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2.1 African Challenges

African agriculture faces a number of simultaneous challenges. Not only is the need for investments in physical infrastructure immense, there is an alarming backlog in investments in human resources, including innovation, R&D, training, education, and extension service delivery.

The most critical challenge is low productivity. Whereas per capita food production since 1960 has doubled in Asia, it has remained largely stagnant in Africa south of the Sahara. In contrast, population growth rates have been – and look set to remain – high.

Decades of negligence and underinvestment have also resulted in reduced soil quality. With the lowest mineral fertilizer application rate of any region, at about seven to eight kilograms per hectare (against a middle and low-income country average of about a 1–200), and together with a shortage of organic fertilizers, African soils have been constantly mined for minerals without adequate replacement. Large areas of land have become unproductive, and need to be replenished with nutrients in a managed and sustainable way. In light of global warming, the dry areas of Africa will become even dryer, adding another challenge: lack of fresh water and low rates of irrigation. Altogether this has contributed toward low yields, weak markets – and resulting low profitability across the sector as a whole.[1]

Another challenge is the fact that today African producers are generally not particularly competitive in global markets, though this is slowly changing. At the same time, they are generally competitive in domestic markets – and supplying domestic and, even more so, regional markets harbors a great potential in the short to medium term. “We don't even have to think about markets outside of the continent,” Peter Hartmann, Director General of the International Institute for Tropical Agriculture, told the 2007 African Green Revolution Conference.[2]

Traditionally, business has not invested in African agriculture because of a lack of confidence in the sector as a whole, seeing the complexity of existing agricultural value chains as being too risky. In addition, inadequate infrastructure and unclear regulations often represent formidable challenges, with regional markets being fragmented and as a result lacking in scale.

While stagnating yields and decreasing support government support to agriculture were the story of the last few decades of the 20th century, in the last few years we have seen a complete turnaround regarding the willingness of both local governments and the international community – as well as the private sector – to invest in agricultural development in Africa. Recently, a raft of private sector agriculture funds have been launched, which could potentially boost private sector investment in the sector. However this will only occur if a sufficient pipeline of new and sustainable investments is developed.

A critical ingredient in converting both public and private sector commitment into actual on-the-ground sustainable investments is the need for governments and businesses to work together to overcome some of the main challenges to successful agricultural growth. A key focus therefore needs to be the forging of partnerships between the public and private sectors to ensure African agriculture can be more profitable for smallholder, medium, and large farmers alike.

Agricultural growth corridors demonstrate the potential for such publicprivate partnerships and for investments to achieve transformative change. Not only are they public-private partnerships in a traditional sense, they are also a multi-sector commitment to action. Farmers need access not only to land seeds and fertilizers but also to transport, power, and water. Ports must be efficient to be able to import inputs, and roads must be built to reach the farmers. Smallholder farmers and agro-dealers need access to rural financing through innovative financing instruments that support agricultural development at different stages. “Ensuring agriculture is financed appropriately in Africa will require a long term view. New models of longer term patient capital are required such as those proposed by AgDevCo. Such models seek to provide risk capital to partially fund development of last mile infrastructure, irrigation and land preparation, at concessionary rates however with a corresponding transformation requirement that often involves integration of small holder farmers as a prerequisite for financial support. More such models are critically needed if we are to see agriculture development go to scale.”

  • [1] The IPCC anticipates that dry areas, including large parts of Africa, which already suffer from fresh water shortages, will receive less rainfall.
  • [2] The African Green Revolution conferences were initiated by and co-hosted by Yara in Oslo in 2006–2008. Summaries from presentations and proceedings can be found at: agrforum.com/about.
 
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