Africa’s food and agriculture sector could be worth $1 trillion by 2030, analysts suggest

October 6, 2023

Africa’s food and agriculture market could more than triple in size by the end of the decade, analysts have said in an upbeat assessment of the continent’s prospects as a possible net exporter of food.

But they have highlighted a wide range of reforms, including streamlining supply chains, clamping down on corruption and improving finance options, that are needed if it is to achieve this transformation

In a paper on the continent’s agricultural development, Gareth Hodder and Brenda Migwalla of the law firm White & Case said that the continent pays $78 billion for food imports each year.

At the same time as the continent is spending these vast sums on imports, as many as one in five Africans goes hungry.

A growing proportion of Africans live in cities yet, the authors noted, the rural population is increasing in absolute terms, having grown from 374.5 million in 1990 to 687 million in 2021. This will place further strain on food resources.

“These challenges are not insurmountable, though,” the authors wrote in their paper, which was also written by Stephen Pickup, head of agriculture at Traditum Private Equity.

Agriculture could, they said, become “a core driver of the continent’s economic transformation”, with the African Development Bank saying that the food and agriculture market could increase from $280 billion a year to $1 trillion by 2030.

Africa's food and agriculture sector could be worth $1 trillion by 2030, analysts suggest

Photo credit: Annie Spratt / Unsplash

They have identified six levers that could trigger Africa’s “agricultural renaissance”, the first of which is legislative changes to create a regulatory environment that incentivises the development of large-scale farming. At the same time, they say, small-scale farmers should be helped to improve their productivity.

While agricultural exports “are crucial”, instead of focusing on exported crops such as coffee, cocoa beans and cotton, national development policies should promote the growing of a wider range of crops for consumption in Africa.

Secondly, local financing capacity should be improved and opportunities leveraged for sustainable finance instruments such as social bonds and loans, blended finance and impact investing.

Access to credit is holding back private sector investment in African agriculture, with the African Development Bank having estimated that the financing shortfall is as much as $65 billion a year.

Impact investors – those who aim to have a positive impact aside from achieving financial returns – can also play a role, as they can do things over and above what commercial financial institutions can.

The third lever is the development of the continent’s “outdated, poorly maintained” infrastructure so that, for example, seed, fertiliser and equipment can be transported to farms.

Africa's food and agriculture sector could be worth $1 trillion by 2030, analysts suggest

Photo credit: Etty Fidele / Unsplash

Fourthly, a reduction in supply chain costs is needed because, along with corruption and rent-seeking, these hinder the continent’s agricultural development, although collaboration with supermarket chains, geospatial mapping and integrated supply chains can help to deal with these issues.

Improving the productivity of small farmers is the fifth key issue that needs to be addressed, according to the analysts. About 80% of the continent’s food supply still comes from small-scale farmers, many of whom continue to practice subsistence agriculture.

Experts have said that more small agribusinesses should be grown into commercially viable projects, while local finance should be enhanced to help agribusinesses that are less commercially viable.

“The shift toward large-scale agriculture, however, must not come at the expense of small-scale farmers, who are an integral part of Africa’s agricultural landscape,” the authors wrote.

The sixth and final key issue is adapting the food systems to climate change, which is set cause disruption to African food security that could be “potentially catastrophic” for people already facing hunger.

“More ambitious and innovative adaptation interventions, research and pragmatic planning are crucial in addressing agricultural challenges in the face of water scarcity,” the authors wrote.

“Significant improvements in productivity will reduce the need to cultivate vast tracts of virgin land in order to meet the continent’s demands.”

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