Africa has to go country for Inclusive and Sustainable Economic Growth!

By Lorem Arkanjelo Aminathia

For the last fifteen years, economic growth rates across Africa have averaged over 5% and the burgeoning population promises an enormous consumer market in the years ahead. Additionally the population growth promises a unique labor force that could further contribute to economic growth.However, the much lauded growth has largely been driven by resource extraction and the expanding informal service sector. Yet Africa continues to be largely agrarian and agriculture support over 64% of the population. But agricultural productivity across the continent is very low, hence undermining Africa’s overall productivity and food security. This is largely the function of the nature of the agricultural sector. African agriculture is made up of 80% small-scale farmers cultivating low-yield staple food crops on small plots with a minimal use of modern inputs. These farmers depend on rain water thus making them highly vulnerable to the vagaries of weather. As a result, Africa imports food staples valued at about 25 billion USD annually, principally because food production, supply and consumption systems aren’t functioning optimally.

Beyond production the agricultural sector is beset by a couple of other issues. The level of value addition and processing of agricultural commodities is low and post-harvest losses in Sub-Saharan Africa average 30% of total production, which in monetary value is a loss of about 4 billion USD annually. The poor performance in agriculture undermines poverty reduction and inclusive growth. In fact, the recent Millennium Development Goals (MDG) report finds that the share of people living on less than 1.25/day slightly decrease; dropping from 56% in 1990 to 48% in 2010. The limited decrease is partly explained by the fact that growth has primarily been driven by low labor-intensive sectors such as mining; while agriculture played a minimal role. A substantial body of economic literature finds that agriculture-led growth has greater impact on poverty reduction than non-agriculture-led growth. As such here believes that productivity changes in the  agricultural sector is a key to achieving inclusive growth on the continent because it mostly consist of smallholder farmers majority of whom are women. Moreover, with higher productivity; coupled with equitable access to land, high quality farm inputs and overall improvements in rural economies, growth will trickle down to the most disadvantaged: youth and women.

As such, Africa needs to put in place institutions and mechanisms that encourage and facilitate improvements in small-scale farming, while concurrently pushing toward the development of large scale commercial farming. One way to do this is to support agribusinesses that promote the integration of small-scale farmers into regional and global agricultural value chains(AVCs). In fact, that is our value proposition at Tanuru Farms. We design out-grower schemes that integrate small-scale farmers in Kenya into the regional agricultural value chains in the oilseeds sector; and eventually facilitate the value addition as well. We firmly believe that the participation of small-scale farmers in AVCs will enable them to harness the interdependence among the different actors in the value chain, namely the suppliers of inputs and seeds, the businesses providing technical support for farmers such as provision of agricultural machinery, the financiers, wholesale producers of farm products, the processors and associated sellers.