macroeconomic reforms, good governance, and business and investment friendly policies.

As a result, these countries experienced relatively high rates of economic growth and improved policy environment for industrial development.

Notwithstanding this remarkable progress, Africa continues to face numerous challenges and supply-side constraints, especially in the agribusiness and agro-industrial sector, which include lack of industrial capacities, low levels of entrepreneurship and institutional support, inadequate energy and infrastructure, and low income levels of the existing enterprises.

This problem has constrained Africa’s agro-industrial development for decades and now requires concerted efforts on creating a conducive and coherent policy environment.

Africa needs to promote agribusiness and generate technical skills in agro-industries, stimulate productivity, promote investment, provide transport facilities and related infrastructure, upgrade and promote indigenous enterprises, create centres of excellence for technology transfer, reduce the time and cost of doing business and introduce appropriate standards to enable products to compete in international markets.

In many African countries, the agricultural sector is largely under-funded and faces problems, which has constrained industrial production and the development of agribusiness.

There is urgent need for increased public investment in the agricultural sector, and related policy reform to ensure increased continental economic growth and development.

There is also need to promote and support institutional reforms in order to stimulate agricultural growth and agribusiness on the continent.

As the African population continues to increase, there is urgent need to boost agricultural production to reduce hunger and ensure food security.

Africa has to build its financial and human resource capacity to be able to produce its own agricultural inputs like fertilisers, farm tools and machinery, upgrade its sanitary standards, and add value to its own agricultural products.

Africa needs to transform its agricultural products and provide the necessary support services to take advantage of the growing domestic and regional agro-food markets.

In addition, within the framework of South-South Cooperation with India, China, and Brazil, the continent stands to benefit from the experiences of these nations in agro-food processing and development.

The recent increase in food prices, which severely affected most countries in Africa, reinforces the urgent need for the continent to not only boosts its food production and self sufficiency, but to also achieve food sovereignty like any other region of the world.

Food handouts

Africa cannot afford to rely on other parts of the world for food aid and food handouts if it is to reduce hunger and malnutrition among its population.

Agriculture remains an important source of livelihood in African economies, accounting for a large percentage of employment and national GDP and therefore the pursuit of the food security agenda is key for the continent’s economic development.

In the pursuit of economic development, peace and security, food security, energy and infrastructure must go hand in hand as priorities for 2010.

The major challenge of developing agribusiness and agro-industries in Africa lies on the adoption of appropriate national and regional policies, strategies and institutions that can nurture innovation in the sector.

In addition, there is need to upgrade standards in agro-products within the value chain not only for export but also for domestic markets.

Standards can ensure high quality label, which in turn facilitates trade. For Africa, the challenge is to generate growth, become competitive and take ownership of its future.

Tankeu is the Commissioner for Trade and Industry at the African Union Commission