Africa’s Agricultural Paradox

Wandile Sihlobo[i]

Remarks at the Africa-Israel Agriculture Dialogue

Stellenbosch, South Africa

24 April 2023

Good morning colleagues,

Thank you to The Brenthurst Foundation and the American Jewish Committee for organizing this gathering at a crucial juncture in our economic development journey. The theme “Africa’s Agricultural Paradox” is befitting given the vision, desire and intention of our country, and the continent, to chart an inclusive and sustainable development path.

I want to make a few remarks on Africa’s agriculture before we move into what promises to be a fruitful discussion.

We all know that agriculture is an essential driver of employment and economic activity in most African countries. For example, roughly 60% of the population of sub-Saharan Africa is engaged in smallholder farming. About 23% of sub-Saharan Africa’s GDP comes from agriculture.

However, the strategic role of the sector as a driver to advance economic development has been hampered by a number of exogenous factors. The Russia-Ukraine war and Covid 19 continue to compromise the resilience of its agricultural sector. These major challenges come against the backdrop of existing problems that have already been affecting the agricultural sector in the past.

These include,

  • Climate change with its associated shocks, such as frequent droughts, flooding, famine, etc.
  • Biosecurity, primarily the weaknesses in managing animal diseases, e.g., highly pathogenic avian influenza (HPAI), foot and mouth disease (FMD), and African swine fever.
  • We see pest infestations, such as the fall armyworm (FAW), and locusts, regularly in the East Africa region – whose frequency and intensity is also emerging as a consequence of changing weather patterns.
  • Low farm and off-farm productivity remains a major challenge and will continue to be a constraint even in this environment where most people are excited about the promise of the African Continental Free Trade Area.
  • Lack of adequate infrastructure, which increases transaction costs for farmers and agribusinesses operating in the continent of Africa.
  • Conflicts or wars, like what we are witnessing in East Africa, Mozambique in Southern Africa, and most recently in West Africa.
  • Fragmented food value chains
  • More recently, the rising input costs, partly because of the Russia-Ukraine war

Therefore, we need to tackle these challenges collectively and holistically in order to maximize the value of the agricultural sector in Africa.

We are a continent that struggles with high unemployment, poverty and low economic growth. We know from the literature that growth in agriculture is two to three times more effective at reducing poverty than an equivalent amount of growth generated outside agriculture.

Moreover, the advantage of agriculture over non-agriculture in reducing poverty is largest for the poorest individuals in society and extends to other welfare outcomes, including food insecurity and malnutrition.

So, what to do with all these challenges?

There are some policy considerations that I believe the African Agricultural Ministers here in the room with us can reflect on during the sessions.

In my view, four overarching issues should remain critical priorities for African governments:

First, the African governments must improve land governance, which is fundamental for long-term investments. We know that roughly 86% of all the continent’s rural land plots are still unregistered. We cannot expect any meaningful levels of investment, infrastructure development and farm productivity improvements in an environment in which land ownership and use rights are inadequate.

Suppose I may use my home country, South Africa, as an example, in areas with strong property rights. In that case, we continue to see secure use and ownership rights that provide incentives to engage in robust agricultural activity, which essentially sustains our food security and exports.

Meanwhile, in the former homelands regions of South Africa, with weak land governance, such robust agriculture is non-existent to a large extent. Of course, I am simplifying a more complicated argument because these rights need to be couched in other important variables and factors such as infrastructure, institutions, skills, and agricultural finance. But you get the main point.

Second, African governments must create an enabling policy environment. This includes clear competition and merger regulations, tax incentives for SMEs, a regulatory environment that promotes quality standards in input and output markets, predictable trade policies, digitalization of customs procedures, and harmonization of border regulations.

Third, once we have the above matters adequately addressed, we could focus on attracting long-term investment in Africa’s agriculture. Here, I am not only talking about the private sector investments by local (MSMEs) and global investors but also public sector investments, i.e., public infrastructure expansion of border infrastructure, roads and connectivity (IT).

Fourth, we must also address the issue of informality in Africa’s agriculture and food industry. In an article I co-authored with agricultural economists Edward Mabaya of Cornell University and Lulama Ndibongo Traub of Stellenbosch University, we noted that “across all of the continent’s regions, except southern Africa, informal employment as a percentage of total employment in the agricultural and non-agricultural sector is above the global average of 64% for emerging and developing markets economies.

More than 80% of the continent’s population relies on open-air, largely informal markets for their food. Poor sanitary conditions in many of these markets raise concerns about food safety for households that depend on them.

Suppose African countries are to ensure resilient and sustainable agrifood systems. In that case, they must upgrade food value chains by shifting production and employment from informal micro-enterprises to formal firms offering wage employment with income security and health benefits for employees. This will also ensure improvements in food safety within the system.”

In essence, colleagues, my message this morning is that we need Policy Reform and Implementation, Investments, and Technical Innovation, which leads to Competition and Efficiency gains in Africa’s agriculture.

Notably, the African government, this time around, should increase the pace of policy reform to continue stimulating private sector investments. They must also ramp up public investments to strengthen regional food value chains, AfCFTA implementation, etc.

Thank you for listening; I look forward to our discussion.

[i] Senior Fellow, Department of Agricultural Economics, Stellenbosch University.

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