By Samuel Abuya
Agribusiness in Africa has continued to elicit a lot of optimism as the sector is expected to hit an all-time high of $1 trillion by the year 2030. The sector is specifically being driven by the continent’s growing consumer demand for food, a growth which is being witnessed at unprecedented rates.
According to the African Development Bank which is playing a critical role in transforming agriculture in the continent, agribusiness in Africa is certainly the next investment frontier for those looking for platforms to venture into.
With a population of 1.2 billion people, Africa has a size that really matters and is currently second in terms of populous continents around the world. The United Nations has projected that the population in Africa will reach 2 billion people by the year 2030. The population will have hit 2.5 billion people by 2050. What that, basically, means in reference to agribusiness, is the fact that at least one in five consumers globally will be from Africa. And, that is how and where the size of the population matters.
The African Development Bank’s African Economic Outlook Report indicates that the middle-class population in Africa is projected to hit 1.1 billion people by 2060 translating to 42% of the entire population. This middle-class, reports indicate, they are becoming more not only sophisticated but also discerning in the kind of food that they consume with concerns on quality and price, food safety and nutritional content taking centre stage.
The growing mega cities across the continent such as Cairo, Kinshasa and Lagos are also expected to contribute a big deal to the growing of agribusiness in Africa. These cities are coming in as a boost to the medium cities that also have quite huge populations. The cities provide ripe and huge investment opportunities thanks to their populations and concentrated spending power.
The projected growth of agribusiness in Africa is further boosted by the fact that more than 60% of arable land which remain unused is in Africa.
Concerted efforts are being made by various policy makers across the continent to create and maintain a favourable business environment in order to woo not only foreign but local investors as well.
The African Development Bank, through its Feed Africa Strategy, is helping its member countries in the region to address the demand and supply challenges in the agricultural value chains. AfDB is using initiatives such as Technologies for African Agricultural Transformation (TAAT) to turn around low yields in commodities that are traditionally a priority in almost every household in Africa. The commodities include maize, rice and soybeans.
In a country like Sudan, for instance, the TAAT initiated heat-resistant variety of wheat has boosted the wheat-sufficiency of the country from 24% back in 2006 to an impressive 45% in the 2018/19 farming season.
It is also worth mentioning that the Special Agro-Processing Zones, commonly referred to as SAPZs, have continued to attract both soft and hard infrastructure and in return creating value addition to increased agricultural yields.
The African Development Bank and its partners have pumped in some $120 million in SAPZs in Ethiopia, Guinea, and Togo which is expected to help in expanding the local agro-processing facilities and activities.
The African Continental Free Trade Area (AfCFTA), which is expected to make Africa the biggest free trade area in the world, is also expected to play a role in expanding agribusiness in Africa.
In 2018, agriculture was one of the nine sectors that really caught the eyes of investors at the 2018 Africa Investment Forum. Others that gave agriculture huge competition include infrastructure, energy, ICT and financial services.
This year’s Africa Investment Forum is scheduled to take place in Johannesburg, South Africa, from November 11 to November 13.
