Apart from air, food and water are the most important sustenance ingredients of life. Hence, we talk of food and nutrition security which come directly from agribusiness. And African Agri Investment Indaba is talking about the full value chain from implements for land preparation to food on the table.
Agriculture by itself is Africa’s most important sector supporting over 60% of livelihoods and contributing roughly 15% to GDP. But when you take the entire agribusiness sector, it supports over 75% of livelihoods and contributes almost 30% to the GDP. African Agri Investment Indaba can be described or titled, Africa Life and Living Investment Indaba.
However, I title my short Keynote Address, Context and Imperative: Africa’s Food Security and Investment Paradox. Food and nutrition security challenge scale of Insecurity Around 340 million Africans face severe food insecurity, Another 500 million experience pervading insecurity. Nearly 280 million Africans remain chronically under-nourished, i.e., one in every five people on the continent.
The deduction is that the continent simultaneously faces food and nutrition security emergencies and a significant investment opportunity. Implication for Africa’s demographic ‘dividend’: Africa is projected to have the world’s largest workforce by 2030 estimated at 1billion people. Africa is to account for one third of the global labour force by 2050. This should present a unique and historic opportunity for productivity, innovation, industrialisation, economic growth and wealth generation. But this can only happen if the people are educated, skilled and empowered.
Yes, health, food and nutrition, human capital development, in all its ramification, must be well handled. Poverty Reduction and Wealth Generation: Food consumes 40% of household income in sub-Saharan Africa compared to 13% in advanced economies, straining wealth generation and poverty reduction. But investment in agribusiness will counterbalance. Africa possesses over 60% of the world uncultivated arable land and a significant freshwater resource.
With land and population, we should only need investment to avoid import dependency. Annual food import of 80% of basic consumed in Africa is estimated to be about $100 to $110 million in 2025. I have always maintained that whoever feeds you can enslave you. Agri Investment Deficit: Annual financing gap in agriculture and agribusiness faced an annual funding shortfall ranging from $40 billion to $200 billion in 2022. It would be higher today. Africa attracted 6% of global agriculture investment – despite being home to 18% of the world population.
Public versus Private Sector Funding in Africa: 95% of investment in agriculture is from the public budget and by contrast in Asia is about 50-60%. Barrier to Private Capital Investment stems from structural and policy directions. Production and markets are highly fragmented, dominated by small-holder farmers. The cost of capital is prohibitive above 20% in most African countries compared to 3-7% in Asia. To these must be added instability and discontinuity in policies and lack of predictability for investors.
Food and nutrition insecurity in Africa are caused by poor availability – low productivity due to systemic weakness and policy instability, weak value addition, missing opportunity for agro-industrialisation and poor investment in agribusiness generally:
a. Availability is adequate production which is hampered by low yields despite research, input deficiency, inefficient land expansion and post-harvest losses.
b. is hampered by poor infrastructure.
c. Affordability is hampered by household poverty and the high cost of food products.
There is gross inadequate investment in agriculture and agribusiness in Africa and the little investment that there is becomes imbalanced investment across the value chain. Investment in production and productivity with research must be primary not only for availability for food and nutrition security, but for employment creation, wealth generation and poverty elimination.
Availability will also help in government revenue generation, foreign exchange earning through export and intra African trade. The next area of investment should be accessibility, especially infrastructure, transportation, communication, energy and information.
If availability and accessibility are well handled with human capital development, affordability will fall into place. Sources of funding or investment: I believe that the private sector should be incentivised to invest in agribusiness in Africa, through domestic mobilisation in Africa where it has been estimated that 4 trillion US dollars in pension funds, health insurance funds, governments reserves, etc, can be sourced.
But not less important is foreign direct investment where estimated $129 trillion is available but only about $60 billion came to Africa last year and about $70 billion went to Egypt from the Middle East, with about $40 billion for the rest of Africa and what went into agribusiness was very little out of $110 billion foreign investment that flowed into Africa.
Funds and resources to develop Africa including investment in agribusiness is here in Africa and outside Africa. And conducive conditions, guarantees and assurances will have to be in place for such funds to come in and to stay in to perform for Africa, the host continent, and for the foreign investors.
Policies to mobilise domestic resources and incentivise foreign direct investment must begin with peace, security, stability and predictiveness. Investors are hard-headed calculators and they want to have more than 50% assurance that their investment will be safe and secure and will yield reasonable return annually and they will be able to withdraw or move their money as and when they desire.
They need a judiciary that is fairly independent, free, fair and the country that will subscribe to maintenance and obedience of rule of law. Corruption is a cankerworm that does not normally help genuine investment. Where there may be no country absolutely devoid of corruption, there are many countries in the world where corruption is not a way of life like most countries in Africa.
Policies must be relevant, realistic and be investor-friendly. The investor has a choice – he or she has choices of countries to invest in, choice of sector of the economy to invest in, choice of the amount to invest and duration of the investment. He or she has the choice to keep funds in safe haven without risks of investment or buy treasury bills that are safe and usually reasonably secure.
It is up to the investment host-nations to learn to know what the investor desires without compromising sovereignty of the investment host-nations and to put all measures in place to ensure ease of doing business.
I believe that with understanding of the investment world by Africa, a lot more can be done for investment generally in Africa but particularly in agribusiness value chain for food and nutrition security, employment creation, wealth generation, human capacity development, government revenue generation, export promotion, intra-African trade and global commercial and financial interaction.
Agribusiness is the largest employer-in-waiting for Africa. This way, Africa integration in economic term will be enhanced and the continent will move out of ridiculous and shameful paradox of being in poverty in the midst of plenty and with Africa impoverished while her resources make others rich abundantly and African youth taking all life risks migrating through the Sahara desert or the Mediterranean Sea seeking green fields in Europe, Asia and the Americas.
We only need leaders to judiciously and in pan African fashion work for the economic integration of global Africa bringing together population, land and capital for our own progress and global progress.
Structural infrastructural deficit must be addressed essentially through public investment in transportation, energy, irrigation and water transport and corridor based quick wins like Lobito Corridor. We have begun with African Continental Free Trade Agreement.
Let us push that aggressively along with what I call League of Africa Free Movement Countries that will eliminate visas among their citizens travelling for business and tourism within their countries. Policies already put in place at national and continental levels must be strengthened through effective implementation. Such policy as Comprehensive African Agricultural Development Programme (CAADP) which mandates 10% of public expenditure on agriculture must be observed.
Removal of non-tariff barriers is another. Inclusion of women and youth in agribusiness through education, skill acquisition and empowerment is another. Provision of incentives for agro-industrialisation is imperative with adequate production for local industry.
When government policies that encourage private sector investment are strengthened and investments are guaranteed to be safe, secured with predictability of reasonable return, investment will flow from the continent and from outside the continent into the agribusiness value chain.
With the right policies, commitment, continuity and total mobilisation of all hands in integrative fashion, investment into agribusiness in Africa will be led by the private sector for food and nutrition security, self-reliance, employment creation, wealth generation, government revenue, export promotion and intra-African trade.
Africa will then be a food basket for the continent and for the world. We have what it takes, we need leadership to put them together and that is why an Indaba like this is an imperative.
