Wednesday, 20 July 2016

Let’s make agriculture cool again

Governments around the world are looking for economic growth and job creation. African economies are no exception, with increasing recognition that growth has to be built on a more diversified economic structure in order to make a lasting contribution to development. For even though Africa has weathered the fall in commodity prices better than the pessimists predicted, the instability of commodity dependence remains a reality.

In their pursuit of growth and diversification, African economies should consider transforming the discourse from a focus on industrialisation to a broader one centred on value addition in agriculture, manufacturing and services. There is no one size fits all approach to value addition. It is worth analysing whether the well-established post-1950s path to development - moving people and resources out of low-productivity subsistence work, especially farming, and into more productive activities in modern manufacturing and ultimately services - is still the optimum approach to job and wealth creation.

This doesn’t mean that African governments should give up on manufacturing and trade. In fact, as China moves up the value chain, there is much potential to attract labour-intensive light manufacturing, as is already happening in countries as varied as Ethiopia and Madagascar. What it does mean is that African governments, partner countries and multinational companies should do more to encourage investment not just in export-oriented manufacturing, but also in services, innovation and agri-processing. This involves investing in the ‘framework of trade’: from improving policies and physical infrastructure to lowering production and trade costs, fostering better business links to regional and international buyers and ensuring ready availability of financing for small and medium-sized enterprises (SMEs).

Agriculture deserves particular attention, because it accounts for around 60% of the labour force in Africa - more than 70% in countries like Liberia and Guinea. And it employs the vast majority of women, especially in sectors such as coffee and tea. Many African smallholder farmers did not share in the ‘green revolution’ productivity gains driven by modern seeds and techniques, irrigation, and greater fertilizer use in Asia and Latin America in the 1960s. In sub-Saharan Africa, irrigation still reaches only a small share of arable land, and the wide variety of staple crops - from teff in Ethiopia to cassava, yams, millet, and maize elsewhere - means that crop strain innovation is a taller task than in Asia where wheat and rice dominate.

Efforts are ongoing to close the yield gaps in African farming by overcoming limited irrigation and other inputs, low-yield seeds, inadequate storage, weak climate resilience, and uncompetitive access to local - let alone international - markets. Initial results are promising. Success could be transformative: with half the world’s uncultivated arable land, and relatively underused renewable water resources, Africa should be at the heart of feeding the 2.5 billion new mouths - many of them African - the global population is projected to add by 2050.

Yet substantially higher productivity will mean that far fewer women and men will be needed to till the soil itself. And people likely won’t be able to walk off the farm and into low-skilled urban manufacturing jobs as they might have done half a century ago in Spain and Korea. The risk is that many people will end up languishing in low-productivity informal service sector work.

The goal, then, must be to transform today’s subsistence agriculture into tomorrow’s agro-processing. Agricultural production, transformation, and related activities like branding, marketing and logistics could become alternative drivers of value addition and the creation of decent jobs.
While tariffs and distortionary subsidies in developed countries have long discouraged investment and value addition in agriculture in Africa, the playing field has significantly changed. Trade reforms and booming South-South and regional trade opportunities have opened new avenues. There is no intrinsic reason African countries should be importing, rather than exporting, basic staples like rice or higher value products like frozen chicken, cooking oil, or instant noodles.
But for agro-based industries to ‘jumpstart economic transformation’, challenges must be overcome at every step of the value chain. Farmers will need much better access to finance, electricity, technology, and irrigation. Agro-industry will need to expand both ‘downstream’, which is to say in processing, and in ‘upstream’ input-related activities. Health, safety, and sustainability standards - both public and private - will need to be met. And crucially, small-scale farmers, and SMEs, instead of only selling locally in low-income communities, will need to connect to more productive regional and international value chains. None of this is straightforward, and constraints on agro-industry vary from one crop or location to the next.

But the payoffs make it worth trying.

In Uganda, for example, the International Trade Centre has connected coffee farmers with traders and roasters looking for particular taste characteristics. The resulting long-term contracts and knowledge-sharing have resulted in improved productivity and quality, and a substantial increase in farm-gate prices. Finance management counsellors were trained to assist farmers’ associations to raise working capital to purchase members’ coffee and sell it on in bulk, enabling farmers to get higher prices than what they could have negotiated on an individual basis. This approach - addressing weak points in the value chain and building connections to foreign buyers - has fostered more processing and higher incomes in the Ghanaian yam sector, the Caribbean coconut industry, and for cassava farmers in Fiji.

Steadily growing demand from African consumers has confirmed that late management guru C. K. Prahalad was right a decade ago when he urged global businesses to seek out the fortune at ‘the bottom of the pyramid’. The challenge now is to fully harness the entrepreneurial energies of the bottom of the pyramid as producers.

In Africa, agro-industry must feature more prominently in the structural transformation process. Harvard science and technology expert Calestous Juma has argued that agriculture is more knowledge-intensive than manufacturing, and offers great opportunities for technological learning. There are solid grounds to believe this learning could spill over into other sectors.

The UNCTAD XIV conference in Nairobi this month provides a valuable opportunity for national governments, investors, and the international community to think about how to develop the sustainable agribusiness value chain in Africa. It is time we made agriculture ‘cool’ for new generations, by making it more rewarding.

Transform Agriculture Into a Wealth Creation Sector, AfDB President Akinwumi Adesina Urges

AfDB President Akinwumi Adesina with Rwanda's Foreign Minister Louise Mushikiwabo, at the 35th Session of the NEPAD Heads of State and Government Orientation Committee meeting in Kigali on July 16, 2016
The issue of Africa's industrialization was the focus of the 35th Session of the NEPAD Heads of State and Government Orientation Committee that met in Kigali, Rwanda, in the context of the African Union Summit.

At the July 16, 2016 event, the leaders deliberated on the importance of intensifying industrialization and scaling up the continent's electrification programs. They urged the New Partnership for Africa's Development to work with regional trading blocs to achieve industrialization for sustainable development.
Representing Rwanda's President, Foreign Minister Louise Mushikiwabo asked the delegates to consider implementing partnerships aimed at reaching sustainable development. "Our goal of sustainable development cannot be realized without industrializing Africa. Our deliberations are important and should lead to practical outcomes geared towards achieving an industrialized Africa," she added.

The Committee's Chairperson, Senegal's President, Macky Sall, stressed that "without energy there is no industrialization". He said there was urgent need for an appropriate industrialization strategy that will ensure a steady pace across the continent.
Addressing the meeting, President Akinwumi Adesina of the African Development Bank, outlined the Bank's New Deal on Energy for Africa whose goal includes expanding grid-power by 160 Gigawatts, connecting 130 million people to grid, another 75 million people to off-grid sources, and 150 million households to clean cooking energy. "We must have energy for light, clean cooking and baseload energy," he said, emphasizing the need to ensure the right energy mix on the continent.
He noted the importance of having a timeline that allows Africa to make adjustments to its energy mix, citing the AfDB-led Africa Renewable Energy Initiative, which is expected to deliver 10 GW of new and additional renewable energy generation capacity by 2020. It also seeks to mobilize Africa's potential to generate at least 300 GW by 2030.

The meeting pointed out the critical role of private sector, describing it as effective in achieving rapid industrialization. "We need to accelerate the rate of private sector participation by creating an enabling environment for its operation. Private sector is the engine of industrial growth, and its ability to create employment is acknowledged," noted Hailemariam Desalegn, Ethiopia's Prime Minister. He referred to the much anticipated Hawassa Industrial Park which is expected to create 60,000 jobs in the country.

President Adesina pointed out the opportunity posed by agro-allied industrialization, saying Africa needed to diversify from raw material production to developing value chains. "This will make Africa's agriculture competitive. He mentioned the current scenario where Africa is producing close to 75 percent of the world's cocoa, but processing only two percent. "The key is to use agriculture as a sector for wealth generation and not one to fight poverty," he stated.
Monitoring and implementation of these initiatives and projects emerged as a key point during the meeting. The NEPAD Agency Chief Executive Officer, Ibrahim Assane Mayaki, presented a recently developed 'dashboard', which he said would guide the Agency as well as Member States in tracking and implementing targets of regional and continental projects. The tool, he said, would enhance accountability.

Africa: Private Sector Urged to Invest in Africa's Agriculture

The commissioner for rural economy and agriculture of the African Union, Rhoda Peace Tumusiime, has called on the private sector to invest in agriculture to increase productivity and food security in Africa.

She made the remarks on Saturday while addressing the press on the sidelines of the AU summit, on how the Comprehensive Africa Agriculture Development Program (CAADP) of the Maputo Declaration of 2003 has been implemented.
She reminded that in 2003, at the African Union (AU) summit in Maputo, African leaders pledged to allocate at least 10% of national budgets to agriculture, to adopt sound agricultural development policies and to achieve at least 6% agricultural growth per annum, and created specific plans like the CAADP.
Tumusiime said that as a consequence, agriculture has grown by 4% per annum, though the target is 6%, which can only be achieved with collaborative efforts.

As a result, public agricultural expenditure has risen on average by more than 7 % per year across Africa since 2003, nearly doubling since the launch of CAADP.
"Graduates are not practicing agriculture, they go for soft jobs such as in ICT, and the private sector is needed in agriculture - if we invest in it Africa's GDP will grow," she said.

According to the World Bank May 10, 2016 update, Africa is among the fastest growing regions, but it now faces significant headwinds as a result of global trends and region-specific risks. Growth has slowed to 3.0% in 2015, down from 4.5 % in 2014.
"We needed mechanized agriculture and many people in agro-processing, more productivity with standards will generate jobs, increasing opportunities, especially for women and youth, ensure food security for both subsistence and international trade, improved nutrition, and strengthening resilience," she said.
Agriculture has the greatest potential to lift the continent out of poverty and alleviate hunger, but the sector has struggled to perform in recent history, with reforms happening excruciatingly slowly.

According to the World Bank, agriculture contributes 32% to Africa's GDP and provides employment to 65% of the labour force on the continent. In many countries, up to 85% of the workforce is employed in the agricultural sector, and an estimated 38% of Africa's working youth is presently employed in the agricultural sector.
Tumusiime added that a large proportion of African farmers are smallholders and often women, stressing that agricultural transformation is a springboard to industrialization as it becomes essential to invest in it and develop accessibility to quality inputs, markets for produce, good soils and soil management techniques, innovative finance tools and other resources needed for sustained agricultural production.

Time for religious organisations to invest in agriculture

It is a good thing to note that religious organisations have been contributing to the socio-economic development of Nigeria since their inception. Missionaries started with the establishment of the first primary schools, 1843 in Badagry, and they helped reduce illiteracy at a very fast rate. Those schools provided qualitative education at affordable prices while many were even free.
Unfortunately, instead of the government to establish her schools and make them compete with the privately owned ones, the government mischievously took over private schools and ran them aground. Religious organisations in Nigeria watched helplessly how the quality of education was bastardised by government. It was not until 1990’s when religious organisations returned into education investment.
Religious organisations also invested in the provision of health care centres, though they are not as many as the schools they own, yet their impacts are felt wherever they are located. Some operate maternity centres in local areas while some offer routine medical check-up.

In 1999, Madonna University was approved as the first religious organisation owned private university in Nigeria, since then, other religious groups have been establishing universities all over Nigeria. ‎However, so much criticism has accompanied the ‘exorbitant’ fees introduced by them as people claim the poor cannot afford them.
The fact that these universities were established by religious organisation makes it look ‘exploitative’ to critics because they believe that services of religious organisations should either be free or cheap as they were funded by followers’ contributions. Moreover, they have invested rightly and I believe the fees would be more affordable in the future.

Media (TV and radio) stations of religious organisations are being operated on various outfits. Some are into real estate, sports and building of skill acquisition centres. All these are not cheap, they cost a huge sums. Setting up a standard university is very expensive, some say it requires a minimum of 10 billion naira to acquire human and physical resources for the start up.
Taking a look at the operations of religious organisations in Nigeria, one will observe that they control huge funds in the economy. Donating/giving for religious purposes is one of the voluntary acts in Nigeria, but unfortunately, there is so much poverty in the society. Religious organisations became economic spectators because the government monopolised the responsibility of developing the economy.
Corruption and cluelessness perpetrated by successive governments have impoverished the society, therefore the government could not discharge her obligations to the society. Malnutrition and hunger has ravaged Nigeria. People with capital would rather import food than to establish farms. Government officials steal billions of naira in attempt to provide farming facilities for farmers. Now, the government has resulted to seeking help from the private organisation, religious organisations inclusive.
Present day agriculture is capital intensive. Much money is needed to achieve abundant food production as local farmers cannot afford the required amount. I have not seen any food exporting nation that keeps using primitive tools for farming. So I don’t believe that we should continue to encourage primitive farming but to continue to find financially capable organisations -like the religious organisations- to invest in agriculture.

I believe that religious organisations must invest in agriculture because poverty, malnutrition and unemployment are synonymous to all religious groups in Nigeria. The investment capability of religious organisations must be optimally harnessed in order to boost food production. They also do not need to depend on the government for land, fertilizers, chemicals, irrigation, machines and other facilities needed for production as they can afford them

The successes recorded in the provision of tertiary education, mass media and other socio-economic developmental activities of these religious organisations must be replicated in the agricultural sector. Successive governments have contributed their efforts (positively or negatively) toward the agricultural sector, yet food remains scarce. Therefore religious leaders must not continue to watch hunger ravage our nation but to convince their followers to join hands towards food production.‎
Religious organisations (and the government) must greatly reduce the amount spent on holy pilgrimages and invest in agriculture. The nations we visit are self sufficient in food production while we suffer malnutrition. So terrible that the hungry congratulate the pilgrims on successful pilgrimages, yet pilgrims have noting tangible to offer the hungry. Many went on holy pilgrimages in the past, but now, they do not even have food on their tables. Pilgrimages can continue when we all have so much to eat.
Efforts to acquire more private universities and media stations should be suspended while the money should be diverted into agriculture. Youths from all religious groups need jobs and food, so let’s provide for them through this means. The era of acquiring private jets, and expensive cars for religious leaders should also be suspended as these are the ways funds can easily be raised for food production.
Only few worshippers benefited from the universities operated by religious organisations. But If religious organisations can eventually invest in agriculture, both faithful and unfaithful follower will benefit directly and indirectly. Agriculture is a very profitable business, so any religious group intending to invest in agriculture should know she has nothing to lose.

When we have abundant food, the over $11bn spent annually on food production will be saved. The value of the naira which has fallen by over 100 percent since January 2015 will definitely rise as the demand for foreign currency will reduce. Presently, the government is confused as far as agricultural development is concerned, therefore let us take responsibility now (am seeking partnership on a proposal I have on how to make religious organisation invest in agriculture).

A Chinese proverb says ‘the best time to plant a tree is ten years ago, the second best time is now’. If we had started ten years ago we would have gone far, but still not too late to begin massive investment in agriculture.
By: Adeyemo Olajire Philip