For the last fifteen years, economic growth rates across Africa have encouragingly escalated, with most countries consistently averaging over 5%. Additionally, the burgeoning population promises an enormous consumer market in the years ahead. This population dividend promises a unique labour force that could further contribute to economic growth. However, the much-lauded growth has largely been driven by resources extraction and the expansion of informal service sector. Yet Africa continues to be largely agrarian as opposed to manufacturing and processing. Agriculture supports over 64% of the population of most sub-Saharan countries. But agricultural productivity across the continent is very low, hence undermining Africa’s overall productivity and food security. This is largely the function of the nature of the agricultural sector. African agriculture is made up of 80% small-scale farmers cultivating low-yield staple food crops on small plots. They employ minimal use of modern inputs and practices. These farmers depend on rainwater, making them highly vulnerable to the vagaries of weather. As a result, Africa imports food staples valued at about 25 billion USD annually. Principally, this is because food production, supply and consumption systems aren’t functioning optimally.
Beyond production, the agricultural sector is beset by a couple of other issues. For one, the level of value addition and processing of agricultural commodities is low. Secondly, the post-harvest losses in Sub-Saharan Africa average 30% of total production, which in monetary valuation is a loss of about 4 billion USD annually. This poor performance in agriculture undermines poverty reduction efforts and limits inclusive growth. In fact, the recent MDG report indicates that the share of people living on less than 1.25 dollars a day very slightly decreased in the recent decades; dropping from 56% in 1990 to 48% in 2010. This significant decrease is partly explained by the fact that growth has primarily been driven by low labour-intensive sectors such as mining. Agriculture has only played a minimal role. A substantial body of economic literature finds that agriculture-led growth has greater impact on poverty reduction than non-agriculture-led growth. Thus, this clarion call that productivity changes in the agricultural sector would be key to achieving inclusive growth on the continent because the sector is made up of smallholder farmers who are predominantly women. Moreover, with higher productivity, coupled with equitable access to land, high quality farm inputs and overall advancements in rural economies, growth will trickle down to the most disadvantaged: youth and women.
As such, Africa needs to put in place institutions and mechanisms that encourage and facilitate improvements in small-scale farming, while concurrently pushing toward the development of large-scale commercial farming. One way to do this is to support agri-businesses that promote the integration of small-scale farmers into regional and global agricultural value chains (AVCs). This is our value proposition at Tanuru Farms. Our business model entails designing out-grower schemes that integrate small-scale farmers in Kenya into the regional agricultural value chains in the oilseeds production chain. Eventually, we facilitate the value addition as well. We firmly believe that the participation of small-scale farmers in AVCs will enable them to harness the interdependence among the different actors in the value chain. These include the suppliers of inputs and seeds, the businesses providing technical support for farmers such as provision of agricultural machinery, the financiers and wholesale producers of farm products, the processors and associated sellers.
Author: Paul Lorem Arkanjelo Aminathia
About the author: Class of 2008, African Leadership Academy | Lorem is the Co-founder and CEO of Tanuru Farms (tanurufarms.com). He holds a Bachelor’s degree in Economics from Yale University in the USA.