Monday, June 30, 2014

Agriculture: the way forward?

The single most pressing challenge facing Africa's governments is to harness the continent's increasing wealth and use it to improve people's lives"- Grain Fish Money Africa Progress Panel Report

Greenland. That is what you see as your flight descends into any African country. That Africa suffers from food insecurity and unemployment despite land available for tilling is a paradox. By all accounts Africa is a blessed region- land, resources and people; yet the continent spends 35 billion dollars on food importation and is ravaged by poverty and unemployment.In a continent where unemployment ranges from 3.4% to 40% , the priority of any government should be to reduce unemployment with tools and resources immediately available.
Presently, Africa has about 120 million household farmers who produce 85% of food consumed across the continent- meeting the need for food production and sustenance compared to pockets of Folawiyo and Zartech-type farmers who we need for food exports
Africa is towing the  industrialization path but is forgetting Agriculture which is core for any development even if only for nutrition purposes. We forget that even developed countries have farmers who are enabled and protected by their governments.
The problem with agriculture as a viable field are diverse. These problems include low productivity( compared to the inputs and resources used,what is the harvest?), storage post harvest( $4 billion is the estimated post harvest loss due to storage inefficiencies), lack of new technologies (improved seeds and planting methods) and transportation costs. The internal problems facing agriculture are exarcabated by lack of finance and access to land.
 Low productivity is caused by low irrigation,  dependence on rainfall and low fertilizer use which reduces soil health. For instance, fertilizers across the continent typically cost three times than that for farmers in Brazil and India.
For governments that want to tackle their unemployment challenges, agriculture provides the means of doing so. Youths should can be incentivized to shift towards agriculture and agro-processing.

  • Creating access to land: Land is a vital part of African life and available. In  a country like Nigeria thanks to the land tenure act, all lands belong to the government. State and local governments seeking to develop their states can make land available to potentil farmers low-cost. Areas in a state or local government can be  designated  as farming areas. If this is done especially in urban areas where population density is high and the struggle for land is difficult people should be encouraged to farm be it in livestock or crop produce holding other factors constant.
  • Access to finance: lack of affordable credit (the going rate in Nigeria for loans start from 20%), inability to save due to the subsistent nature of farming and lack of insurance inhibit farmers from expanding/improving their productivity by re-investing in farming. Also, farmers ergo members of the informal  economy are excluded from financial services because financial institutions do not invest in rural areas and farmers (both rural and potential urban) lack the requirements (a collateral) for credit. In addition, because agriculture is perceived as high risk, Financial Institutions do not invest in them because returns are not guaranteed. Also farmers/ youths with bright ideas are unable to translate these ideas into bankable projects. To address these challenges, Kenya has M-Pesa ( a mobile banking platform for the "poor") which has helped farmers. Nigeria's government in 2011 also created an agency Nigerian Incentive-Based Risk Sharing in Agricultural Lending whose purpose is to provide credit guarantees of unto 70% to banks that loan to farmers. However, the success of this agency is yet to be seen as there is little or no awareness of it's existence. On paper, an organization like NISRAL should provide comfort for banks to loan to farmers and should be encouraged. This should go hand in hand with reaching out to the farmers so that they make use of this opportunity. Related to this is that governments should reduce the incentive  for FIs to invest in bonds etc and fund the real sector. For instance, the yield on Nigeria's government bonds is at least 12%. A financial institution that loans at 25% and yields 12% has no incentive to reduce its interest rate. Financial institutions can also collaborate with farming associations in order to reach individual farmers or give credit to the farming association.
  • Upskilling farmers: farmers lack access to the latest technologies and seeds. The effects of this is that they tend to overuse their land which leads to low productivity and low yields. According to a senior IFC official crop per resource use in Africa is low compared to other continent. Educating farmers can address this. In Malawi, a lead farmer project where a farmer that has been properly trained in the right agricultural techniques teaches/ shows this process to other farmers thus imbibing new principles and sharing best practices. Models like this can be introduced to other regions/ countries
  • Enabling agribusiness: inefficiencies post harvest result in high prices of crops that do not even get to the primary producer. These inefficiencies include lack of storage, waste and infrastructure. For instance in Nigeria about 80% of her roads are unpaved and unsafe. Coupled with the security challenges the nation faces, middlemen have to contend with bad roads, tipping policemen etc. On the issue of wast, the "useful" part of say a cow is taken and others discarded. As previously mentioned, every part of a cow is useful even it's blood. Also, cassava is being processed the same way it has been processed for centuries. The government can come in by teaching youth the how and whats of agro-processing. It is great to see Nigerian brands of pancake flour, yam flour, cassava etc. It would be more successful if more people engage in afro-processing.
Agriculture provides a veritable means of addressing the continents youth unemployment food insecurity challenges. African governments have to sort out the infrasture issue because without it there will be no connection between the primary producers and final consumers.

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