TANZANIA - Diplomacy
Special Advisor, Kofi Annan Foundation
Tesfai Tecle is Senior Advisor on Food and Nutrition Security at the Kofi Annan Foundation. Previously, he served as Special Advisor to the Chairman of the Board of the Alliance for a Green Revolution in Africa (AGRA). Prior to joining AGRA, he was the Assistant Director-General and Head of Technical Cooperation with the Food and Agriculture Organization of the UN (FAO) in Rome. He has served in various senior capacities at the UN and worked with the Institute of Development Research in Ethiopia and the World Bank in Washington DC. Tecle has a PhD in International Economics and Development from Cornell University (US).
The Mozambique picture is actually representative of the large majority of sub-Saharan African countries. Throughout the region, smallholder producers are facing major obstacles that prevent them from integrating into value chains. The most important reason for this is the small size of their farms and their low level of productivity. For example, the average size of most smallholder family farms is 1ha or less, while their average crop yields are less than one-third of similar smallholders in Southeast Asia. This small-scale production does not lead to significant surpluses for marketing beyond home consumption. Furthermore, even when farmers do produce surpluses, the high transaction costs and the challenge to comply with strict requirements and standards demanded by modern agricultural value chains limits access to the market. African smallholder farmers that sell surpluses from their harvest typically receive less than 20% of the consumer price, largely due to high transportation costs, post-harvest losses, and the profit margins charged by middlemen. This in turn reduces farmer incentives to grow more food for the market. Governments can help bridge this gap by investing in and maintaining the infrastructure and logistics that would help to reduce these transaction costs. They can also remove trade barriers and adopt price policies that do not unfairly penalize small farmers in order to benefit urban consumers. There is an urgent need for adaptive research aimed at improving agricultural productivity and production, and to build capacity and infrastructure throughout the value chain.
Africa’s vast infrastructure deficit is a major constraint on its economic growth and seriously impacts food and nutrition security. Governments do have a crucial role to play, establishing and maintaining critical infrastructure and providing appropriate regulatory frameworks. Where the private sector can help address infrastructure related constraints is through complementary innovative financing and public private partnerships. Many countries have set up investment agencies that help facilitate private investment in infrastructure projects. In partnership with governments, businesses can build feeder roads to reduce transportation costs, improve storage facilities to enable aggregation of farm produce, and invest in processing equipment that helps smallholders achieve quality standards and improve their market access. Companies must understand that creating value for the countries and communities in which they operate is in their own long-term business interest.
In addition to the Tanzania and Ghana experiences mentioned, it is also worthwhile to refer to the M-Pesa mobile banking system in Kenya and the E-Wallet for supply and distribution of subsidized inputs in Nigeria. Digital technologies are rapidly changing the face of African agriculture. They provide great opportunities to integrate previously isolated smallholders into food systems. Through mobile devices and apps, African farmers can access up-to-date knowledge and information that is vital to their business, including weather forecasts, advice on best agronomic practices, and market prices for crops. Digital solutions should play a greater role in helping smallholders access critical inputs such as seeds, fertilizer, credit, and insurance to help raise their productivity and improve food and nutrition security.
The size of the food and agribusiness sector is growing rapidly in Africa and could grow to a trillion-dollar market by 2030. It is expected that this expanding market opportunity will encourage more of the large local and international players to go into agriculture-related businesses. What is important though is that larger companies develop partnerships with smallholder farmers, as they are the key to unlocking Africa’s agricultural potential. In addition to making significant contribution to national socio-economic development, it makes good business sense for big companies to share access to markets, technology, and knowledge to help smallholder farmers turn their subsistence farms into profitable businesses. This is exactly what the Kofi Annan Foundation is promoting through its African Food Systems Initiative.
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