No one drinks oil or eats cobalt, but everyone needs food to survive. This has been the demand driver of Africa’s economic engine - agriculture. However, despite the sector employing 60 perecnt of the continent’s workforce, it only compensates with less than one-seventh of its GDP. This huge gap is enjoyed by the rest of the world as they add value to the raw commodities we export.
This situation is the same in Kenya though this is probably not news to you; Africa’s immature secondary sector has been widely discussed yet it hasn’t translated to a change in this narrative. To understand how we’ll transform our sector and economy, we first need to understand the hurdles we face, how and why they were put in place.
History is like a road map to the present. If you've seen where we've been, you'll have a much better idea of where we're going. When Kenya gained its independence in 1963, it was enabled by a series of agreements known as the Lancaster Accords.
These accords have had a significant impact on Kenya’s agricultural sector. It is the main driver for the positives we’ve seen, but it is also the root cause of most of the challenges we face.
On the positive side, the accords led to increased investment in agriculture as they urged the British Government to provide financial assistance to Kenya to help develop its agricultural sector. This investment led to increased agricultural productivity, which helped to improve food security in Kenya.
Under British rule, much of Kenya's land was owned by European settlers. The accords stipulated that all land in Kenya would be owned by the Kenyan Government, and that land would be redistributed to Kenyan citizens. This redistribution of land helped to improve access to land for smallholder farmers, which helped to boost agricultural production.
However, the Lancaster Accords also had some negative impacts on Kenya's agricultural sector such as the increased emphasis on export crops. The Kenyan government focused on promoting the production of export crops, such as coffee and tea which focus less on their value addition. This emphasis on export crops led to the neglect of food crops, which made Kenya more vulnerable to food shortages.
Innovative land reforms and strategic partnerships
Kenya's approach to transformation can stand out by learning from past failures of rigid ideological projections and adopting a more balanced partnership strategy for effective problem-solving.
Under this approach, local county governments would establish cooperative partnerships to represent their citizens' interests and would seek technical expertise through strategic joint ventures.
These partnerships would include minority shareholders in the form of a strategic agricultural development company, responsible for providing technical capacity, machinery, and funding. In return, they would receive a share of the profits and dividends from the cooperative entity.
Coordination and capacity building
In Kenya's breadbasket regions, the average farm size has seen a stark reduction over the past decade, yet we have large parcels of land under government agencies and parastatals. Strategies like the Land Commercialisation Initiative (LCI) can be deployed to use large tracts sitting idle in the various government ministries and parastatals that can be used for farming as such increasing food production and bridging the gap which exists in the production process.
The question of the day is, are we ready for multi-county and regional block investments in agriculture? To drive this key reform agenda; Investments in agriculture should be of a national nature traversing different countries. County governments, through the regional economic blocs, can achieve scale which can help reduce transaction costs and attract sustainable financing on these bankable projects. Ownership can be based on shareholding with revenue sharing arrangements with the commercialisation of agriculture.
This will attract the right International Investors like pension funds and makes it possible to raise financing through County Bonds and other debt instruments.
Further, there is an immediate need to rethink commercial farming and the sentimental attachments farmers have on the large plantations of tea, coffee, palm oil, macadamia, avocado etc. There is a need for a current mind shift on the capacity to manage large commercial farms.
The future is not necessarily bleak, but we must act swiftly to enjoy the fruits of our labour figuratively and literally.
The writer is the group managing director & CEO of CPF Financial Services Group.
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