Last week I was in Rwanda. The small East African member country is putting up a new airport, a convention center, new hotels, an ICT park and modern malls.
Besides these mega projects and an obsession with cleanliness, the country is leveraging on technology to improve its agricultural productivity.
Senior government officials are upbeat about recent statistics showing 10 per cent poverty decline.
They are aware that more can be done if they can stall further sub-division of land through rapid urbanisation. This will free up more land for large scale agricultural activity.
Farmers have always gotten a poor deal from middlemen who take advantage of their limited knowledge on pricing and lack of access to finance.
Storage of their harvest has been poor leading up to 45 per cent post-harvest losses. Most are forced to sell their produce in a hurry for cash when prices are low due to harvest surplus only to buy the same crop for food security at a higher price.
With the introduction of the East African Commodities Exchange (EAX), farmers will no longer face the exploitation they have endured.
Paul Kukubo EAX chief executive and formerly chief executive of the ICT Board and native Kenyan says they will help the farmers grow high quality grain, show them improved farming methods and be able to provide financing through collateralising warehousing electronic receipts of their produce.
With the Warehouse receipt, the farmer can electronically trade his/her produce through the exchange and can hedge the family’s price risk through a futures contract at the exchange.
Post-harvest losses are down to five per cent and the farmer has access to the entire East African Market and beyond.
In the long run, Rwanda through EAX will be able to increase liquidity of trade; enhance price discovery; de-risk lending to agriculture; and instill integrity of trade.
Rwanda is simply building an unassailable comparative advantage over its sister countries in the region. It is one of the few that has been proactive in creating an enabling environment which encourages private sector involvement.
This is a key pillar in the African business leader and philanthropist Tony Elumelu’s Africapitalism philosophy and the reason why, as one of the founders of EAX, he built the exchange in Rwanda.
Should Kenya sit and watch her farmers continue to suffer in the hands of cartels and greedy middlemen? In my view we should not considering the fact that the 2012 Global Agricultural Productivity index has forewarned us.
The report notes that “only 13 per cent of Sub-Saharan Africa’s total food demand in 2050 can be met if the region’s Total Food Productivity rate remains constant.
This significant gap will need to be closed through investments in productivity improvements, selective expansion, intensification, and trade”.
In the North Rift, farmers are about to harvest. There will be surplus grain. They will most likely sell their produce below input cost.
Politicians will urge the government to buy the cereal through the National Cereals and Produce Board. Middlemen will buy to create an artificial shortage. The value-chain of coffee, pyrethrum and sugar too is stunted by cartels and corrupt co-operative societies.
This sad situation in our country must change since agricultural productivity is important for many reasons.
Through technology, agricultural practices have changed and as they change, they bring changes in demand for resources.
Improving agricultural productivity will ensure sustainable development for our future generations to live and thrive.
Dr Ndemo is a former permanent secretary for Information and a lecturer at the University of Nairobi.