Agriculture in Africa

By Prof. Mthuli Ncube, Managing Director, Head of Quantum Global Research Lab

July 2017

The domain possesses much potential for job creation and employment, provided that farmers take advantage of Fourth Industrial Revolution technologies

According to 2010 McKinsey figures, 60% of the world’s uncultivated, arable land is located in Africa. However Africa suffers from low productivity levels in comparison to other regions. Consequently, improvement of agricultural productivity is considered a priority in the African Union’s Agenda 2063, a vision to banish the hand hoe and ensure that African agriculture is characterized by science, technology and innovation. Combined with an abundance of youthful labour, Africa has the means to achieve this vision. Successfully modernizing and consolidating Africa’s energy and agricultural landscape will also lead to greater self-sufficiency and a reduction in imports, advantages the continent needs. Agriculture is a significant sector in many African nations, with the African Development Bank, Organisation for Economic Co-operation and Development and United Nations Development Programme’s African Economic Outlook 2014 noting that it accounted for around 25% of regional GDP and about 60% of employment.

Agricultural productivity in Africa suffers from a number of structural issues that include the use of fertilizers, mechanization, irrigation and access to finance. The latter is partly hampered by weak property ownership rights of agricultural land, especially in rural areas, all which weaken the quality of collateral for credit. In 2012, Nature reported that much of sub-Saharan African soil was nutrient poor, and yet Food and Agriculture Organization data recorded that in 2013, farmers in Africa only applied 17kg of fertilizer per hectare of cultivated land, while the average in South Asia was more than 150kg. Efficient use of fertilizer has been proven to triple crop yields. Low levels of mechanization and gaps in the value chains keep Africa dependent on primary product exports and secondary product imports. There are few examples of successful value chain financing solutions in Africa. Most value chain investment currently goes to large private sector actors and does not reach small producers. Financing solutions for value chains need to aggregate small producers to bigger players, who are empowered with technological knowhow. Modern agriculture still requires the need for labour but also demands specific cognitive and management skills. The education system must also adjust to meet the needs of agricultural production.

Aside from a high level of automation, emphasis should also shift towards data collection at micro and macro scales, so that African farmers and markets can build data analytics to predict and better manage shocks from commodities, climate events and the financial system. Demographics and technology also impact the agricultural agenda. In consumption, shifts in knowledge about nutrition and increased preferences for local and fresh produce grown sustainably can help Africa’s exports, but if not well-managed, production in advanced economies will crowd out African produce.

According to the Africa Progress Panel 2015 report Power People Planet, about 2 million hectares of forest were lost annually between 2000 and 2010, in part due to environmental degradation. Policies focused on energy and agriculture should take advantage of climate-smart opportunities. This will mean increasing productivity and investing in rural infrastructure, including crop storage, agro-processing and transport, without neglecting the climate.

Developing supply chain links with agro-processing industries and moving up the value chain are both critical for the success of the African agricultural and manufacturing sectors. Commodity exchanges have proven to be one effective way to improve access to markets, storage and transportation facilities as well as fairer prices for farmers.