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

    Top US General: Turkish Media Report ‘Absurd'

    General Dunford rejects ‘irresponsible' claims of coup involvement by former four-star Army General Campbell, who led NATO forces in Afghanistan before retiring earlier this year

    Video Saving Ethiopian Children Thought to Be Cursed

    'Omo Child' looks at efforts of one African man to stop killings of ‘mingi’ children

    Protests Over Western Troops Threaten Libyan 'Unity' Government

    Fears mount that Islamist foes of ‘unity' government plan to declare a revolutionaries' council in Tripoli

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

    By the Numbers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora