The Role of Africa on Food Business

Marcos Fava Neves

25 Abr 2013 13:26

First Published on China Daily, April 26th, 2013

Since 2006, when I first landed at O.R. Tambo International Airport and after South Africa World Cup 2010 turned into a wonderful airport, I’ve had a chance to visit several places of South Africa and gave more than ten lectures in conferences, universities, public and private organizations.

I’ve gone from the busy Johannesburg to the world class and marvelous Cape Town. Visited cooperatives in Malmesberry and went from the legalist Bloemfontein to Bothaville, home of Nampo Park, the largest exhibition facility in South Africa.  Also had a chance to visit the wonderful mountains of Clarens and Drakensberg, the cosmopolitan Pretoria and also other places of a lovely country.

In all these visits, I had opportunities to engage in deep discussions with producers, industry organizations and with Government officials about the whole Africa, to collect a lot of materials and learn about this unique continent by done my favorite activity: asking questions and listening to people. I should not forget to tell the reader about the chance of tasting wonderful Pinotage red wines in Stellenbosch, in a scenario of dreams. 

Although not having the chance to personally visit other African countries yet, I will try to generalize these ideas here to the whole continent, even knowing that in Africa we have 55 countries and thousands of languages.

Africa had a continuous, but not homogeneous development in the last years, and it is well recognized that the countries that retreated from socialist economic models are performing better. Most African countries are now democracies. We’ve seen also empowerment of private business by Governments and in several countries violence is declining, due to the end of “cold war”, more media attention, a wake up of the society based on internet information and also the development of institutions. Some countries went through disarmament policies and policies to increase education, improving living patterns. 

Africa normally isn’t the major focus of attention of most food and agribusiness strategists, and this is a huge mistake under two lens or better saying, points of view: consumption and production.

In the lens of consumption, it is important to say that Africa, together with the Middle East, is the largest food importer of the world. The growth of Africa as a food importer is justified by the large economic growth of several countries (continuous growth of 6-10% in GDP per year) followed by some income distribution and growth of middle class. African countries are also facing the growth of urbanization and we may remember that some countries have very large populations, like Nigeria (165 million inhabitants), Ethiopia, Egypt and Congo (from 75 to 90 million), South Africa, Uganda, Kenya and Sudan from 35 to 50 million and with around 20-30 million inhabitants we have Mozambique, Cameroon, Ghana, Cote D’Ivoire, Marrocco, Algeria, Madagascar and Angola. Africa has 55 cities with more than 1 million inhabitants and still 40% of urban population.

It is expected that Africa and Middle East will respond for 50% of world’s meat import growth till 2022, 53% of wheat, 50% of rice and 25% of soybean oil. With the food consumption in Africa continuing to rise, some countries are developing policies towards food security.

In the lens of food production, it is also a mistake not to pay great attention to Africa. It is recognized that South America is growing fast and will be the future world food supplier, but I’d say that South America would not be enough. We will need Africa to play an important role, since several African countries are full of production resources. The majority of land available to be brought to production is based in Africa.

To feed the world within this consumption growth will put much more pressure over the resources a country or a region has to produce food. As resources I consider land (soil), water, people, technology, information, connectivity, credit, energy (sun and power), Institutions and Government, storage capacity, agricultural inputs, transport and logistics and, finally, management capabilities. My general perception is that the societies that has these resources and better manages them will be the ones to capture most of this food and agro related markets growth, promoting the development. And here is where Africa is still struggling.

Several issues regarding resources are perceived in Africa.

• Some countries lack institutions, political stability, high mortality rates, corruption, lack quality people in Governments;
• Unsustainable agricultural practices taking to soil and resources degradation;
• Logistics is also a huge issue and some countries that have oil are not investing these resources towards more competitiveness. Countries like South Africa face mining activities removing land from agriculture;
• Fragmented food production systems and producers;
• Difficult market access and week linkages;
• Smallholders isolated from commercial markets;
• Productivity far below world averages;
• Low credit availability;
• Infrastructure not present in the way food and agriculture needs;
• Lack of insurance

From these issues, an action plan with several topics emerge:

• There is an optimism towards biofuels, since they will empower African farmers and society and some countries are already adopting these policies;
• To include black commercial producers;
• Engagement of smallholders;
• Empower younger generations and women;
• The issue of food safety and security and the creation of jobs via agri-food business development;
• Africa is pursuing investments that result in sustainable job creation, inclusion of people and economic development;
• Improve cross border conditions and trade, reducing transaction costs;
• Adopting standards;
• Yield management and technology transfer;
• Access to information and knowledge building more research capabilities;
• Improve trade environment, laws and regulations and build up committed organizations;
• Improving data and information access via web and other sources;
• Programs for better usage of the resources listed above.

So there is a lot to be done in African agriculture and this brings a lot of opportunities. As conclusion, I am very positive with Africa. My view is that in the next 10 years we will talk a lot about Africa as a leading world food consumer, and several investments will be done, and a real laboratory of agribusiness experiences. After the next 10 years, we will talk about Africa reaching food security and even becoming a food exporter. In Africa there are several opportunities and the real agribusiness entrepreneurs, the ones that view ahead have scheduled their flights, are landing, or already landed in O.R. Tambo International searching opportunities, building relationships and doing investments.