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6.2 Agro-Industries

The AU/ECA report points out that regional value chains and markets for strategic commodities would not only increase competitiveness of agriculture at farm level, but also trigger the development of agro-processing and agribusiness ventures at the regional level. This is also the approach of the AGCs, focusing on the local level, within a broader crosscutting – national and regional – framework.

A crucial part of the corridor concept is for an increase in related off-farm economic activities, not least local agro-processing creating jobs and adding value. A related focal area is improvement of storage capacity and the reduction of postharvest losses. Both interventions are part of the African Development Bank Group's Agricultural Sector Strategy 2010–2014, together with other infrastructural investments, including feeder and community access roads.

Interestingly, the regional economic community, the Common Market for Eastern and Southern Africa (COMESA),[1] has developed an agro-processing sector strategy to capture the full value of production and create employment, reduce poverty levels and increase economic growth. In so doing, the community points to the fact that in developed countries, more than 98 percent of all primary agricultural products are sold to agro-processing facilities, while in the COMESA region, the percentage is only 30.[2] In 2010, the community, together with the International Fertilizer Development Center, announced the formation of the COMESA Regional Agricultural Inputs Program, responding to rising food prices by increasing agricultural productivity through improved access to finance, fertilizer, and seeds.[3]

6.3 Regional Integration

Regional economic integration has been a favored strategy in Africa since the foundation of the OAU in 1963, after most African countries had gained their independence. Still, this is a main ambition, and the agricultural growth corridors contribute to it – and as regional interconnections are key enablers of trade and integration.

The potential for regional trade in Africa is huge, concludes the International Assessment of Agricultural Knowledge, Science and Technology for Development in its study Agriculture at a Crossroads,[4] noting that, “Intraregional trade development in agriculture, formalizing existing informal trade, value addition and ICT are all largely unexploited trade opportunities.” Furthermore, the study argues, “It will be difficult for sub-Saharan Africa to participate more profitably in global trade without establishing a regional presence and national and regional infrastructure for value addition for local producers.”

The need for regional integration was reaffirmed as essential for growth and development in Africa by the high-level Joining up Africa Conference in London in 2010,[5] where improved transport corridors enabling better trade and facilitating business development fostering integration was one issue on the agenda. Ensuring that the private sector is more effectively engaged in supporting regional integration, several barriers need to be addressed, the outcome statement notes. It also underlined the promotion of competitiveness and improving investment climates, as well as, “Continued innovation of financial and insurance products to support private investment in Africa, including enhanced guarantees, risk sharing mechanisms and enclave lending.”

Today, African countries, on average, trade just about ten percent of their goods with each other, compared to 65 percent of goods traded between European countries.

  • [1] COMESA, set up in 1993, comprises 19 member states with a combined population of over 430 million.
  • [2] According to a report by the Technical Center for Agricultural and Rural Cooperation ACP-EU, 16 March 2010.
  • [3] Press Release by the IFDC, 7 December 2010.
  • [4] IAASTD, “Agriculture at a Crossroads”, 2009.
  • [5] With high-level participation from key multilateral agencies such as the World Bank, the African Development Bank, and the Economic Commission for Africa, private companies, including Yara (represented by the author) was present at the conference, which aimed to bolster support and promote joined-up action for regional economic integration in Sub-Saharan Africa.
 
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