African farmland may hold key to food security African farmland may hold key to food security
May 13, 2013
The UAE's recent suggestion that Africa should develop agriculture free zones highlights how food-importing states view the continent's great natural bounties.
"Africa has potential for great success in agri-business, which will help in supporting food security programs for many counties that suffer from food shortage production," said Hesham Al Shirawi, chairman of Economic Zones World.
"The free zones could be used as storages for all kinds of food products and could also include large livestock farms and factories for packaging and exporting."
As the world's food basket, Africa can emerge as an agricultural power house feeding the world, but also needs to ensure its domestic needs are met.
"We cannot overstate the importance of agriculture to Africa's determination to maintain and boost its high growth rates, create more jobs, significantly reduce poverty, and grow enough cheap, nutritious food to feed its families [and] export its surplus crops, while safeguarding the continent's environment," noted recently by Makhtar Diop, vice president-Africa Region, World Bank.
A new Grow Africa initiative, launched by the African Union and other multilateral parties in 2011, aims to help impoverished small farming communities to stand on their feet and emerge as crucial participants and providers of the global food industry.
"Seven countries joined initially - Burkina Faso, Ethiopia, Ghana, Kenya, Mozambique, Rwanda, and Tanzania - seeking private-sector investment aligned to national plans for agriculture developed through the African Union's Comprehensive Africa Agriculture Development Program (CAADP)," the report said, noting that Nigeria joined earlier this year.
Sixty-two companies have committed to invest or collaborate in the initiative and the project has already yielded early results.
The Grow Africa study reports early progress, with more than USD 60 million invested in activities that incorporate smallholder farmers into commercial, market-based activities.
Around 270,000 metric tons of commodities have been sourced from the eight partner countries valued at USD 300 million.
Rich food-importing nations have often been accused of buying up vast tracts of agricultural land with little or no benefit to the local communities.
Protecting farmers
More than 201 million hectares of land are uncultivated and available for farming in sub-Saharan Africa, according to the World Bank.
Compared to an average annual expansion of global agricultural land of less than 4 million hectares before 2008, approximately 56 million hectares worth of large-scale farmland deals were announced even before the end of 2009. More than 70% of such demand has been in Africa; countries such as Ethiopia, Mozambique, and Sudan have transferred millions of hectares to investors in recent years.
The forum aims to cultivate a more inclusive approach where small farmers don't feel exploited, but are crucial links in the food chain. The new process also demands greater transparency from investors with letters of intent.
"These are detailed statements from companies on investments they plan to make. They outline both commercial objectives and how these will contribute to broader agricultural development outcomes, such as job creation or raising smallholder incomes.
"The process of generating such 'Letters of Intent' helps create productive dialogue with governments and other partners. Their announcement builds trust and momentum, and can be used to attract other partners and investors to the value chain."
Here are some key highlights of Grow Africa initiatives in the eight African nations:
Coordination with SMEs, to help finance USD 11 million and install 38,000 metric tons of processing capacity.
240,000 farmers trained since 2009 in good agricultural practices to increase productivity by 21-78%.
At a pan-Africa level, over USD 50 million invested and more than 100 employees hired locally, with further employment and investments planned.
The Agha Khan Foundation has already invested USD 400,000 to help 5,000 farmers, with a further USD 1.3 million expected over 2013-2015 to partner with 25,000 more farmers.
Country initiatives
In places like Burkina Faso, corns and cereals offer major investment opportunities for the private sector and foreign players.
Gulf investors will also be keen to hear about importing opportunities in onions and potatoes, apart from frozen and canned food.
Livestock is the second pillar of Burkina Faso's economy, accounting for 15% of GDP and 30% of the workforce. There are significant opportunities for regional export and for animal feed production.
A dedicated livestock area in the city of Bagré has 17,000 hectares and 26,000 animals, offering opportunities in animal feed production.
In Ethiopia, the government appears to have heeded Dubai's suggestion and launched industrial economic zones to encourage the development of an agro-processing industrial sector.
More than three million hectares of arable land is available for lease, and the government aims to facilitate provision of infrastructure on 283,000 hectares, according to the report.
Ghana is also benefiting from a USD 145 million World Bank and USAID sponsored project to improve the country's agro investment climate.
A private group, Injaro Agricultural Capital Holdings, has pledged investment commitments to six companies in five countries, with USD 2.4 million disbursed by end of 2012, and another USD 3 million in 2013.
Investors in Mozambique are being provided with a package of investment incentives, in places like the Nacala Special Economic Zone.
"A USD 20 million catalytic finance instrument has played a business incubator role in supporting 12 medium-sized investments to date in farming enterprises within the Beira corridor, where less than 3% of arable land has been put to commercial agricultural use," Grow Africa said.
Mozambique and the Netherlands are jointly funding USD 23.5 million rehabilitation and expansion of the irrigation scheme for rice production in Maganja da Costa district in the Zambézia province.
The 3,000-hectare project hopes to aid 5,000 small producers this year.
"Officials are reaching out to both 'conventional' and 'non-conventional' potential investors in the Middle East, Brazil, Japan, India and elsewhere," the report noted.
Nigeria launched the Agricultural Transformation Agenda (ATA) in 2012 with the goal to add 20 million metric tons to the domestic food supply by 2015 and generate employment for as many as 3.5 million people by 2015.
Tanzania has initiated the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) to boost the country's agricultural production
SAGCOT is the first-priority investment area for achieving the goals of Tanzania's Agricultural Sector Development Program (ASDP) and the Kilimo Kwanza (Agriculture First) Growth Strategy.
"The Tanzanian market exhibits significant growth potential, with meat already being exported to the Middle East and neighboring countries," the report said.
The government is making as much as 10,000 hectares of prime ranch available for feedlots, abattoirs, meat processors, rendering plants and tanneries.
"African leaders have defined an agenda for agricultural growth that is both sustainable and inclusive," said Joergen Ole Haslestad, president and CEO, Yara International, which specializes in agriculture products and is a partner in the program. "This creates win-win opportunities for investors, farmers and communities."