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Global African Investment Summit talks agribusiness

Lisa Koch

Agribusiness was one of the focus areas of the Global African Investment Summit, a two-day event attended by leading politicians and members of the business community.

Among the plenary panel sessions, working roundtables and project case studies, panellists discussed some of the key issues in African agribusiness, and shared their thoughts on where the focus should be to sustainably grow this sector.

A somewhat surprising view shared by a number of the panellists is that inefficient skills development, knowledge sharing and technological development are hindering growth in the sector, rather than access to finance. This is underpinned by their experience that larger scale projects which focus on deploying skills, sharing knowledge with the local community, and using technology where possible to reduce costs, inevitably results in a self-financing initiative. As one panellist noted, it is actually easier to raise $100m than it is to raise $10m, so small ideas need to be developed into large ideas, which ultimately attract greater investment.

Perhaps this is not so surprising – issues of fragmentation are being addressed through a number of different models, such as cooperatives and nucleus farming, to help small scale farmers achieve greater market access.

This raises the inevitable question of whether large farms are actually dwarfing small-hold producers, cutting them out of the market. But this argument was quickly put to rest by another view shared by the panellists: that progress is not possible without involving the small farmers, and in fact the whole community. This plays out in many ways:

  • Local communities can be involved in all aspects of the value chain, from contributing locally-sourced inputs to processed food, to working in the processing plants themselves.
  • The unique needs of the local community provide new market opportunities for business. Diageo provided an excellent example – they are developing a cassava-based beer for sale in Ghana to respond to local demand. This not only provides a new revenue source for the company, but contributes to the move from cassava being a subsistence crop to a cash crop – and local growers benefit.
  • Partnerships between large scale farming and the neighbouring small-holders allow for skills and knowledge transfer and give the local farmers access to suppliers they would not otherwise have been able to utilise. As the Managing Director of Africa and the Middle East for Olam International stated, this is not charity by big business, but a commercial proposition for the investor, and at the same time addresses socio-economic issues which the state should be concerned with.

Of course there are challenges, but with food security on the global agenda, and increasing demand forecast for growing markets such as China, the story for African agribusiness looks positive.

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