Agriculture is the elephant
There is cautious optimism about the economic outlook in Sub-Saharan African countries, where the GDP increase in 2016 was stronger than in other regions. But cheap commodities and expensive borrowing will continue to complicate an economic infrastructure still dominated by oil and mining. The need for diversification is urgent – regional economies must concentrate on sectors that can offer jobs to a growing young population desperate for economic stability.
It may be surprising to speak of agriculture as one of these sectors, but it should not be under-rated since it accounts for one third of African GDP and employs two thirds of Africa’s workforce. Agriculture is the elephant in the picture and should be recognised as such, not just for its sheer size but for its well-known capacity for hard work and its massive potential to bring Africa back into economic balance.
than ten times more effective in reducing poverty than growth in other sectors. Yet Africa has gone in fifty years from being a net exporter of agricultural and food products to a net importer today. And while the developed world must also take its share of the responsibility for this situation, intra-African trade remains far too low at 3.5% of the region’s GDP despite nearly doubling in the past 20 years. If intra-African trade of agricultural and food products and services can increase to over 10% of GDP by 2025 as the Malabo Declaration of 2014 aims to do, then the regional balance of trade and payments will be on the road to repair.
A combination of better coordination between public and private sectors, investment targeted to reduce business risk, and a faster, surer flow of funds can impact GDP growth the most. High lending rates are threatening to impede the growth of small businesses and weaken the food value chain links which would otherwise be casting the backbone and network of sub-Saharan agricultural economies.
The historic focus on public investment in Africa has led to a financial dependency to which only donors with a development policy commitment can legitimately respond. A broad mixture of public, private-sector and development financing must coalesce and start to collaborate. Engaging the private sector with unencumbered investment opportunities remains the most sustainable way to drive agricultural transformation.
Alignment is key to the achievement of these tasks. Agricultural development policies, plans and projects must be closely linked to national development policies in a recognition that cities and rural areas are the sides of the same coin and trade in the same currency. A reliable and functioning policy environment must characterise the new landscape, and effective collaboration models need to be developed and scaled for this purpose.
The decade past has seen good progress and resilience appears to have increased in the region. Governments, donors and the private sector have shown that they can work together efficiently in key areas. To realize agriculture’s potential at this critical time for African economies, the progress must be maintained and accelerated so that there is no sliding back. The investors of the future are ready and willing to be persuaded.