According to consulting firm McKinsey, sub-Saharan Africa excluding South Africa, will need to increase the use of fertilisers and improved seeds by eight and six times, respectively, to unlock its full agricultural potential.
At least 8 Billion US Dollars of investment in basic storage and 65 Billion US Dollars spending on irrigation will be necessary in order to boost total irrigated area to 15 per cent from its 2019 level of 5 per cent. Furthermore, additional investment will be needed in basic infrastructure such as roads, ports and power. It is estimated that more than 60 per cent of the sub-Saharan population is comprised of smallholder farmers. Although the number of medium-sized- which span 5 ha to 100 ha- farms is rising, small-scale plantations still account for the vast majority of cultivated land throughout the continent. In Nigeria there are currently fewer than 100 farmers throughout the whole country who operate at least 50 ha of land.
Small-scale commercial farmers, who own cultivated farms bigger than subsistence farming, produce about 85 per cent of Africa’s agricultural output, while the remaining 15 per cent comes from subsistence farmers and large-scale plantations. Though many of Africa’s subsistence farmers live below the poverty line, this is not necessarily the case for small-scale commercial farmers. However, the lack of education, difficulties in gaining access to funding and the low use of inputs can all have a substantial and negative impact on productivity levels.
In many African countries women account for at least half of the labour force. The average age of farmers in Africa is 60 years, according to the FAO. However, this may change in coming years as the increased use of technologies in agriculture on the continent, especially in precision farming, may assist young people and women in moving into farming.
Beyond public investment, according to the report, access to finance is a major issue for most of the continent’s farmers, especially for smallholders. Estimates show that only about 10 per cent of African households in rural areas are connected to formal financial institutions.
However, innovations such as microfinance and mobile banking are opportunities to boost African farmer’s access to loans. As mobile penetration has increased to reach 44 per cent in 2017, local entrepreneurs and international institutions have developed digital financial solutions for Africa’s farmers.
These solutions are wide in scope and variety, including products like e-wallets that can be used as business accounts by farmers or mobile phone apps, such as Farm Drive, that can help farmers to develop much-needed credit history. The report further said mobile applications providing micro-insurance and index-based crop insurance are also being developed across emerging markets, including Africa.
The World Bank, for example, is developing an index-based agricultural insurance in Cote d’Ivoire for Ivorian farmers who are increasingly vulnerable to climate change and extreme weather events. A pilot phase was launched in 2018 for four crops- cocoa, cotton, rice and corn. The World Bank listed index insurance as a good tool to improve the farmers resilience, helping them boost their yields and get access to desirable funding.
Further, the report said Africa has vast swathes of uncultivated area. In 2013 the World Bank said the continent had 200m ha of suitable land that could be used to grow crops, which is almost half of the world’s usable and cultivated land. However, the region faces major issues hindering the development of additional land. It said over 90 per cent of rural land in Africa is undocumented, making it vulnerable to land grabbing. In Cote d’Ivoire, where most of the rural area indeed remains unregistered, the land continues to be extremely fragmented, making it difficult to develop profitable businesses on some of the larger plats of land.
In Egypt, meanwhile, almost 85 000 acres of agricultural land have been lost to illegal construction projects since the 2011 unrest, according to data from the Ministry of Agriculture. This prompted the Egyptian government to crack down on people building illegally on farmland. In some countries, women are also banned from land rights due to customary laws that are regularly enforced.
Recent analysis cited in an article from consulting firm Mckinsey said the majority of the unused land across Africa is located in areas barely reachable due to poor road networks and infrastructure, while some others are located in conflict of forest areas. It is estimated that only approximately 20m to 30m ha of additional land in sub-Saharan Africa- which is mostly located in nine countries and would represent a potential increase of 10 per cent- has the potential to be turned into cultivated area in the shorter-term.
The report said large land deals are also underising scrutiny in Africa. In 2018 India’s Karaturi Global asked for compensation from the Ethiopian government, which had cancelled the company’s lease, saying it failed to reach progress targets. According to McKinsey, 420 large agricultural deals, that each span 10m ha have been signed in Africa during 2000-16, but few of them have yet to be effectively implemented.
It also noted that most countries in Africa have greatly underdeveloped agro-industrial sector. That means that Africa’s exports are mostly comprised of raw products like agricultural commodities, including cocoa and coffee, and that finished goods account for the majority of the continent’s many imports. According to African Development Bank, ‘’little attention has usually been paid to the value chain through which agricultural commodities and products reach the final consumers within the country and abroad.’’ In the areas of Africa that are considered more rural, agro-processing is usually non-existent or quite basic, a fact that can sometimes result in significant harvest losses, the bank said.
Despite the challenges ahead, prospects for Africa’s agricultural sector are relatively positive. UN institutions expect cultivated areas to expand and farmers to increase their use of inputs, such as fertilisers, pesticides, improved seeds, irrigation systems and mechanisation. Innovations and greater access to technologies are expected to aid in developing smart and precision farming techniques and promoting their widespread use.
The report said, despite increased production, food security will continue to depend on global markets and significant imports of finished goods for the medium term. Contributing to this, food consumption is projected to surge as the population is expected to double by 2050 and become increasingly urbanised. At the same time, the continent is facing growing challenges.
Climate change is anticipated to be the most influential and is already directly affecting millions of farmers and households across the continent. In this context, experts have called for African governments to increase investment in the sector, including in infrastructure and agri-business and to continue improving their policies and governance. These challenges, according to the report, would encourage agriculture to truly transform into one of the strongest pillars of Africa’s successful long-term economic development.
The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.
Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.
According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.
The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.
Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.
Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.
Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana. The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.
African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).
AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.
The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.
The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.
To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”
Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.
The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.
“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.
“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.
The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.
About the World Economic Forum Annual Meeting 2023
The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,