The Role of SMEs in promoting
Science, Technology and Innovation
in Food Security and Sustainable
Agriculture
By:
Ambassad...
Outline of Presentation
1. Challenges in African Agriculture
2. Contributions of SMEs
3. Constraints faced by Agribusiness...
1. Challenges for agricultural SMEs
• SMEs in Africa have failed to be a major force in
advancing Science and Technology I...
Challenges for agricultural SMEs
• Some of the unfavourable situations hindering SME
growth and development in Africa incl...
Challenges for agricultural SMEs
• Africa’s ability to break the relative food
insecurity and poverty challenges would lar...
2. Contributions of SMEs
• SMEs have been defined variously depending on the
context.
• The Ministry of Commerce and Indus...
Contributions of SMEs
• Contribution of SMEs in Liberia:
– Serve as a source of family income for over 80% of Liberians
– ...
Contributions of SMEs
• Compare to China (2012):
– SMEs in China comprise 99 % of all firms
– Account for 60% of GDP and f...
3. Constraints faced by Agribusiness SMEs
• Several constraints hinder innovative potential of SMEs
to break through the f...
Constraints faced by Agribusiness SMEs
• Empirical evidence: most African governments
have not been committed to these tar...
3. Cheaper imports into domestic markets
• SMEs in Liberia, for example, have not fully exploited the
benefits of globaliz...
4. The policy and regulatory environment
• A conducive policy and regulatory environment
necessary for SMEs to operate eff...
5. Infrastructure Policy
• Good infrastructure facilities provide a conducive
environment for productive SME activities gr...
6. Lack of Access to Finance
• Access to finance remains a major challenge to most SMEs in
Liberia and Africa.
• Agribusin...
4. Way forward
• Agriculture is a big business and Africa
considered as last agricultural frontier to feed the
world.
• Af...
1. Workable science and technological
innovations policy
• Research institutions in Africa need to re-examine the
kinds of...
• SMEs could lead the direction of technological
innovations from the research institutions
• SMEs can directly engage oth...
2. Innovation for competitiveness
• Strategic linkages and collaborations between
agricultural research institutions acros...
3. Collaboration with big firms
• Cooperation with big firms will enable SMEs
withstand various levels of risk which will ...
4. Financial and technical support
• Agriculture and related agribusinesses require both financial
and technical support f...
• Agribusiness SMEs can lead the quest for
appropriate technological innovations for
increased food security for sustained...
6. Recommendations
• Serious brainstorming sessions required on the
part of Government, Ministry of Agriculture, and
finan...
7. Research needs
Small and suitable field production machinery
• Pre-harvest mechanization: Precision planting,
nursery i...
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The Role of SMEs in promoting Science, Technology and Innovation in Food Security and Sustainable Agriculture

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By: Ambassador Wendell McIntosh (President / Chairman of ADA COMMERCIAL INC., Monrovia, Liberia)
At the occasion of the 5th EABF and 4th EU-Africa Summit on 31st March 2014 in Brussels, Belgium

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The Role of SMEs in promoting Science, Technology and Innovation in Food Security and Sustainable Agriculture

  1. 1. The Role of SMEs in promoting Science, Technology and Innovation in Food Security and Sustainable Agriculture By: Ambassador Wendell McIntosh (President / Chairman of ADA COMMERCIAL INC., Monrovia, Liberia) At the occasion of the 5th EABF and 4th EU-Africa Summit on 31st March 2014 in Brussels, Belgium
  2. 2. Outline of Presentation 1. Challenges in African Agriculture 2. Contributions of SMEs 3. Constraints faced by Agribusiness SMEs 4. Way forward (Roles of SMEs in innovations for food security) 5. Conclusions 6. Recommendations 7. Research needs
  3. 3. 1. Challenges for agricultural SMEs • SMEs in Africa have failed to be a major force in advancing Science and Technology Innovations, especially in our agricultural productive systems • Agricultural productivity remains low. • There is heavy reliance on food aid and food imports in Africa. • Problem mainly attributed to business and policy environments not conducive for SMEs to operate and compete in domestic and international markets.
  4. 4. Challenges for agricultural SMEs • Some of the unfavourable situations hindering SME growth and development in Africa include: – Unstable political climate; – Lack of business and investor confidence in the economy; – Unstable and unpredictable macroeconomic environment; – The difficulty in doing business, and – The perceived corruption of governments in most African countries.
  5. 5. Challenges for agricultural SMEs • Africa’s ability to break the relative food insecurity and poverty challenges would largely depend on: – Public sector/government leadership to harnesses the entrepreneurial and/or innovative potentials of agribusinesses in the private sector, – Technical and financial support to the efforts of especially infant and distressed agribusinesses.
  6. 6. 2. Contributions of SMEs • SMEs have been defined variously depending on the context. • The Ministry of Commerce and Industry of Liberia defines Micro, Small, and Medium-Scale Enterprises (MSMEs) in terms of full-time, non-family employment: – Microenterprises (0-3) – Small Enterprises (4-20) – Medium Enterprises (21-50), and – Large Enterprises (> 50) • Irrespective of the definition, SMEs create employment and contribute substantially to the GDP of their respective countries
  7. 7. Contributions of SMEs • Contribution of SMEs in Liberia: – Serve as a source of family income for over 80% of Liberians – Contribute about 20-30% of the value of manufacturing output – SME manufacturing firms contribute a maximum of about 2% to GDP. – SMEs engaged in trade and services in Liberia account for about 2- 3% of GDP. • In Ghana: – SMEs provides about 85% of manufacturing employment – Contributes about 70% to GDP, and – Account for about 92% of businesses. • In Republic of South Africa: – About 91% of the formal business entities – Contributes between 52 to 57% to GDP, and – Provide about 61% to employment in that county.
  8. 8. Contributions of SMEs • Compare to China (2012): – SMEs in China comprise 99 % of all firms – Account for 60% of GDP and fiscal revenues, and – Employ nearly 80% of the country's population (Ministry of Industry and Information Technology) – Accounted for 65% of the country's all invention patents, – 75% of corporate innovations, and – 80% of new product developments.
  9. 9. 3. Constraints faced by Agribusiness SMEs • Several constraints hinder innovative potential of SMEs to break through the food insecurity and poverty cycles. CONSTRAINTS 1. Lack of political will on the part of government – Claim by governments to put agriculture first in its development and food security agenda not credible. – CAADP targets not fulfilled by almost all African governments • Increase agricultural production by 6% per year • Increasing public spending in agriculture by devoting at least 10% of their annual budget to agriculture.
  10. 10. Constraints faced by Agribusiness SMEs • Empirical evidence: most African governments have not been committed to these target. 2. Low productivity • Farms in Africa characterized by low productivity. • Appropriate technological innovations with external inputs is a key challenge for most African peasant farmers. • Some research findings have contributed to productivity improvements. • Some technologies are difficult to adopt based on socio-economic and socio-cultural factors.
  11. 11. 3. Cheaper imports into domestic markets • SMEs in Liberia, for example, have not fully exploited the benefits of globalization. • Developing countries under pressure from the influx of cheaper (and sometimes inferior) foreign imports onto the domestic market. • This unfair competition is a major challenge for SMEs in Liberia and African in general. • Evidence: • Liberia currently challenged with cheap rice imports of low quality • Yet potential and capacity exists, through ADA COMMERCIAL’s proven experience, to produce, supply, and saturate the domestic market with quality milled rice at competitive prices. Constraints faced by Agribusiness SMEs
  12. 12. 4. The policy and regulatory environment • A conducive policy and regulatory environment necessary for SMEs to operate efficiently. • Available evidence: – General policy environment in Africa is weak and sometimes non-existent . – Farmers and agribusinesses unable to efficiently compete and prosper. – The policy environment does not provide safety nets for start-ups and distressed businesses to manage risks from foreign competition. – Local agribusiness entrepreneurs either neglected or discriminated against by their own national governments in favour of foreign companies. Constraints faced by Agribusiness SMEs
  13. 13. 5. Infrastructure Policy • Good infrastructure facilities provide a conducive environment for productive SME activities growth. • Lack or inadequate infrastructure, such as roads (trunk, feeder, and first class roads), electricity, water, telecommunication, research facilities, etc. • The enabling environment upon which private sector (SMEs) can depend on to spur growth and development is mainly absent Constraints faced by Agribusiness SMEs
  14. 14. 6. Lack of Access to Finance • Access to finance remains a major challenge to most SMEs in Liberia and Africa. • Agribusiness is a profitable venture and perceived as very risky – Therefore discriminated against by financial institutions and national governments for support. • SMEs (from production to distribution to value addition) have been crippled by the lack of financial support. • Very little done by African governments to adequately support SMEs access loans at low interest rates. • For example, interest rates charged to SMEs in Liberia, Ghana and South Africa on average are above 29%. Constraints faced by Agribusiness SMEs
  15. 15. 4. Way forward • Agriculture is a big business and Africa considered as last agricultural frontier to feed the world. • African SMEs in the agribusiness sector need innovative pro-poor sustained strategies that will guarantee food security using appropriate technologies.
  16. 16. 1. Workable science and technological innovations policy • Research institutions in Africa need to re-examine the kinds of research output they produce and how it has benefitted the agricultural sector. • A forum should be created where SMEs (including farmers) could regularly meet with Ministry of Agriculture and other relevant Ministries, Research and financial institutions to understand the needs and concerns of agribusinesses. Way forward
  17. 17. • SMEs could lead the direction of technological innovations from the research institutions • SMEs can directly engage other essential stakeholders, including researchers for appropriate and improved seed varieties that will improve on the food security situation. • For example, ADA Commercial is linking up with Africa Rice Centre to ensure the right rice varieties suited for the Liberian climate are produced: • In commercial quantities for massive mechanized rice production in Lofa and Nimba Counties in Liberia. Way forward
  18. 18. 2. Innovation for competitiveness • Strategic linkages and collaborations between agricultural research institutions across Africa and individual SMEs need to identified and mapped out for specific demand-driven innovations. Way forward
  19. 19. 3. Collaboration with big firms • Cooperation with big firms will enable SMEs withstand various levels of risk which will put them in a better position to be resilient to unfavourable economic difficulties. • Off take agreements need to be signed with key institutions to guarantee ready markets for agribusiness SMEs. • For example, ADA Commercial has signed an off take agreement with ECOWAS to: – Produce and supply rice – To feed the Food Banks of all ECOWAS Member States Way forward
  20. 20. 4. Financial and technical support • Agriculture and related agribusinesses require both financial and technical support from governments and private sector. • Promising and strategic agribusinesses need to be deliberately identified by governments and key stakeholders • Special attention devoted to them in terms of technical and financial support. • An example: ADA Commercial has land and machinery and equipment to commercially produce and supply grains to the ECOWAS sub-region. • Capital injection with appropriate partnerships is required to succeed in such agribusiness ventures. Way forward
  21. 21. • Agribusiness SMEs can lead the quest for appropriate technological innovations for increased food security for sustained agriculture. • ADA Commercial in Liberia has the experience and capable of spearheading the agricultural technological drive in the rice sector. 5. Conclusions
  22. 22. 6. Recommendations • Serious brainstorming sessions required on the part of Government, Ministry of Agriculture, and financial institutions to define modalities for supporting Agribusiness SMEs. • There is the need to deliberately identify and support SMEs with the capacity to go into large scale production. • Agribusiness SMEs must partner with research institutions to produce appropriate innovations.
  23. 23. 7. Research needs Small and suitable field production machinery • Pre-harvest mechanization: Precision planting, nursery industry and efficient use of water • Improvement of agricultural technology and system management • Post harvest mechanization for processing of agricultural product Renewable energy technology • furnaces for bio char • Bio gas digesters

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