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Africa’s share in global agricultural production is very low – report

Agriculture remains one of Africa’s most important economic sectors, accounting for over 15% of the region’s Gross Domestic Product GDP and providing employment to more than two-thirds of the population.

If the sector’s most notable challenges can be overcome, agriculture could play an even larger part in transforming economies. In particular, governments across the continent are working with international organisations to find solutions to the rising effects of climate change. Nevertheless, the overall is quite bright; cultivated areas are expected to expand and farmers are set to increase their use of inputs, such as fertilisers, improved seeds, irrigation systems and mechanisation.

According to Oxford Business Group Agriculture in Africa report 2019, Africa holds more than 60% of the world’s arable land, but the continent’s share in global agricultural production is low. Vast areas of land are not cultivated and productivity is lower than in the rest of the world. Nevertheless, farming is key for the majority of African economies and accounts for at least 15% of the region’s GDP. In addition, around two-thirds of the African population is employed within the agricultural sector, the vast majority working in small-scale plantations that currently produce at least 90% of overall food production.

The report said chronic long-term underinvestment and poor governance have resulted in an agricultural sector that has been unable to play a role in transforming Africa’s economies, either by ensuring food security, creating jobs or reducing poverty. Now, the sector faces many challenges, the most notable of which is low productivity. This results from a variety of factors, some of which include low use of inputs and irrigation systems. In this context, farmers are particularly vulnerable to the effects of climate change- a fact that has shed light on the need for increased attention an investment in the continent’s promising agricultural sector.

It indicated that Africa’s 30.4 square kilometres boast a diverse range of agro-ecological areas and climates. These include rainforest vegetation with tropical weather, found in the south of West Africa and in Central Africa from Sierra Leone to the Congo’s. Other areas are dry and arid vegetation, such as those countries in the continent’s Sahel region.

‘’This diversity is a tremendous asset, but it also poses a substantial challenge for African agricultural development,’’ Abidjan-based African Development Bank stated on its website. ‘’On the other hand, it creates a vast potential with respect to the mix of agricultural commodities and products which can be produced and marketed in domestic and external markets. On the other hand, the diversity implies that there are no universal solutions to agricultural development problems across the continent’’ it said.

According to Washington-based International Food Policy Research Institute, during colonial period- which for most African countries ended around the 1960s- agriculture was the most significant sector in the continent’s economy. At this time, farmers were made to produce cash crops which were then exported to European countries as raw materials for their own growing industries. The exported cash crops included: cocoa, coffee, palm oil and rubber from West Africa: cotton from the Sahel region; tea and coffee from East Africa; and tobacco and sugarcane from the south of Africa.

‘’In general, food crops were not promoted and farmers grew them for subsistence only’’ the IFPRI reported. ‘’During the colonial period, Africa was developed essentially as an agricultural-exporting economy. This goal was achieved with some success, as evidenced by the number of African countries being top global producers of tropical cash crops’’. Cote d’Ivoire, for example, has become the world’s largest producer of cocoa beans. Today, the country accounts for 40 per cent of the world’s cocoa input.

After independence, the report said many African countries focused on financing local manufacturing and considered agriculture to be a less productive food supplier. As a result, the post-colonial period was characterised by underinvestment in the agricultural and rural sectors. Consequently, Africa’s agriculture recorded poor performance throughout the 1970s and 1980s, with production in sub-Saharan Africa growing on average by only 1% annually between 1971 and 1980, compared with the 3% growth seen throughout Asia. Land productivity was also two to three times lower than that observed in Asia.

Throughout the 1980s and 1990s the International Monetary Fund IMF and the World Bank pushed for the implementation of structural adjustment programmes SAPs, which were schemes designed for poor nations and countries in crisis, intended to reduce the role of governments in the economy. Countries were asked to implement these SAPS as a pre-condition for loans or external resources. The report said key measures included liberalisation of the economies, with the abolition of regulations such as price controls; privatisation of state-owned companies that were considered to be inefficient, reduction of public expenses and promotion of foreign direct investment FDI.

Further according to the IFPRI, the austerity measures resulted in a reduction of government spending in the sector. In sub-Saharan Africa the share of public agriculture spending inn the total budget declined to an annual average of 3.3% in the 1990s, down from 7.4% in the 1980s. The expansion of cultivated land meant that production growth climbed higher than in the 1970s, though productivity remained low, with output per ha of land at approximately 180 US Dollars in 1990. This was about one-third of the yields producer in Asia.

The report indicated that in 2003 the African Union launched the Comprehensive Africa Agriculture Development Programme CAADP, a strategy centred on agriculture, with the goal of reducing poverty and ensuring food security. The programme defined agriculture as a main engine of economic growth, and called for African governments to allocate 10% of their annual budget to the sector with the target of 6% annual growth. The Maputo commitments made in 2003 were renewed in 2014 in Malabo Equatorial Guinea.

One of the CAADP’s most notable achievements has been that it ‘’has significantly raised the political profile of agriculture’’ according to the IFPRI. Some 40 countries has signed CAADP agreements by the end of 2014, with many nations designing their own investment plan for the agricultural sector. However, the CAADP’s targets are still far from being met. Countries in sub-Saharan Africa only achieved a 2.6% average annual growth rate in the agricultural sector between 2003 and 2009.

Nevertheless, six countries- Angola, Ethiopia, Guinea, Mozambique, Nigeria and Rwanda- have managed to meet the growth goal of 6%. In regard to the investment target, in 2016 just 13 countries had successfully met their pledge to invest at least 10% of their budget in agriculture.

According to the Alliance for a Green revolution in Africa AGRA: ‘’Progress has generally been slow, mainly because many countries, despite the willingness to do what is right, grapple with capacity challenges that hinder their ability to design and implement a transformational agenda’’ it stated in its 2018 Africa Agriculture Status Report.

AGRA noted that recent policies placing farming at the heart of Africa’s economic development and promoting public investment in the sector are key to developing agriculture across the continent. However, more needs to be done to improve the poor structural governance seen in some African governments: although the private sector dominates the agriculture sector, its success is only made possible with public investments and policies.

‘’The past norm in African countries has been poor governance with respect to the agricultural transformation. Poor government performance has been in part associated with past foreign aid efforts at reducing the size and scope of government. Those policies were felt quite harshly by the agriculture sector, which depends heavily on government actions, and thereby inhibited the growth of the small-scale commercial private sector that dominates the sector. AGRA said. ‘’Fortunately, more recently these foreign aid policies appear to have been reversed, however, the quality of governance continues to be poor in many African countries’’

According to AGRA, Ethiopia, and to a slightly lesser extent Rwanda and Ghana, are positive examples for the continent when it comes to successful large-scale agricultural expansion. For the past 25 years Ethiopia has recorded sector growth above the 6% target defined by the CAADP. The East African nation has massively invested in its agriculture, including in irrigation and made the CAADP in a 50% reduction in rural poverty.

According to Thomas Jaine, professor at Michigan State University, public investments in the agricultural sector have had a direct and measurable impact on productivity. Jaine stated that recent yield improvements were observed in countries that embraced the AU’s CAADP scheme, especially in Ghana, Rwanda, Ethiopia and Burkina Faso.

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Business

Payless to partake in BSE’s Flagship Tshipidi program

28th June 2022
PAYLESS

Newly established wholly indigenous citizen owned retail chain Payless Retail (PTY) Ltd is set to partake in the first session of Botswana Stock Exchange (BSE)’s Tshipidi Mentorship Program (TMP) on Monday June 29th.

The TMP aims to train and capacitate SMEs so they can operate as corporates and eventually list on the local bourse. According to local bourse, BSE, the program aims to provide practical training to potential issuers through a comprehensive and interactive program that covers the key themes necessary to position a company to list on the BSE.

Payless Retail is a newly established supermarket chain whose mission is to become a convenient one-stop shopping destination as it is one of the Botswana oldest retailing brands.  It started off as Corner Supermarket in January 1976, and to date boasts of nine stores in, among others, Gaborone, Mochudi, Molepolole and Tlokweng. Payless was recently acquired by Ellis Retail Group, which is led by businessman Elliot Moshoke.

The takeover catapulted Ellis Retail to the envious position of being the first wholly indigenous owned major retail chain. “We jumped at this opportunity because it gave us a chance to prove to Batswana that the retail business is open and lucrative.”

The objective is to create a proudly Botswana retail chain that fully supports our national Vision, economic development and citizen economic empowerment ambitions,” Moshoke told BusinessPost.

He further emphasized that Batswana are capable and able to run large scale businesses hence they need to accept invite foreign investors who will come in to support us not take the business.
“Our win as Payless in the Fast Moving Consumer goods (FMCG) industry is a win for Batswana. We need their support in this difficult and challenging journey.

As you are aware, Payless is the only retail chain in the hands of Batswana ba Sekei. We need to take advantage of this to generate employment and create small businesses in retail and Agri businesses,” he explained.

The retailer has also partnered with Botswana Investment & Trade Center (BITC) on their #PushaBW campaign with a view to initiating earnest engagement with local producers to iron out bottlenecks and ensure seamless trading.

“Local producers have to be part of the phenomenal growth of the Payless brand. This will in turn facilitate employment creation and economic growth. We did this because we have the utmost respect for local manufacturers and producers,” he mentioned.

Payless is currently restocking all of its stores; a development that Moshoke says is testament to the retailer’s commitment to growing the brand and ensuring continuity of business. He further revealed that renowned retail suppliers like PST and CA Sales have reignited their trust in Payless, opening their doors for Payless as they have faith in the retailer’s new owners.

The takeover has reportedly saved more than 200 jobs and gave a new lease of life to the previously fledging Payless brand. According to a press release from the management team, the Payless work forces are also extremely excited about what the future holds. The TMP is a comprehensive and interactive program that covers the key themes necessary to position a company to list on the BSE.

The program is administered by experts within the listing ecosystem and seeks to bring the potential issuers closer to the listings advisers, investors and leaders of already listed companies.  “As a strategic initiative, the BSE decided to set up this mentorship program in a bid to assist SMEs to strategize, corporatize and acclimatize in order to list to access equity finance and expand operations,” said the BSE.

The TMP will avail to SMEs practical insights, knowledge and feedback from institutional investors, increased awareness of the BSE listing requirements as well as an intimate network of advisors and CEOs of listed companies. After training, Payless will graduate with improve governance structures and better knowledge of articulating its business strategy. The retailer will also gain increased visibility through BSE marketing platforms.

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Business

BITC assisted companies rake in P2.96 billion in export earnings

21st June 2022
BITC-CEO-Keletsositse-Olebile

Despite Covid-19 interrupting trade worldwide, exporting companies in Botswana which benefited from the Botswana Investment and Trade Centre (BITC) services realised P2.96 billion in export earnings during the period from April 2020 to March 2021.

In the preceding financial year, the sale of locally manufactured products in foreign markets had registered export revenue of P2, 427 billion against a target of P3, 211 billion BITC, which celebrates 10 years since establishment, continues to carry out several initiatives targeted towards expanding the Botswana export base in line with Botswana’s desire to be an export led economy, underpinned by a robust export promotion programme in line with the National Export Strategy.

The main products exported were swamp cruiser boats, pvc tanks and pvc pipes, ignition wiring sets, semi-precious stones, veterinary medicines, hair braids, coal, textiles (towels and t-shirts) and automobile batteries. These goods were destined mainly for South Africa, Zimbabwe, Austria, Germany, and Namibia.

With Covid-19 still a problem, BITC continues to roll out targeted virtual trade promotion missions across the SADC region with a view to seeking long-lasting market opportunities for locally manufactured products.

Recently, the Centre facilitated participation for Botswana companies at the Eastern Cape Development Council (ECDC) Virtual Export Symposium, the Botswana-Zimbabwe Virtual Trade Mission, the Botswana-Zambia Virtual Trade Mission, Botswana-South Africa Virtual Buyer/Seller Mission as well as the Botswana-Namibia Virtual Trade Mission.

BITC has introduced an e-Exporting programme aimed at assisting Botswana exporters to conduct business on several recommended e-commerce platforms. Due to the advent of COVID-19, BITC is currently promoting e-trade among companies through the establishment of e-commerce platforms and is assisting local companies to embrace digitisation by adopting e-commerce platforms to reach export markets as well as assisting local e-commerce platform developers to scale up their online marketplaces.

During the 2019/2020 financial year, BITC embarked on several initiatives targeted at growing exports in the country; facilitation of participation of local companies in international trade platforms in order to enhance export sales of local products and services into external markets.

BITC also helped in capacity development of local companies to compete in global markets and the nurturing of export awareness and culture among local manufacturers in order to enhance their skills and knowledge of export processes; and in development and implementation of trade facilitation tools that look to improve the overall ease of doing business in Botswana.

As part of building export capacity in 2019/20, six (6) companies were selected to initiate a process to be Organic and Fair Trade Certified. These companies are; Blue Pride (Pty) Ltd, Motlopi Beverages, Moringa Technology Industries (Pty) Ltd, Sleek Foods, Maungo Craft and Divine Morula.

In 2019 seven companies which were enrolled in the Botswana Exporter Development Programme were capacitated with attaining BOBS ISO 9001: 2015 certification. Three (3) companies successfully attained BOBS ISO 9001:2015 certification. These were Lithoflex (Pty) Ltd, General Packaging Industries and Power Engineering.

BITC’s annual flagship exhibition, Global Expo Botswana (GEB) to create opportunities for trade and strategic synergies between local and international companies. The Global Expo Botswana) is a premier business to business exposition that attracts FDI, expansion of domestic investment, promotion of exports of locally produced goods and services and promotion of trade between Botswana and other countries.

Another tool used for export development by BITC is the Botswana Trade Portal, which has experienced some growth in terms of user acceptance and utilisation globally. The portal provides among others a catalogue of information on international, regional and bilateral trade agreements to which Botswana is a party, including the applicable Rules, Regulations and Requirements and the Opportunities for Botswana Businesses on a product by product basis.

The portal also provides information on; measures, legal documents, and forms and procedures needed by Botswana companies that intend on doing business abroad. BITC continues to assist both potential and existing local manufacturing and service entities to realise their export ambitions. This assistance is pursued through the ambit of the Botswana Exporter Development Programme (BEDP) and the Trade Promotion Programme.

BEDP was revised in 2020 in partnership with the United Nations Development Programme (UNDP) with a vision to developing a diversified export-based economy. The programme focuses mostly on capacitating companies to reach export readiness status.

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Business

Inflation up 2.3 percent in May

21st June 2022
Inflation

Prices for goods and services in this country continue to increase, with the latest figures from Statistics Botswana showing that in May 2022, inflation rate rose to 11.9 percent from 9.6 percent recorded in April 2022.

According to Statistics Botswana update released this week, the largest upward contributions to the annual inflation rate in May 2022 came from increase in the cost of transport (7.2 percent), housing, water, electricity, gas & other Fuels (1.4 percent), food & non-alcoholic beverages (1.1 percent) and miscellaneous goods & services (0.8 percent).

With regard to regional inflation rates between April and May 2022, the Rural Villages inflation rate went up by 2.5 percentage points, from 9.6 percent in April to 12.1 percent in May 2022, according to the government owned statistics entity.

In the monthly update the entity stated that the Urban Villages inflation rate stood at 11.8 percent in May 2022, a rise of 2.4 percentage points from the April rate of 9.4 percent, whereas the Cities & Towns inflation rate recorded an increase of 1.9 percentage points, from 9.9 percent in April to 11.8 percent in May.

Commenting on the national Consumer Price Index, the entity stated that it went up by 2.6 percent, from 120.1 in April to 123.2 in May 2022. Statisticians from the entity noted that the transport group index registered an increase of 7.3 percent, from 134.5 in April to 144.2 in May, mainly due to the rise in retail pump prices for petrol and diesel by P1.54 and P2.74 per litre respectively, which effected on the 13th of May 2022.

The food & non-alcoholic beverages group index rose by 2.6 percent, from 118.6 in April 2022 to 121.6 in May 2022 and this came as a result of increase in prices of oils & fats, vegetables, bread & cereal, mineral waters, soft drinks, fruits & vegetables juices, fish (Fresh, Chilled & Frozen) and meat (Fresh, Chilled & Frozen), according to the Statisticians.

The Statisticians said the furnishing, household equipment & routine maintenance group index rose by 1.0 percent, from 111.6 in April 2022 to 112.7 in May 2022 and this was attributed to a general increase in prices of household appliances, glassware, tableware & household utensils and goods & services for household maintenance.

The prices for clothing & footwear group index moved from 109.4 to 110.4, registering a rise of 0.9 percent during the period under review. Bank of Botswana has projected higher inflation in the short term, associated with the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices and added that the possible increase in public service salaries could add also upward pressure to inflation in this country.

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