Africa: How SMEs Can Turn Around Food Production in Africa

22 October 2019
opinion

Among the many challenges that Africa faces on a daily basis, the food and agriculture sector has been receiving some added attention. Finding a solution for over 250 million undernourished people (over 20 per cent of the population) has been on the top of the list for decades, and with the continent's population expected to rise to 1.3 billion by 2050, that solution cannot come fast enough.

The drastic increase in population will result in a much higher demand for food and produce, which cannot be provided with current resources.

This substantial gap is worrisome for local officials and UN committees, along with various experts, consultants, and entrepreneurs all over the world. In order to meet the massive demand that is only expected to rise, African governments will have the highest impact by supporting local producers, who need all possible assistance to improve production efficiency levels and the quantity of produce.

The good news is that such improvement is definitely possible. A few weeks ago, I wrote about how smart investing can significantly improve the productivity of agriculture in Africa. Such an investment must be made wisely and responsibly, to best achieve the desired impact.

The real growth engine of Africa

There are three key questions at the heart of any smart investment: when to invest, what to invest in, and who to invest in.

As for the first question, the answer is clear: African governments best investment today is in agriculture and the food sector (in fact, it would have been better to invest yesterday).

As for the second question - what technologies and projects to invest in - a more detailed article will be published soon, but to give you a quick taste- businesses and projects that are implementing advanced, proven technologies across the value chain (from field and production technologies, through irrigation systems and fertilization to smart and cost-effective energy solutions) are already available, all holding a significant impact potential on the sector.

The third question is the most interesting one. Contrary to popular belief, African governments should not focus on large companies and corporations that will lead the agriculture and food sectors. The reason is simple: despite their extensive activities, they are not the real growth engine of the field. The real leading growth engine are SMEs, already directly responsible for 64 per cent of the continent's production chain, according to the latest Africa Agriculture Status Report.

Another 20 per cent is produced by farmers who grow for their family's personal use, while the large companies and corporations are responsible for no more than the remaining 16 per cent, and their scope for growth is limited.

Although various governments across the continent have already seen the light, there is a long way to go.

In different countries, governments help agriculture SMEs through subsidies for various products, such as fertilizers, advanced irrigation systems (like the solar irrigation systems that Ignite Power provides to farmers throughout Africa), and invest in different projects to attract investors and support more local SMEs, like the Gabiro agribusiness hub project.

These steps are only the beginning, and only building the foundations. Governments must take many additional, significant steps to help those businesses grow and prosper. SMEs are the real growth engine of Africa, and the fastest way for the continent to step into a better, more sustainable, future.

The writer is the founder of Ignite Power, a solar power firm in Rwanda. The views and opinions are those of the author and do not represent the views and opinions of the author's employer.

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