News / Africa

Foreign Investors See Potential in African Agriculture

Specialists say good governance and improved infrastructure could provide a boost to the sector

Part 2 of a 5 Part Series: Investment in Africa

Agriculture is one of the most important economic activities in Africa.  In addition to providing employment, agriculture has the potential to transform African societies through the increased export of produce to Western markets.

Many agree that transformation will not take place without increased investment in agriculture, including public or private loans to small farmers.  Statistics show that Africa has about 12% of the world’s arable land but 80% of it is not in use. Observers say there are many opportunities to develop land and even make it attractive to agribusinesses.

The Kenyan story

Among those taking advantage of new opportunities are Kenyan farmers, including some who are now making millions of dollars exporting flowers.

According to the International Food Policy Research Institute, horticulture has become the third largest source of foreign exchange in Kenya after tourism and tea.

But statistics show that farming in Kenya is still typically carried out by small farmers who usually cultivate no more than two hectares.

Adieno Achieng is a small scale farmer in Kisumu.  She says government can support farmers like herself by subsidizing farm inputs like fertilizers and seeds. She says that farmers would also benefit from access to agricultural loans.

Investment in small farmers

But in recent years,  government assistance to small farmers and to agriculture in general has been in decline.

Mohammed Beavogui is the director of the Western & Central Africa Division of International Fund for Agricultural Development (IFAD) in Rome, Italy.

He says even international development aid meant for agriculture “dropped from 20% to 4%...”
But he says that there are signs to show that this trend is changing because of the rise in food prices internationally.  “People complain of food prices, but for agriculture somewhere, it is an opportunity,” he says.

Leaders from many developing countries are also recognizing the need to invest in their own food security.

At the 2009 G8 Summit in L’Aquila, Italy, donors collectively committed $20 billion to agricultural development and a new approach to global food security.

Beavogui says, “The share of agriculture in development is increasing….  For example, my institution, the International Fund for Agricultural Development, got an increase of almost 50 percent of its replenishment to support agricultural projects….  All these are showing that there is an effort to invest in agriculture,” he says.

He says productivity in Africa has a long way to go to catch up with counterparts in developing nations in Asia.  “We still have to introduce new seeds…new technology,  and fertilizer…”

Improved Infrastructure Needed

Also needed, say development specialists are improved ways to take goods to market.

“If you want agriculture to work you need to allow agricultural products to get to the market, and that means you need roads,” Beavogui says.

The decision to invest in local agriculture often depends on a region’s ability to move goods from the farm to the factories or to ports for export.

Statistics indicate that only 34% of sub-Saharan Africa’s rural population lives within two kilometers of a paved road.         In most of Africa, poor road infrastructure accounts for investors deciding to look elsewhere.  “Every fifth African needs at least five hours to get to the nearest market….” Beavogui says.

Economists point to Malawi, which earns up to 70 percent of its foreign exchange from tobacco.  Most of it is grown in the rural areas, where farmers have to transport the crop many miles to the commercial capital, Blantyre.

Foreign Investment

There are some signs that local and western investors are slowly attracting interest in African agricultural potential.  The best example is the African Agricultural Land Fund, a private equity strategy that seeks to invest in food production across sub-Saharan Africa.

EmVest Asset Management is a joint venture between GrainVest South Africa and Emergent Asset Management of Britain.  EmVest is managed by people with an active interest in African agriculture.  GrainVest is a South African firm that is active throughout the agriculture production chain, including crops, maize milling and futures trading.

Patrick Devenish is the CEO of agro-industrial conglomerate AICO Africa, Ltd., incorporated in Zimbabwe.  He was recently in the United States to network with other African CEOs in New York.

He says that AICO has invested heavily in African agriculture and the returns have been good. In Zimbabwe, the company is involved in buying and seed cotton, from which it makes and sells cotton lint.

Devenish says the agricultural sector in Africa is a particularly under-targeted area that offers great returns for any western investor.  He’d also like to see US companies provide a market for African agricultural exports.  “We would like to see a demand pull rather than push,” he says. Government has a role to play in attracting investment, Devenish says.

“We would like to see a government focusing on providing an environment for conducive to business rather than getting directly involved in the business….   There are government interventions that have made life difficult.”

That includes Zimbabwe, he says, where the government confiscated the farms of once-successful farmers.

AICO Africa Ltd. has been providing financing to small-scale cotton farmers, says Devenish, because “the average small farmer in Zimbabwe doesn’t have access to [it]….”

Mohammed Beavogui of IFAD Beavogui says another project sponsored by Kofi Annan’s NGO,  the Alliance for a Green Revolution in Africa (AGRA), is developing a “breadbasket approach” to coordinate agricultural development efforts in a Ghana.  The plan will add up to US $500m to the agricultural component of GDP, create up to 15,000 new jobs and double the household incomes of close to 250,000 smallholders.

Meanwhile, a company called Africa Finance Corporation (AFC), which serves West Africa is helping small farmers.  Its CEO, Andrew Ali, says the strategy of investing in small farms is more useful “than replicating the big farms in the midwest of the US….”

Ali says it’s similar to the model used by Asian nations like Singapore where small farms are the cornerstone of the country’s relatively successfully agricultural export strategy.

You May Like

Video Positive Messaging Helps Revamp Ethiopia's Image

In country once connected with war, poverty, famine, headlines now focus on fast-growing economy, diplomatic reputation More

Russian Activist Thinks Kremlin Ordered Nemtsov's Death

Alexei Navalny says comments of Russian liberals who think government wasn't involved are 'nonsense.' More

Video Land Disputes Rise Amid Uganda Oil Boom

Investors appear to be cashing in by selling parcels of land to multiple buyers More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Positive Messaging Transforms Ethiopia's Imagei
X
Marthe van der Wolf
March 03, 2015 9:03 PM
Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.
Video

Video Land Disputes Arise Amid Uganda Oil Boom

Ugandan police say there has been a sharp increase in land disputes, with 10 new cases being reported each day. The claims come amid an oil boom as investors appear to be cashing in by selling parcels of land to multiple buyers. Meanwhile, the people who have been living on the land for decades are chased away, sometimes with a heavy hand. VOA's Serginho Roosblad reports.
Video

Video In Russia, Many Doubt Opposition Leader's Killer Will Be Found

The funeral has been held in Moscow for Boris Nemtsov, the opposition leader who was assassinated late Friday just meters from the Kremlin. Nemtsov joins a growing list of outspoken critics of Russia under the leadership of President Vladimir Putin who are believed to have been murdered for their work. VOA’s Daniel Schearf reports from Moscow.
Video

Video Simulated Astronauts Get Taste of Mars, in Hawaii

For generations, people have dreamed of traveling to Mars to explore Earth's closest planetary neighbor. VOA's Mike O'Sullivan reports that while space agencies like NASA are planning manned missions to the planet, some volunteers in Hawaii are learning how humans will cope with months in isolation on a Mars base.
Video

Video Destruction of Iraq Artifacts Shocks Archaeologists

The city of Mosul was once one of the most culturally rich and religiously diverse cities in Iraq. That tradition is under attack by members of the Islamic State who have made Mosul their capital city. The Mosul Museum is the latest target of the group’s campaign of terror and destruction, and is of grave concern to archaeologists around the world. VOA’s Kane Farabaugh reports.
Video

Video Smartphones May Help in Diagnosing HIV

Diagnosing infections such as HIV requires expensive clinical tests, making the procedure too costly for many poor patients or those living in remote areas. But a new technology called lab-on-a-chip may make the tests more accessible to many. VOA’s George Putic reports.
Video

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials have expressed concern over reports of a crackdown on Afghan refugees in Pakistan following the Peshawar school attack in December. Reports of mass arrests and police harassment coupled with fear of an uncertain future are making life difficult for a population that fled its homeland to escape war. VOA’s Ayesha Tanzeem reports from Islamabad.
Video

Video Ukrainian Volunteers Prepare to Defend Mariupol

Despite the ongoing ceasefire in Ukraine, soldiers in the city of Mariupol fear that pro-Russian separatists may be getting ready to attack. The separatists must take or encircle the city if they wish to gain land access to Crimea, which was annexed by Russia early last year. But Ukrainian forces, many of them volunteers, say they are determined to defend it. Patrick Wells reports from Mariupol.
Video

Video Moscow Restaurants Suffer in Bad Economy, Look for Opportunity

As low oil prices and Western sanctions force Russia's economy into recession, thousands of Moscow restaurants are expected to close their doors. Restaurant owners face rents tied to foreign currency, while rising food prices mean Russians are spending less when they dine out. One entrepreneur in Moscow has started a dinner kit delivery service for those who want to cook at home to save money but not skimp on quality. VOA's Daniel Schearf reports.
Video

Video Presidential Hopefuls Battle for Conservative Hearts and Minds

One after another, presumptive Republican presidential contenders auditioned for conservative support this week at the Conservative Political Action Conference held outside Washington. The rhetoric was tough as a large field of potential candidates tried to woo conservative support with red-meat attacks on President Barack Obama and Democrats in Congress. VOA Political Columnist Jim Malone takes a look.
Video

Video Southern US Cities Preserve Civil Rights Heritage to Boost Tourism

There has been a surge of interest in the American civil rights movement of the 1950s and '60s, thanks in part to the Hollywood motion picture "Selma." Five decades later, communities in the South are embracing the dark chapters of their past with hopes of luring tourism dollars. VOA's Chris Simkins reports.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More