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Briefing 58; Mariam Yinusa: - Supporting agribusiness development and industrialisation in the continent


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The Brussels Development Briefing n. 58 on “Africa’s Agriculture Trade in a changing environment” organised by CTA, the European Commission/EuropeAid, the ACP Secretariat, IFPRI, Concord and BMZ/GIZ was held on Wednesday 23 October 2019 (9h00-13h00) at Hotel Sofitel Brussels Europe, Place Jourdan 1, 1040 Brussels.

The briefing brought various perspectives and experiences around the new trends and opportunities in intra-Africa trade in the context of free trade agreements and regional integration. It also showed Africa trade within the broader global trade picture and with the EU as one of the main trade partners.

Experts presented trends and prospects of regional trade in Africa in the light of new policy developments as well as Africa’s recent performance in different markets. It also featured successes and innovative models in regional trade across regions in Africa and lessons learned for upscaling and expanding regional trade.

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Briefing 58; Mariam Yinusa: - Supporting agribusiness development and industrialisation in the continent

  1. 1. Supporting Agribusiness Development, Agro- Industrialisation and Trade in Africa Mariam YINUSA, Principal Economist, Agribusiness Development, AFDB September 2019 AFRICAN DEVELOPMENT BANK GROUP
  2. 2. TABLE OF CONTENTS I. Introduction – Agriculture in Africa II. AfDB Feed Africa Strategy III. Promoting Trade
  3. 3. I. Introduction– Agriculture in Africa
  4. 4. Africa’s Agriculture in Context POPULATION GROWTH & EXPANDING MIDDLE CLASS 2.5 billion people living in Africa MEGATRENDS URBANIZATION & TECHNOLOGICAL CHANGES EVOLVING DIETARY PREFERENCES IMPACT BY 2050 65% of the world’s uncultivated arable land is in Africa 51% of Africans are engaged in agriculture but contribute only one quarter of Africa's GDP US$ 47 billion was spent on food imports into Sub-Saharan Africa in 2017 over 60% increase in Africa’s food demand AFDB. 2017. Betting on Africa to Feed the World; FAO. 2018. The Regional Outlook on Gender and Agrifood Systems; FAO. 2018. Food Outlook, Nov. 2018; PNAS. 2016. Can Sub-Saharan Agriculture Feed Itself; ILRI. 2015. African Livestock Transformation, presented at AFDB Feeding Africa Conference Oct. 2015 4 STATE OF AGRICULTURE IN AFRICA By 2030, African food market will be worth US$ 1 trillion
  5. 5. To sustainably feed a growing population, Africa must close the yield gap and build a robust agribusiness sector Asia Latin Amer & Caribeans North America + Europe Sub-Sahara Africa 0 1 2 3 4 5 6 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Metrictonsperha Average Cereal Yields Challenges in the Agriculture Value Chain
  6. 6. Strong agriculture consumption growth in Africa driven by three key growth drivers 31313233 34 50 0 10 20 30 40 50 Cereals Sugar Dairy Meat Fish Oilseeds Africa agricultural commodities consumption to significantly outpace other regions Key growth drivers Other developed excl. SSA SSA pop. growth • Growing population: growing population resulting in increased food demand (32% growth by ’25) • Increased urbanisation: increasing share of population demanding larger variety of food and more processed food • Growing middle class: rise of Africa‘s middle class to drive increased calorie consumption and increased variety of food demanded Africa‘s food market valued at ~$300B in 2013 expected to triple in size to $1000B by 2030 Source: FAO; AfDB % consumption growth expected between’15-‘25
  7. 7. • Transportation & logistics companies • Lenders/Insurance companies • Manufacturers Actors Overview of the Agricultural Value Chain Inputs & Production Storage & Handling Value-Add Processing Distribution & Packaging Primary Secondary Actors Activities Inputs Outputs • Seed • Irrigation/Pumping • Livestock feed • Fertilizer • Farming/Ranching • On-farm mechanization • Land, water, fertilizer, feed, medicine • “Upstream” outputs • Fruits, vegetables, grains, livestock • Processed, refined goods (e.g., rice, meat, bread) • Cold storage • Moisture control • Mechanized sorting/packaging • Drying • Milling / grinding / refining • Processing (e.g. conversion into meal) • Packaging • Distribution • Refrigeration • Small holder farmers / Associations • Commercial farms • Co-ops • Traders / Brokers • Commercial operations Tertiary Services • Ancillary services that serve to support agriculture throughout the entire value chain Description • Farming / processing equipment • Financing • Logistics / transport • Warehousing Activities
  8. 8. Trends in Intra-African Trade Largest Importers Other Major Exporters Largest Exporter Total value of exports Intra-African exports 17.6% of Africa’s total exports $65 billion South Africa (35.4%) Nigeria (7.7%) & Egypt (4.7%) South Africa, Namibia & Botswana Other Major Exporters 13% of Africa’s total imports Source: Intra-Africa Trade Profile, TRALAC (2017)
  9. 9. Intra-African Trade in Goods Source: Intra-Africa Trade Profile, TRALAC (2017)
  10. 10. Trade in Agricultural Goods • Agricultural goods represent of 20.7% of total intra-African exports and 22.7% of total intra-African imports (2016). • Total intra-African agricultural trade amounts to $12,477 million (2016). Source: TRALAC Guide, The African Continental Free Trade Area.
  11. 11. II. AfDB Feed Africa Strategy (2016- 2025)
  12. 12. 1. Power and Light Up Africa 2. Feed Africa 3. Industrialize Africa 4. Integrate Africa 5. Improve Quality of Life of Africans The AfDB High 5 Development Priorities
  13. 13. Feed Africa Framework
  14. 14. Key Drivers Increased investment in agricultural research and technology dissemination Support for post-harvest loss reduction Enhanced engagement of youth entrepreneurs in agriculture Support to blue economy and livestock development Deployment of climate-smart agriculture practices Promotion of agricultural value chain development and value addition Catalysing private sector entry and growth in African agribusiness Supporting the development of an agribusiness enabling environment.
  15. 15. Raising agricultural production & productivity through identification of appropriate scalable technologies Creating an enabling environment for technology adoption Facilitating effective delivery of technologies to farmers at scale by working with existing R&D centers TAAT’s agricultural technology transformation MUST be regionally harmonized, food and nutrition conscious, & environmentally sustainable 1 2 3 Technologies for African Agricultural Transformation (TAAT)
  16. 16. TAAT Country Programs Development of Seed Systems Farmer extension on Good Agricultural Practices Market access Enabling environment 16 • Engagement of seed companies or other seed/animal producers • Use of/establishment of agro-dealer networks • ICT-based delivery systems to reach farmers Appropriate policies, regulations, systems by Gov’t • Agriculture • Trade • Fiscal policies • Etc Linkage to: • Processors • Aggregators • Warehouse receipt operators • Etc. • Including Climate Smart Agriculture
  17. 17. 8 01 Farm/ Production 03 Manufacturing Processing 02 RTC/PH 04 Trade  Inputs  Mechanisation  Irrigation  Climate Smart Agriculture (CSA)  Farm Access Roads Agricultural Productivity  Aggregation / Storage / Distribution  Value Chain Support Services  Market Services  Farmer Institution Support Aggregation and Post-harvest Support  Power  Water  Roads  Effluent mgt  ICT On-site Investment  Highways  Railways  Airports  Seaports  Soft Infra Distribution, Agro-logistics, Markets – Dom/Export Production Agro-processing Trade / Marketing Special Agro-industrial Processing Zones (SAPZ) Private sector led agro-industry and value chain development
  18. 18. Special Agro-industrial Processing Zones (SAPZ) 7 Agro-based Spatial Development Initiatives designed to concentrate agro-processing activities within areas of high agricultural potential to improve productivity and integrate production, processing and marketing of agricultural commodities. Economic and Social Development of Rural Areas This is achieved by bringing adequate infrastructure (energy, water, roads, ICT etc.) to rural areas of high agricultural potential, and promote private investments (agro- industrialists / entrepreneurs). Business Development Services The SAPZ are purposely built shared facilities (RTC, APH), to enable agricultural producers, processors, aggregators and distributors to operate in the same vicinity to reduce transaction costs and share business development services for increased productivity and competitiveness. Productivity enhancement and competitiveness of smallholder Farmers through skills enhancement to close the industry skills gap for innovation and job creation for youth Skills Enhancement
  19. 19. SAPZ Rural Transformation Centers (RTCs) 9
  20. 20. Schematic representation of an Agro-Processing Hub which hosts facilities for agro-processing SAPZ Agro-Processing Hub 10
  21. 21. Digital Solutions for African Agriculture Input Supply On Farm Production Post Harvest & Agro-processing Trade, Marketing & Consumption Enhance yields, scale productivity Improve efficiency Improve traceability, sustainability and profitability Facilitate access to markets • Land & soil fertility mapping by remote sensing/ mobile apps • Weather monitoring and insurance products • Finance Agro dealers • Mobile and ICT based advisory • Satellite or drone based monitoring • E-wallet • Forecasting & shared automated harvesting • Data capture & analysis of field performance • Traceability and mapping • Price monitoring • Digital payment & mobile money systems • Digital marketplaces Value Chain Goals ICT Tools Our goal is to increase investments in digital enablers across agriculture value chains in Africa.
  22. 22. Through public sector investments, the Bank will enable Governments to: • provide essential public goods. • partner with the private sector. Entry Point Intervention Areas Approach to Promote Digital Agriculture 22 Pure Public Goods Interventions Potential PPP Interventions Enabling Environment for Digitized • Digital Strategies • Digital infrastructure • ICT and data regulations • One-stop shops for coordination of Access to Markets • E-commerce/Digital marketplaces outputs •Tracking and Traceability (T&T) • Blockchain for integrated food Middleware Infrastructure • E-registries • E-extension • Soil Information Management • Agricultural Projects Information System (e-AgriGovernance) Inclusive Fintech4Ag • E-wallets and e-insurance • Other digital finance solutions • Co-invest in agtech startup funds Digital Literacy and Capacity • ICT4Ag incubation and accelerator • Smallholder Farmer Digital Literacy •Technology transfer and capacity Smart Agriculture and Intelligent • Geospatial and remote sensing • Farm management systems • Drone development
  23. 23. Trade and exports Commodity Products Improve the Agricultural Value Chain Farmers Agro Dealers Seed companies Fertilizer companies Agro processors Industrial manufacturers Public Goods support: Roads, Irrigation, R&D, Storage, Price Stabilization, etc. Seasonal Financing Term Financing • De-risk the financial value chain • Unlock commercial financing for agriculture • AFDB to support RMCs to setup RSF • RSF to leverage up to 10x • Systemic change in bank financing for agriculture • Finance for growth of Agribusiness • Financing agriculture as a business/ENABLE Youth Commodity and Agricultural Financing Value ChainsRisk sharing mechanism for increased agriculture finance Appropriate Risk Sharing Instruments along the Agricultural Value Chain Guarantees Interest rebates Insurance Technical Assistance
  24. 24. III. AfDB Trade Support Initiatives
  25. 25. AfCFTA Potential Outcomes On industrial products, intra-African trade would incease between 25%-30%. Sectors that are expected to benefit the most: • Textile • Apparel • Leather • Wood and paper • Vehicle and transport equipment • Electronics • Metals On agriculture and food products, intra- African trade would incease between 20%- 30%. Sectors that are expected to benefit the most: • Sugar • Vegetables • Fruit • Nuts • Beverages • Tobaco • Meat • Dairy products • The removal of tariffs on goods would increase the share of intra-African trade to 50% (depending on the ambition of the liberalization) between the implementation of the AfCFTA and 2040. • The value of intra-African trade would increase between 15%-25% (depending on the ambition of the liberalization) in 2040. Source: UN Economic Commission for Africa
  26. 26. Africa Trade Fund (AfTra) 26 Vision MissionAfTRA To mobilize resources to improve supply-side capacity and trade facilitation in RMCs for enhanced market access A competitive African economy that is regionally and globally integrated To achieve this, AfTra supports the delivery of Aid for Trade to RMCs, especially low-income countries, aimed at improving supply-side capacity for producers and traders
  27. 27. Africa Trade Fund Pillars Facilitating Trade Building Products and Markets Building Capacity for Institutions Making customs, ports and one- stop border posts more open and accessible and easing movement along trade corridors Getting goods up to SPS standards, stamping quality on products and crossing over to new markets Building capacity for institutions, collecting market data, analyzing trade gaps, adding value along the chain and supporting negotiations
  28. 28. Africa Trade Fund Success Stories Agriculture and Food Products: Raising standards, boosting livelihoods • Project: Harmonization of African Standards for agriculture and food products • Location: Africa-wide • Beneficiaries: Farmers, producers, businesses and traders Enabling women beekeepers to access markets in Rwanda • Project: Rwanda honey value chain development project • Location: Rwanda • Beneficiaries: Beekeepers particularly women and honey processors • Project: Support for African Cashew Industries in West and East Africa • Location: Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Kenya, Mozambique, Tanzania • Beneficiaries: Cashew Businesses, Cashew processors (particularly women) • Project: Trade and Institutional capacity building in the apiculture sector • Location: Zambia • Beneficiaries: Honey processors, particularly women and youth
  29. 29. Trade RemediesKnowledge Products Improving SPS Measures Reducing Technical Barriers to Trade Trade Facilitation Customs Cooperation and Mutual Administrative Assistance Rules of OriginInfrastructure Other Enablers