Inside Africa blog

Legal developments around Africa

Mozambique farmers ready to reap the benefits of investment

Vanessa Brierley

April saw the announcement by the African Development Bank (AfDB) that between 2016 and 2017 it hopes to triple the level of support it provides to Mozambique, one of the world’s poorest countries. This would mean funds of around US$1.7 billion earmarked for Mozambique. 

While significant by amount alone, this investment is particularly notable by the fact that the AfDB has reserved a portion of these funds to specifically increase agricultural productivity and to help the country diversify its economy.

Agriculture, the backbone of Mozambique’s economy, contributes approximately 25% to gross domestic product and employs about 80.5% of Mozambique’s labour force. Productivity is, however, slow moving.  The nature of African agriculture means the majority of farmers are smallholders with limited access to quality inputs, technology, markets, infrastructure or finance tools and it is estimated only 10% of the country’s arable land is currently being cultivated. A renewed focus on this sector is thought to have the greatest potential to lift the country out of poverty, create jobs and alleviate food insecurity – a critical domestic issue which is fast becoming an international concern.

Ensuring the people of Mozambique share in and benefit from this potential is critical.  It is often assumed that bigger, mechanised farms are more efficient and productive than small farms, however research indicates that for farming economies of scale are not always evident  and small farms can be just as successful and sustainable as large ones.  The answer, accordingly, does not appear to be large-scale foreign land investment, which can in fact have the effect of pushing local farmers off their land and to low-paid jobs for survival. Regulation and policy change is key too, as we’ve highlighted in previous blogs.

Mozambique’s government has been seen to be making a concerted effort to transform agricultural productivity, adopting the ‘green revolution’ to modernise the sector while providing much-needed support to small-scale farmers.  Traditionally, this approach tends to focus on distributing existing technologies which have not been widely implemented outside developed countries, such as modern irrigation, pesticides, fertilisers and improved resilient crop varieties.  These can make a significant difference, particularly given Mozambique’s vulnerable position and climate.  Productivity can, however, also be increased by allowing small farmers the ability to expand their land area.  Although currently many farmers do not have the money and cannot obtain credit to do so, it is hoped with targeted financial and governmental support this too will change.

The large proportion of foreign aid and international support Mozambique receives reflects that many foreign countries and entities have realised that investment in Africa, teaching its people how to utilise scarce natural resources more efficiently and helping them to adapt to climate change is a necessity both for the country and internationally. Change must, however, come from within and it is promising to see the application of both political and institutional resolve to ensure that key decisions are made and implemented effectively to secure this future.

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Africa is as dynamic a market as it is diverse. We understand that changes impacting your business can arise rapidly and vary significantly across the continent.

Our understanding of Africa’s markets stems from extensive experience on the ground. Through our Inside Africa blog, we aim to apply this insight to provide you with timely commentary on the latest developments across Africa, as well as insight into the many nations that make up this vast continent.

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