Achieving food security with social and environmental sustainability.
The agriculture sector has significant potential for making an impact across value chains and it is key to driving inclusive economic development, given it is responsible for over 60% of employment and over one third of total value added across the continent, according to the ILO. Increase dynamism in this sector can have high social and economic impacts including on bulging youth unemployment. With a comparative advantage in agriculture, Africa can produce at scale. The continent has abundant agricultural resources that are currently underutilised. It is home to 60% of the world’s arable land, so extensive agricultural practice is possible.
The economist Nicolas Kaldor argued that the growth rate of an economy is positively related to the growth rate of its manufacturing sector. The large body of work in the applied economics of growth that he influenced has recognised manufacturing as the engine that induces productivity and growth not only within the manufacturing sector but also in agriculture.
This is key to why agro-industrialisation that builds upon Africa’s distinctive farming system of smallholders is essential for the modernisation of the continent’s agricultural sector. The production and export of value-added agricultural products provides guard rails against commodity price shocks and the realisation of a steadier rate of economic growth. At the national level, investments and incentives that are customised for Africa’s smallholder farming systems are critical.
The African Union’s Comprehensive African Agricultural Development Programme offers a template for key policy measures. African countries agreed to allocate at least 10 per cent of national budgets to agriculture and rural development, especially towards improving rural infrastructure, agricultural research, and technology adoption. New tools such as agro-industrial parks, agro-processing zones, and special economic zones have emerged in the continent in countries such as Benin, Ethiopia, and Nigeria, among others. These offer regulatory frameworks to ensure that dynamic gains up and down the value chain can be realised.
At the regional and continental levels, market integration through the efforts of the regional economic communities and the African Continental Free Trade Area initiative can facilitate trade and regional value chains. The World Trade Organization must ensure that global trade rules that distort agricultural markets through subsidies and undermine competitiveness in African agriculture are reformed.
But these state and international initiatives are not enough.
The long-term sustainability of agro-industry in Africa requires that agro-industrial businesses be built by the private sector. Its involvement is critical to ensuring that food insecurity is a thing of the past, both in Somaliland and Ethiopia
We want to build agricultural businesses that ensure further value is
created and captured on the continent, with strong demand off takers,
both local and international.