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Over the last decade, African
economies have grown faster than any others in the world. But most of this
growth has occurred outside of agriculture, even though agriculture employs one
half to two-thirds of the population. This fact more than any other explains
why Africa's economic expansion has failed to generate benefits for the
majority of Africans.
Heads of state, senior government
officials and business leaders from around the world can help spur more
inclusive growth in Africa by emphasizing investment in smallholder agriculture
- food production on farms that are typically less than a hectare in size.
These smallholder farms are the mainstay of Africa's agriculture system. And
with the right mix of policies and investments from the public and private
sector, they have potential to be global players.
According to the World Bank, the
value of Africa's agricultural output could soon triple, from an estimated $280
billion today to around $800 billion by 2030. That output could flow to
Africa's urban food markets, which are expected to increase fourfold, and
satisfy Africa's overall demand for food, which is projected by the African Union
to almost triple by 2050, increasing by 178% compared to 89% in India and 31%
in China. But, most importantly, if the investment is channelled to family
farmers and local agriculture businesses, the benefits will accrue to the half
billion Africans, many still mired in poverty, who rely on farming for food and
income.
We have a long way to go. Today,
African farmers and agriculture businesses are attracting only 5.8% of total
commercial lending on the continent, a strong signal that the majority of investors
are not yet buying into this sector's potential returns.
African governments recently pledged
to increase significantly their investments in our smallholder farmers. Many
believe a critical mass is gathering to mount a major turnaround in African agriculture.
But for this transformation to occur, we must confront the fundamental
challenges in production and marketing, along with the weak agriculture
policies and institutions that have caused this sector to chronically
underperform.
The issues start in the field.
African farmers use a smaller fraction of fertilizers, high quality seeds and
basic farm machinery like tractors than their peers in other developing
regions. Only 6% of cultivated land in Africa is irrigated. And when production
challenges are addressed and yields increase, farmers often struggle to
capitalize on their surplus.
For example, due to a mix of
infrastructure challenges and outdated trade policies, Africa's farmers and
agriculture businesses still have enormous difficulty accessing markets - from
the urban centres in their own countries, through their African neighbours just
across the border, to potential buyers in regional markets.
Moreover, food
processing and other "value-added" agriculture activities, and the
employment, income and investment that come with them, still occur largely
outside of Africa for African markets with a resultant huge food import bill,
not to mention the lost opportunity in exported jobs for African youth.
There are examples in several
countries where targeted reforms and a focus on attracting private sector
investment in smallholder agriculture have achieved rapid results. In just a
few years, Nigeria's imports of rice, sugar and fish fell from $11 billion to
$7 billion. In Rwanda, Uganda, Malawi, Ethiopia, Ghana, Tanzania, Kenya, Zambia
and Mali, increased access to seeds, fertilizers and other technologies is
doubling and even tripling yields of critical food staples.
Today, we are seeing that Africa's
agriculture sector can expand rapidly and its benefits shared broadly when the
focus shifts from traditional public sector-driven agriculture to more private
sector-led endeavours. Then, government policy, spending and regulatory
frameworks - aided by development partner support - can focus on positioning
smallholder farmers and local African businesses in functioning markets to act
as entrepreneurs and engage in partnerships with local, regional and
international businesses that can facilitate inclusive economic growth.
Even with the recent oil price
slump, Africa remains the world's fastest growing region for foreign direct
investment. As leaders meet in Addis this week, governments, business and
international institutions need not only to embrace policies and incentives that
can help fast track investment, but also direct a greater share of this capital
to African farmers and African agriculture businesses.
Making the right investment and
policy decisions now will determine whether the fruits of Africa's enormous
agriculture opportunities are harvested for the benefit of the 530 million
Africans that depend on agriculture for food and income. It will also determine
how inclusive Africa's economies become and whether the promise of African
agriculture comes to fruition or remains unripened in the realm of a potential
that is never realized.
