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Take horticultural products grown
for export. According to the Kenya
Flower Council, the country’s exported
blooms account for 35 percent of all
flower sales in Europe. By successfully
complying with EU environmental
requirements, horticulture exports
now rival tourism as Kenya’s major
source of foreign exchange. Tourism
and agribusiness are interlinked,
however. Hotels and restaurants have
strong economic incentives to source
local food products. In Kenya, hotels
source most of their hard furniture to
locals. Other countries have also made
major strides in growing their agricultural
exports. Senegal and Mali have
expanded their horticultural exports,
and Ghana is successfully exporting
pineapples.
Yet, despite agriculture’s significant
role in Africa’s development, aid to the
sector has been in decline over the past
two decades. No one cause can explain
this trend, but a number of factors
are at play. One is the greater priority
placed on health and education.
Another is the recent economic liberalization
programs, which decreased
the role of the state in the agriculture
sector and increased incentives for the
private sector to engage. A third cause
48 SAISPHERE
is the belief that development aid for
other sectors, such as infrastructure
and financial services, will have positive
effects on the agriculture sector
without necessitating a large amount
of direct investment.
Investing in Agriculture
Statistics from the Organisation for
Economic Co-operation and Development
show that when the development
community has invested in agriculture
in Africa, the largest proportions
of funds have been targeted toward
policy, agriculture development, food
crop production, water resources and
agriculture extension services. Additionally,
much of the development
community’s strategy in recent years
has focused on increasing production
through improved farming methods
and adoption of new technologies.
Although the emphasis on improving
production is critical to boosting
African agriculture to the level needed
to sustain the continent’s population
and achieve development goals, production
alone will not reap the full
economic and social benefits the agricultural
sector can deliver.
According to the World Bank’s
World Development Indicators 2011,
during the past 20 years, value-added
agriculture grew at the modest average
rate of 3.2 percent—only 0.7 percent
faster than the population. On the
other hand, there has been a sharp
acceleration of manufacturing growth
(from 2.2 percent per year in the 1990s
to 3.2 percent during this century’s
first decade) and an even sharper rise
in the pace of growth in services (from
2.6 percent to 4.8 percent for the
same periods). At the same time, the
population of Africa has been migrating
from rural areas to urban centers.
This movement, along with a rise in
incomes, has led to increasing demand
for processed food products. With the
growth of manufacturing and services
coupled with its shifting population,
Africa has an opportunity to reap huge
rewards through targeted investments
in agribusiness.
Agribusiness is “a broad concept
that covers input suppliers, agroprocessors,
traders, exporters and
retailers. Agribusiness provides inputs
to farmers and connects them to consumers
through the financing, handling,
processing, storage, transportation
and distribution of agro-industry
products,” according to a recent report
by the U.N. Industrial Development
Organization. So defined, agribusiness
is the single largest component of the
manufacturing sector, estimated to
account for half the sector in Ghana
and one-third in Kenya. Although statistics
are scant, agribusiness also represents
a substantial share of services
and, in a growing number of African
countries, exports.
More significant to Africa’s future
than these shares is the marginal
importance of agribusiness—that is, its
contribution to growth. Much of the
accelerated growth of African economies
in recent years is in agribusiness
writ large. Urbanization and rising
incomes increase demand for food, and
especially for higher-value-added processed
and packaged products. With an
expanding middle class, modern food
stores are now a regular urban feature.
Increasingly, these stores are replacing
imported products with local goods.
As agriculture becomes more commercialized,
African agribusiness has