NOMQHELE DUBE: Agriculture for export has huge growth potential in Africa

Agriculture for export is an overlooked economic pillar in Africa, despite its vast potential to boost the continent’s economic growth and development. Africa is home to some of the world’s most fertile land, and its agricultural sector is a major source of employment and income for millions of people.

The continent is the world’s largest exporter of cocoa beans, coffee beans and shea nuts, the second largest exporter of cotton and palm oil, and the third largest exporter of rubber and bananas.

Agricultural exports are still relatively low compared to other regions of the world. In 2022, Africa accounted for just 10% of global agricultural exports, according to the World Bank. This is much lower than the shares of Asia (32%), Europe (28%) and North America (19%).

Reasons for this include challenges with infrastructure and access to finance and technology. In addition, many African farmers produce for subsistence purposes, rather than for export.

Subsistence farming is a challenging way of life for African farmers, who often face poor infrastructure, limited access to inputs and unfavourable weather conditions. For example, in the Sahel region of West Africa farmers produce subsistence crops such as millet, sorghum and cowpeas.

In the Great Lakes region of East Africa farmers produce subsistence crops such as sweet potatoes, beans and bananas. In the Southern African Development Community (Sadc) region farmers produce subsistence crops such as maize, sorghum and cassava.

According to the African Development Bank, Africa could double its agricultural output by 2050 as global demand continues to increase, which would generate an additional $1-trillion in income and create millions of new jobs.

The African Continental Free Trade Area (AfCFTA) presents an opportunity for agricultural export trade among African nations. The AfCFTA aims to create a single market for goods and services in Africa, and it has the potential to boost intra-African trade in agricultural products by 30%. 

The top five exporters of agricultural products in Africa in 2022 were Nigeria, Egypt, Kenya, SA and Ivory Coast. Cocoa beans, cashew nuts, palm oil, rubber, coffee, wheat, corn and tea were the top agricultural products exported from Africa to the US, EU, China, India and Indonesia.

The war in Ukraine disrupted the supply of agricultural commodities from Russia and Ukraine, two of the largest exporters. This led to increased demand for agricultural commodities from countries such as Kenya, Ethiopia, Morocco, Egypt and SA.

Kenya and Ethiopia saw increased demand for their coffee and tea exports, and Morocco for its wheat and fertiliser exports. SA saw increased demand for its maize and citrus fruit exports. 

To support export agriculture African governments need to invest in infrastructure such as roads, ports and irrigation systems to reduce transportation costs, improve access to finance for farmers, support farmers to adopt sustainable farming practices, reduce trade barriers and support value addition to agricultural products.

Investing in infrastructure will improve access and affordability for farmers to transport their products to market, which will make them more competitive in the global marketplace. Improving access to finance will help farmers acquire the inputs and equipment needed to increase their productivity.

Supporting farmers to adopt sustainable farming practices by offering training on how to reduce their use of pesticides and fertilisers will help protect the environment (such as reducing soil erosion) and ensure African agriculture is sustainable in the long term. Reducing trade barriers through negotiating trade agreements will make it easier for African farmers to export their products to other countries.

Adding value to agricultural products by processing them or transforming them into new products will help to increase the value of African agricultural exports. For example, value addition to coffee will include roasting and grinding the beans or brewing the coffee into ready-to-drink beverages. 

The SA government has increased investment efforts towards infrastructure to boost exports of agricultural products. About R22.2bn was allocated to the department of agriculture, rural development & land reform in 2023/24 to develop and implement agricultural policies.

A significant portion of this budget was used to invest in infrastructure such as irrigation systems, roads and storage facilities. The government is investing in new and upgraded irrigation systems to improve water efficiency and increase agricultural production. It is also investing in improving and maintaining rural roads to reduce transport costs and improve access to markets for farmers. 

In addition Transnet, the state-owned freight transport and logistics company, is investing at least R38bn in its ports over a seven-year period to improve capacity and efficiency. The investment will focus on expanding and upgrading berths and terminals, new equipment and technology, improving operational efficiency, improving cold chain and reducing costs.

This initiative is intended to enhance port capacity and operational efficiency, ultimately alleviating congestion and minimising delays. Consequently, it will streamline the export of agricultural products, which is vital for preserving their quality and freshness, ensuring a quicker and more efficient process. 

Other examples of agricultural export-related investment include a $3.5bn allocation by the Kenyan government to the National Agriculture Investment Plan (NAIP) for the period 2019-2024. A significant portion of this investment is used for the development of new roads, to improve the transport of agricultural produce from farmer to market or farmer to port. In addition, the Kenyan government is working with the private sector to develop and commercialise new agricultural technologies.

For instance, the government has partnered with the Freshco Seed Company to develop a drought-resistant maize seed. Drought-resistant maize varieties have deeper roots, are more efficient at using water, and have better stomatal control, which allows them to withstand periods of water stress better than traditional maize varieties. The seed will help boost agricultural production in drought-prone areas of Kenya.

By investing in infrastructure, improving access to finance, supporting sustainable farming practices, reducing trade barriers and supporting value addition to agricultural products, African governments can boost export agriculture and drive economic growth and development across the continent. 

• Dube is an analyst at strategic research and advisory firm Birguid.