By: Shira Petrack
Untapped business opportunities abound in Africa’s agriculture sector. Beyond the profits, however, investing in African agriculture offers the rare chance to catalyze growth in a sector that employs more than half of all working people in Sub-Saharan Africa and to move the continent towards food sovereignty.
Today, despite the considerable human labor working on some of the most extensive tracts of arable land left in the world, agriculture accounts for only around 15% of SSA’s GDP. What is more troubling is that continent is still not growing enough food to feed its population.
Instead of attaining food sovereignty through the farmers’ agricultural efforts, Africa imports most of its food. The continent’s already sizable food import bill increases year after year and is expected to more than triple from $35 billion in 2017 to $110 billion by 2025.
The low agricultural yields are largely due to the lack of investment into basic efficiency raising measures such as irrigation systems, mechanization, and adequate storage facilities. Up to 70% of farmers cultivate parcels of less than two hectares manually using hoes.
Even with the imports, there is still not enough affordable food for everyone. Around 1 in 5 people on the continent are classified as severely food insecure, and over half the population is moderately food insecure. Thirty-three percent of children under the age of five are considered stunted.
These statistics translate to over 224 million people on the continent who live in households where at least one person during the year has reduced the quantity of the food, skipped meals, gone hungry, or gone a whole day without eating because of a lack of money or other resources. At least 610 million people live in households where at least one person was forced at times during the year to eat low-quality diets or reduce the quantity of food they would normally eat because of a lack of money or other resources. And Africa is the only region in the world where the number of stunted children has risen in the past twenty years.
Affluent countries, multinational organizations, and international foundations have been sending commodities and other types of international assistance to Africa for decades. Unfortunately, food aid is too low and too sporadic to bring real food security to the continent.
Instead, sustainable food sovereignty on the continent will most likely come through the private sector. Companies and individuals who want to make a difference need to realize that investing in agriculture in Africa is not just a moral imperative – it is also a savvy business decision. In the short run, investments in irrigation, mechanization, storage facilities, and modern inputs will allow farmers on the continent to grow enough food for them and their communities. In the long term, these same farmers will be able to produce and store surpluses and sell them throughout the continent and internationally. The world’s population is increasing at a dizzying pace, and with the right investments, Africa can become its breadbasket.
By putting their “skin in the game,” international investors and agribusinesses will be more motivated to continue investing in African agriculture year after year. And since Africa has such large tracts of underutilized arable land, investors will be able to reap significant rewards by giving local farmers the means to obtain the most from their fields.
In the past decade, private equity investments into agriculture have risen globally, with most investments going to Africa. But a much larger investment is still needed. According to a study by McKinsey & Company, Sub-Saharan Africa requires an investment of $8 billion for improved storage and $65 billion for irrigation to achieve its agricultural potential. In terms of inputs, farmers across the region need eight times more fertilizer and six times more quality seeds to reap the most from their soil.
If you are an agribusiness executive or investor reading these lines, you might realize the opportunity – but you don’t know where to start. When it comes to Africa, it is much harder to use the web to obtain even basic market data, and many seasoned businessmen lack the connections necessary to find the right local partners. Even after such partners are identified, conducting due diligence can be nearly impossible.
That’s where we come in. Whether you are an international investor looking for the right local partner, an agribusiness executive considering expanding into or across Africa, or a local farmer wishing to increase your yields, we can help. Empower Africa’s Agriculture Solutions and Consulting Services combine the world’s top agronomy experts, industry-leading technology, and tailor-made business-oriented solutions to help you build the most efficient and profitable version of your African agriculture business.
Contact us, and let’s grow your business.
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