2017 l VOLUME 8 l ISSUE 3

VICE PRESIDENCY FOR ECONOMIC GOVERNANCE

Africa’s Agricultural Transformation:

1| Introduction
Africa has achieved unprecedented economic growth over 10 fastest-growing countries with real GDP growth of 7
the past two decades and is experiencing its longest period percent or higher2. In spite of global and regional headwinds
of sustained economic growth since the 1960s. The growth that have characterized the recent global economic
rate has not only accelerated, but also spread geographically. landscape, Africa’s economic performance has remained
In 2015, average real Gross Domestic Product (GDP) grew resilient and its mid-term prospects appear favorable. This
by 3.5 percent, higher than the global average of 3.1 percent, has ushered in hopes for the continent's development
and the Eurozone average of 1.5 percent (Figure 1). During prospects and its place as a new driving force of world’s
the same year, five African countries were among the world’s growth.

Figure 1 Real GDP Growth (percentage per annum)

Source: Annual Report 2015, AfDB.

1 Adamon N. Mukasa (corresponding author: [email protected]), is consultant, Andinet D. Woldemichael and Adeleke O. Salami are Senior Research
Economists, and Anthony M. Simpasa is Chief Research Economist, all in the Macroeconomics Policy, Forecasting and Research Department of the African
Development Bank.
2 Côte d’Ivoire, Democratic Republic of Congo (DRC), Ethiopia, Tanzania, and Rwanda.

Disclaimer: The findings of this Brief reflect the opinions of the authors and not those of the African Development Bank,its Board of Directors or the
countries they represent.

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These favorable macroeconomic performances were expect- most food-insecure region with more than one out of four
ed to spill over to the agricultural sector, the backbone of Africans being undernourished, and the proportion projected
livelihoods and employment for most Africans. Indeed, to increase by 33 percent, from around 240 million in 2015 to
agriculture currently employs 65–70 percent of the African around 320 million in 2025 (OECD and FAO, 2016). Moreover,
workforce, supports the livelihoods of 90 percent of Africa’s Africa is the only region of the world where the absolute
population, and accounts for about a quarter of the number of people living below the international poverty line of
continent’s GDP (OECD and FAO, 2016; World Bank, 2016). US$ 1.90 a day increases, with the most optimistic scenario
The importance of the agricultural sector is such that showing about 330 million poor in 2012, up from about 280
agricultural growth in sub-Saharan Africa is more effective in million in 1990 (Beegle et al., 2016). Agro-ecological zones
reducing poverty than growth in non-agricultural sectors. such as the Sub-Humid Guinea Savannah and Semi-Arid
Christiaensen and Demery (2007) found, for instance, that Sahel regions are among the most vulnerable.
overall Africa’s GDP growth originating from agriculture was
respectively 2.7 and 2 times more effective in reducing Despite the continent’s endowments with abundant arable
poverty in the poorest quarter and in the richest quarter of land (200 million hectares of uncultivated arable land, close to
African countries, respectively, in their sample than growth half of world’s availability) and vast water resources (17 rivers
from non-agricultural sectors. The place of agriculture in with catchments areas greater than 100,000km2 and more
Africa’s economy cannot, therefore, be overemphasized, and than 160 lakes larger than 27km2), Africa’s agricultural sector
improving the quality and standards of life of Africans will is unable to supply enough food to the continent (UN-Water,
ultimately involve enhancing agricultural performance. 2000). As a result, the region has become a net food importer
since the mid-1970s (Rakotoarisoa et al., 2012). The resulting
The above notwithstanding, Africa’s agricultural sector still food import bill of US$ 48.5 billion in 2016, expected to
performs poorly, and its enormous potential remains skyrocket to over US$ 110 billion by 2025, has crowded out
untapped. The continent still lags behind other regions of the expenditures for other crucial economic sectors such as
world in terms of productivity, agricultural mechanization, education, health, and infrastructure.
advisory and extension services, and access to credit and
financial markets. For instance, cereal yield has only slightly In view of the foregoing, there is a broad consensus on the
improved in SSA since 2000 and in 2014 it was estimated at need for a rapid transformation of Africa’s agriculture in order
around 1,430 kg per hectare of cultivated land, compared to to accelerate the continent’s development and the pace of
4,000 kg per hectare in Latin America and the Caribbean, or inclusive and sustainable economic growth. A more radical
5,200 kg per hectare in East Asia and the Pacific (Figure 2). economic transformation is needed, and the agricultural sector
can perfectly kick-start the process. If well managed and
Furthermore, the recent improvements in the sector in terms implemented, agricultural transformation has the potential of
of adoption of modern inputs (such as fertilizer, improved overcoming many of Africa’s economic challenges by
seeds, and pesticides), agricultural mechanization, or access supporting growth, promoting inclusion, and reducing poverty.
to advisory services have been insufficient to harness the It also has the virtue of relieving recurrent human challenges on
continent’s huge agricultural potential and trigger significant the continent by fostering food security and improving nutrition
poverty reduction. Consequently, Africa remains the world’s and related health issues. The transformation of Africa’s

Figure 2 Cereal yield, kg per hectare

Source: World Development Indicators 2016, World Bank.

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agricultural sector could, therefore, be a driver of the overall requires improved efficiency and value addition in connecting
economic renaissance on the continent, setting off a virtuous farmers to markets, as well as enhanced resilience in the face
circle of mutual cross-sector benefits. of growing risks due to climate, market, and political shocks.

This paper briefly examines the question of agricultural Available data reveal that agricultural transformation is already
transformation in Africa, identifies some priority areas to underway in several African countries, though at various
achieve such transformation, and discusses challenges facing stages. Several studies have indeed provided evidence of
African countries in their efforts to overcome structural employment shifts and labor exits from agricultural to non-
impediments to agricultural development. The paper further agricultural sectors in most African countries, a crucial pattern
proposes policy recommendations in regards to the identified of agricultural and structural transformation (Proctor and
priority areas of intervention and highlights the particular role Lucchesi, 2012; de Vries et al, 2015; Yeboah and Jayne,
that the African Development Bank has played to help African 2016; McCullough, 2016; Diao et al., 2017). Using data from
countries leapfrog their agricultural transformation. the International Labour Organization (ILO), Proctor and
Lucchesi (2012) found for instance that the share of agri-
culture in total employment in SSA has declined by about 3.4
2| Agricultural transformation percentage points between 1999 and 2009. Similarly, de Vries
and economic growth in Africa et al. (2015) found that, between 1990 and 2010, the share
of agricultural employment in 11 SSA countries declined from
Though there is no universally accepted definition of agricultural 61.6 to 49.8 percent.
transformation, there exists, however, some key guiding
principles to help grasp its scope. Put simply, agricultural Moreover, since 2001, much of Africa has enjoyed a sustained
transformation can be understood as the process through growth of agricultural value added. Figure 3 shows in fact that
which farms slowly but gradually move from highly diversified, average annual growth rates of agricultural value added per
subsistence-oriented production systems towards more worker and total factor productivity have been positive for
specialized and business-oriented production processes most of the countries where data are available. The
(AGRA, 2016). In particular, it involves productivity growth, which improvements in agricultural performance can also contribute
itself depends on increased uptake of modern technologies and to the reduction of poverty, especially in areas where the
inputs that improve the productivity of land and labor. It also workforce is mostly engaged in agriculture. As shown in
entails tangible progress in remedying imperfections in labor, Figure 4, most countries that experienced a positive growth of
land, and financial markets that impede technology adoption, as their agricultural productivity also enjoyed a reduction in their
well as efficient resource allocation and investment. It further national poverty rate. However, the relationship between

Figure 3 Annual growth in agricultural value added and total factor productivity,
2001–2013, selected African countries

Source: World Development Indicators (2016) for agricultural value added and Fuglie (2012; 2015) for Total Factor Productivity.

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Figure 4 Pourcent changes in agricultural value added per worker

Source: World Development Indicators (2016) for agricultural value added per worker and Povcalnet for poverty rates.

agricultural productivity growth and changes in poverty rates investment and technological change, means that less
appears weak (R2=1.4%), suggesting other important factors workforce will be needed to achieve the same agricultural
must be at play. output. The resulting labor surplus can be utilized by other
sectors.
Agricultural transformation can affect economic growth
through at least three channels. First, agricultural growth has Finally, agricultural transformation impacts on economic
the potential to contribute to economic growth through a growth through increased consumption from households
multiplier effect on domestic sectors with links to agriculture engaged in agriculture as their incomes rise. This, in turn, will
(Snodgrass, 2014). In particular, growth in the agricultural create demand in non-agricultural sectors, which will further
sector will increase demand for goods and services from raise overall demand in the national economy and fuel
other sectors in terms of modern inputs (such as fertilizer, economic growth.
improved seeds, and other agrochemicals), transport, and
fuel. Furthermore, growth of agricultural output will help In addition, agricultural transformation can also be a crucial
downstream industries (essentially the food-processing tool of achieving inclusive growth in Africa. It can be an
sector) to overcome recurrent supply shortages. Therefore, important means of promoting inclusive growth on the
the larger the value of the multiplier effect in agriculture, the continent by stimulating employment, boosting income and
higher the contribution of the sector to economic growth. investment, and subsequently helping achieve better living
Existing empirical studies conducted between 1989 and 2014 standards from the marginalized engaged in agricultural
have measured the magnitude of the agricultural multiplier in activities. Promoting agricultural growth through sustainable
SSA at an average of 1.5, implying that an US$ 1 increase in agricultural transformation may, thus, spur economic develop-
agricultural income, brought about by agricultural investment, ment for a large number of people, relying or not on
innovation or technological change, has the potential to raise agriculture to survive.
national income by US$ 1.5 (Haggblade, Hazell, and Brown,
1989; Block and Timmer, 1994; Delgado al, 1994; Dorosh However, unlike structural changes undergone in East Asia
and Haggblade, 2003; Farole and Winkler, 2014). This effect where agricultural labor exits were accompanied by rapid
is slightly less than estimates for Asia (1.6-1.8). increases in manufacturing, African workers who leave the
agricultural sector are going into the services sector (Diao and
Second, agriculture is linked with economic growth through McMillan, 2014; Kormawa and Jerome, 2015). As a result,
its impacts on factor markets. Indeed, successful trans- the contribution of the manufacturing sector to SSA’s GDP is
formation of Africa’s agricultural sector, through increased lower today than during the 1980s, suggesting that the

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continent is in fact de-industrializing. Since the 1980s, the potential and opportunities arising from steady increases in
share of manufacturing has declined gradually, from 14.3 Africa’s food markets, population growth, rapid urbanization
percent on average in the 1980s, to 12.5 percent in the and strong middle class. Indeed, Africa’s private consumption
1990s, and 10.8 percent between 2000 and 2015 (World reached US$ 1.4 trillion in 2015 while households and
Bank, 2016). businesses are projected to spend US$ 2.1 and US$ 3.5
trillion by 2025, respectively, totalling US$ 5.6 trillion of market
To strengthen the link between agricultural growth, economic opportunities for actors along agricultural value chains
growth, and poverty reduction in Africa, a structural trans- (McKinsey & Company, 2016). Compared to other regions of
formation of the agricultural sector is much needed, the world, Africa’s private consumption was the fastest
particularly in key priority areas where the continent still lags growing, at 5.8 percent per annum between 2000 and 2005
far behind other regions. These priority structural changes and 5.2 percent a year from 2005 to 2010, before falling to
include, among others, strengthening Africa’s agricultural 3.9 percent between 2010 and 2015. The recent increase in
value chains, increasing the rates of agricultural mecha- the number of supermarkets across Africa has also had a
nization, improving the participation of youth and women in sizeable effect on Africa’s agricultural value chain dynamics,
agriculture, reinforcing institutional capacity of African particularly for niche-markets and buyer-driven chains which
countries, promoting climate-smart agricultural practices, and have then proliferated.
strengthening intra-African agricultural trade.
Finally, high population growth, rapid urbanization, and the
emergence of a strong middle class can help support Africa’s
3| Priority areas for Africa’s agricultural value chains. Estimated at 1.19 billion inhabitants
agricultural transformation in 2015, Africa’s population is projected to rise to 2.48 and
4.39 billion by 2050 and 2100, respectively, which is the
3.1 Agricultural value chains highest rate of population growth in the world (UN, 2015).
Moreover, while only 40 percent of Africans lived in urbanized
Africa is currently at the bottom of global agricultural value regions in 2014, the continent is expected to urbanize faster
chains, exporting goods with very little or no processing. Its than other regions of the world in the coming decades, with
agricultural value chains tend to be dualistic, including an 56 percent of urban populations by 2050. Africa’s middle
informal component (serving essentially lower-income class is also fast-growing and has more than doubled
consumers in local markets) and a formal component (made between 1990 and 2010. These changes in population
up of large farms and processors that offer products to profiles and the rise of a middle class with a growing
higher-income domestic consumers) more or less connected purchasing power will lead to dietary changes and will affect
(Webber and Labaste, 2011). Effective supply chains, both various segments of food supply chains on the continent,
up and downstream, and strong interactions between the which actors at different stages of the agricultural value chains
informal and formal value chains, may create opportunities for can leverage. Projections by the World Bank suggest indeed
actors at each stage of the agricultural value chain, improve that African urban food markets would increase four-fold to
their gains, and enhance their living standards. exceed US$ 400 billion by 2050, offering opportunities to
agriculture and agribusinesses and boosting job creations,
Improving the performance of Africa’s agricultural value chains increasing income, and improving populations’ livelihoods
is also required for agricultural transformation and inclusive (Byerlee et al., 2013).
growth. The absence of a strong and efficient agricultural
value chain implies that many African countries risk being
ensnared into producing low-skill, low-value products and 3.2 Agricultural mechanization
services, thereby struggling to obtain a significant value-
added share in global trade. Africa still marginally affects the Agricultural mechanization stands for the application of
international agricultural export markets and its share of global mechanical technology and increased power to agriculture
agricultural exports has declined gradually from almost 10 aiming at enhancing the productivity of labor and achieving
percent four decades ago to around 2 percent today. On the results that surpass human capacity. Almost all countries that
import side, sub-Saharan Africa remains the only developing have overcome the challenges of development did so through
region that has seen its share of world agricultural imports strong support for mechanization and heavy investments in
increase rather than decrease, creating imbalances between both animal traction projects and powered mechanization.
export revenues and import bills. These imbalances have Experience from other regions of the world, especially Asia
undermined both the scope of economic growth and its and Latin America, shows that investments in agricultural
redistributive capacity and should be addressed for a mechanization have been key to enabling farmers to intensify
successful agricultural transformation and, sustained and their production, enhance their efficiency, and improve their
inclusive growth. productivity and quality of life.

In order to transform its agricultural sector and promote Agricultural mechanization is also an imperative to transition
sustained inclusive growth, Africa therefore should aim at from subsistence-oriented production to agribusiness. The
climbing the global agricultural value chain. This objective is rapid expansion of agricultural machinery use has helped
within Africa’s grasp, given its huge untapped agricultural many countries in Asia and Latin America transform their

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agricultural sector, originally subsistence-oriented, into a if very high, can crowd out other family expenditures such as
progressively commercial and internationally competitive education and food, leading to a vicious circle of poor health,
industry. In that regard, Africa is still performing poorly. In fact, low farm production, low income, and low consumption.
the rate of agricultural mechanization is dismally low, at
around 13 tractors per 100 km2 of land, compared with the Furthermore, Africa can leverage its vast untapped land and
global average of 200 tractors (World Bank, 2016). Between water resources to speed up the pace of agricultural
1961 and 2000, the number of tractors utilised by SSA mechanization. Africa is indeed home to 25 percent of the
farmers grew by only 28%, compared with 470% in Latin world’s fertile land, but accounts for only 10 percent of global
America and the Caribbean and 500% in Asia (FAO, 2008). If agricultural output. Africa has thus the potential to triple the
Africa wants to be food self-sufficient, export its food surplus, value of its annual agricultural output, from US$ 280 billion
and keep up with the future nutritional needs of its burgeoning today to around US$ 880 billion by 2030 (McKinsey &
urban population, drastic increases in agricultural mecha- Company, 2014). It also has substantial water resources, but
nization rates are of utmost importance. As highlighted in less than 5 percent is used, and only 6 percent of its fertile
Figure 5, the use of agricultural tractors on the continents is land is irrigated. Africa, therefore, offers greater potential for
largely concentrated in North African countries and South agricultural machinery sales and represents a promising
Africa, followed by large countries with large commercial market for prospective investors in its farm machinery
farming sectors such as Nigeria, Tanzania, and Kenya, while industry.
farmers from other African countries barely use agricultural
tractors. Finally, competition between suppliers of agricultural
machinery has also led to cheaper and more affordable farm
Agricultural mechanization can also help improve the health machinery suitable for African conditions. The emergence of
conditions of African farmers. Indeed, African agriculture still new suppliers, especially from newly industrialized countries
overwhelmingly relies on human muscle power, using hoes and such as China, India and Brazil, provides new sources of
other handheld tools. During the last decade, animal and tractors and other farm machinery at affordable costs. The
tractor power have even decreased in African agriculture, increased availability of these agricultural engines can help
amplifying the reliance of the sector on manual methods. African farmers increase the efficiency of their agricultural
Besides the obvious severe limitations of such agricultural production, reduce post-harvest losses, increase their farming
methods for farm productivity, they are also accompanied by revenues, and transition in the near future to business-
severe health problems for farmers. The resulting medical bills, oriented agriculture.

Figure 5 Number of agricultural tractors in use, most recent available estimates, 2000-2008

Source: FAOSTAT (2016), http://faostat3.fao.org/download/I/RM/E.

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3.3 Youth and women leveraging the energy, strength, enthusiasm and dynamism
of Africa’s youth and channelling these strengths into more
In most African countries, women make substantial contri- profitable, productive, and competitive agribusinesses,
butions to the development of African agriculture and rural African countries can enjoy increased productivity, enhanced
activities. Recent estimates show that the share of food production system, and increased agricultural incomes.
economically active women working in African agriculture Agriculture also offers many attractive employment opportu-
stands at a striking 62 percent, compared with an average of nities to youth and women, in terms of input supply markets,
43 percent in other developing countries (FAO, 2011). ICTs, processing, transport, marketing, or retailing along the
Consequently, agricultural transformation and subsequent agricultural value chain. The participation of youth and women
economic growth cannot be achieved without women’s in agriculture and agribusiness can therefore boost economic
involvement into the process. growth and help reduce poverty and food insecurity across
the continent. This will require that no effort be spared to
On the other hand, youth are Africa’s greatest assets for its mobilize, educate, and equip the youth and women with the
agricultural transformation and growth. Africa’s youth necessary skills and tools for agricultural transformation.
population is rapidly growing and expected to double to over
830 million by 2050. While other regions of the world,
particularly developed countries, experience aging problems, 3.4 Institutional capability
SSA’s population is instead rejuvenating, with its median age
declining between 2010 and 2015. Sub-Saharan Africa has Strong and efficient institutions occupy a central stage in
currently the world’s youngest population and is home to over facilitating and driving the agricultural transformation agenda.
420 million young people (Brooks et al., 2014). Two out of They are mandated to ensure delivery of agricultural inputs,
three inhabitants are under the age of 25 years, and 44 resources, and services necessary for agricultural moder-
percent of SSA’s population is under the age of 15. About 70 nization and transformation (Alence, 2004; Dorward et al.,
percent of the youth reside in rural areas and employed 2004). Where they function well, they also ensure an optimal
African youth work primarily in the agricultural sector, where distribution of income among various actors and contribute to
they account for 65 percent of the workforce (AGRA, 2015). enhancing growth and sharing it equitably among citizens.

Young African, men and women, are critical to the trans- There is also a strong correlation between the quality of
formation of agriculture on the continent and for efforts to institutions and the effectiveness of agricultural policies,
ensure food security. Owing to their relative importance, youth strategies and outcomes. Good quality institutions facilitate
and women represent a driving force for Africa’s agriculture. and streamline the rules of the game for actors at various
They are becoming well educated, better equipped and stages of the agricultural value chains (farmers, agro-
empowered to meaningfully contribute to the socioeconomic processors, agro-dealers, agropreneurs, or industrialists)
development of their respective countries. Based on current which in turn help to modernize and transform the agricultural
trends, 59 percent of 20-24 year olds will have had secondary sector. They are instrumental in increasing productivity and
education in 2030, compared to 42 percent today. This will production, adding value and reducing harvest loss, by
translate into 137 million 20-24 year olds with secondary facilitating the formulation, implementation, and reinforcement
education and 12 million with tertiary education in 2030 (FAO of developmental policies. Improving governance and
et al., 2014). To reap the benefits of the “demographic accountability of African institutions is, therefore, a must for
dividend” or youth bulge experienced across the continent, the agricultural transformation and inclusive growth agendas
youth and women must take the central stage in all policies (Haile-Gabriel, 2015).
and strategies aimed at improving the performance of Africa’s
agricultural sector. If youth and women are not brought on Moreover, good institutions are instrumental for pro-poor
board, the transformation of Africa’s agriculture can only be agricultural and inclusive growth (Dorward et al., 2004).
incomplete and non-inclusive. The increase in the working age Historical evidence suggests that good institutions played a
population on the continent could support increased crucial role in enhancing poverty-reducing agricultural growth
productivity and stronger, more inclusive economic growth. and redistributing riches among citizens. Governments in
Increases in youth employment, particularly in the agricultural countries such as South Korea and Japan have managed to
sector can lead to increased incomes, higher living standards put into place policies, supported by a strong and efficient
for the community, and better health and education outcomes. bureaucratic apparatus, that enhanced agricultural outcomes,
Youth employment also has the potential to fuel inclusive farmers’ incomes, and tightened the gap of living standards
growth for African countries (ILO, 2013). It is estimated that between farming and non-farming citizens. They were
lowering the youth unemployment rate to that of adults’ would influential in helping their agricultural sector achieve successful
translate to a 10 to 20 percent increase in Africa’s GDP, an transformation, in reducing income inequality between rural
increase that could be used to achieve sustained inclusive and urban regions, and in implementing inclusive policies.
growth (UNDP, 2015; AfDB et al., 2012).
Recent continental initiatives show that there are renewed
Finally, Africa’s vibrant youth and women’s resilience present political commitments of African leaders to improving agricultural
a great opportunity to address the constraints and challenges governance and performance. African leaders have recently
holding back improvements in agricultural productivity. By showed renewed interests in elaborating strategies aimed at

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boosting agricultural performances, increasing its competiti- growth on the continent (Branca et al., 2012). Farmers
veness, and improving its governance. Launched in 2003, the engaged in environmentally friendly agriculture will strengthen
Comprehensive Africa Agriculture Development Programme their livelihoods and food security through improved
(CAADP) of the Africa Union (AU)’s New Partnership for Africa’s management of land and inputs and adoption of climate-
Development (NEPAD), represents a continent- wide effort to resilient technologies. For African governments to succeed in
improve agricultural policies and which ultimate goals are their challenges of addressing both food security, sustainable
sustainable agriculture growth and poverty reduction. Commit- development, and climate change, investments in climate-
ments made in the 2003 Maputo Declaration and the 2014 smart agriculture may be an important asset, and institutional
Malabo Commitments through the CAADP are evidence of and financial support will be required to enable African
African countries’ increased ownership and leadership in design- smallholders to transition to climate-friendly agricultural
ing and implementing agricultural initiatives. Other initiatives such practices.
as the Alliance for a Green Revolution in Africa (AGRA) launched
in 2006, the Grow Africa Initiative of the AU, the NEPAD, the Finally, across the continent, there is now a clear public
World Economic Forum in 2011, the Agenda 2063 of the AU in awareness on climate change and the urgent need to develop
2013, the AfDB’s High-level conference on “Feed Africa” in adaptive and mitigating strategies. The devastating effects of
October 2015, and the AfDB’s “Feed Africa” Strategy in 2016, climate change on Africa’s agriculture, which is essentially
are among those initiatives and action plans wherein African rain-dependent, have prompted African leaders to take urgent
leaders increasingly strive to modernise agriculture for increased measures to help their farmers adapt to and mitigate climate
production, productivity, value addition, and shared prosperity. change. This public awareness has led to the inclusion of CSA
in the NEPAD programme and to the development of the
Finally, in most African countries, civil society and other private African Climate Smart Agricultural Coordination Platform, as
sector actors now increasingly play a safeguarding role to well as the African Climate Smart Agriculture Alliance in 2014.
ensure accountable institutions. Owing to their technical As a result, the total area under CSA management on the
expertise, proximity to the population and increasing presence continent has increased from virtually zero in the early 2000s
in the field, civil society organizations (CSOs) have played a to around a million hectares, leading to better yields, higher
crucial role in the fight against hunger, malnutrition, and poverty. profitability, less vulnerability for women involved, and better
Their views and opinions have also helped enhance the soil fertility and conservation. The adoption of CSA practices
legitimacy, transparency, and accountability of public institutions by other countries offers Africa’s farmers a great opportunity
across the continent. On the other hand, private sector to increase their productivity while adapting to and mitigating
entrepreneurs have also brought their capital to supply climate change.
agricultural inputs and machinery, invest in agricultural projects,
and co-finance soft and hard infrastructure. Their partnership
with public authorities have thus permitted more transparent 3.6 Intra-African trade
institutions, enhanced governance, and promoted more
accountability. In an increasingly globalized world, African agriculture can
benefit from a vibrant trade between neighboring and/or
African countries. Agricultural regional integration can help
3.5 Climate-smart agricultural practices expand existing markets, create new ones for national
farmers, and enable new opportunities for growth. Further,
The negative effects of climate change on agricultural outcomes the integration can promote competitive and more diversified
are now well documented, and recent studies have shown that economies and attract new sources of investment. Farmers
these effects will be disproportionally higher in Africa than in from one country can seize the opportunity to learn from
other regions of the world. Some parts of SSA are expected to others and share their own experiences in agricultural
suffer the most, with decreases in agricultural productivity practices. In this win-win game, African countries will not only
expected to turn around 15-35 percent (Fischer et al., 2005; harness the full growth potential of their agricultural sector by
Stern, 2006; Cline, 2007; Barnard et al., 2015). Others will reaping the benefits of larger marketplaces, but also ensure
experience increased water and food shortages, shorter that the fight for sustainable agriculture is widespread across
growing agricultural seasons, increased frequency of drought the continent. By collaborating and sharing knowledge,
and flooding, and possibly reduced suitability to agricultural African farmers can improve their productivity and speed up
activities. Owing to the escalating challenges of climate change, their path towards sustainable agriculture and inclusive
environmentally friendly agriculture is, therefore, a must for growth (UNCTAD, 2013).
African countries. It is a promising way to sustainably increase
agricultural productivity and farmers’ income, adapt and build However, the level of intra-African trade is still dismally low
resilience to climate change at each level of the agricultural value compared to the levels achieved by other regions of the
chain, and develop concrete strategies for the reduction of world; as shown in Figure 6, intra-African trade stood at
greenhouse gas emissions from agriculture. around 15.7 percent in 2014, compared to 69.1 percent in
Europe, 61.5 percent in Asia, and 55.8 percent in America.
Furthermore, by identifying suitable strategies to perform Even if Africa’s unrecorded informal cross-border trade is
agriculture without sacrificing future generations, climate- accounted for, intra-African trade is not likely to exceed 20
smart agriculture is well-suited to promote long-term inclusive percent.

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Figure 6 World intra-trade, by region

Source: UNCTAD, http://unctad.org/en/Pages/statistics.aspx

Furthermore, a strong intra-Africa trade can provide a cushion of production factors, in creating a common tariff on goods
against external agricultural shocks. The heavy reliance of from external countries, and in eliminating intraregional
Africa on international trade and the concentration of its barriers. The West African Economic Monetary Union has also
exports on primary commodities imply that the continent is established a shared accounting structure and has put in
particularly vulnerable to external shocks and protectionist place a stock exchange that spans the region. There is, there-
trade policies. This problem is particularly acute in the fore, room for other RECs, such as the Economic Community
agricultural sector, especially as the continent has been a net of the Great Lakes Countries and the Economic Community
food importer since the mid-1970s. The recent global food of Central African States to succeed in their attempts to
price crisis has blatantly demonstrated the extent of eliminate trade tariffs on products made within their regional
vulnerability of Africa’s economies. Indeed, while high global member countries.
food prices of 2007-2009 and 2011 might have played an
important role in the “Africa Rising” narrative and largely Increases in income and in the size of Africa’s middle class
explained Africa’s exceptional GDP growth, the recent fall in indicate that there is a great potential for regional agricultural
food commodity prices has seriously affected its foreign trade. The expansion of intra-African trade offers an
exchange earnings, shrunk revenues of its agricultural net opportunity for African countries to exploit the economies of
sellers, and prompted labor exits from its agricultural sector. scale associated with larger markets and overcome the lack
Though Africa cannot delink itself from international trade, it of export competitiveness due in part to the small size of their
can significantly reduce its vulnerability to external shocks by economies. Increases in income and size of Africa’s middle
improving the performance of its regional trade. Boosting class imply that there is already a market for African
intra-African trade and deepening regional market integration, enterprises to exploit within the continent without having to
therefore, constitute vital and timely responses to the overcome the burden associated with distant markets in
multifaceted challenges of agricultural transformation on the Europe, Asia, and America.
continent.
Finally, unexploited opportunities for intra-African trade exist in
In recent years, African leaders have made significant strides many product categories, particularly for food and agricultural
to harness the enormous potential of intra-regional trade, products. Though around 70 percent of African countries are
create employment, catalyze investment and foster economic net food importers and 40 percent net importers of
growth. At the African Union Summit in January 2012, for agricultural raw materials, only about 15 percent of Africa’s
instance, African leaders committed to boosting intra-African world trade in food and live animals occur within the
trade and fast-tracking the establishment of a continental free continent, while on average only 21 percent of African food
trade area. Some Regional Economic Communities (RECs) exports take place within the continent. This means that there
have also succeeded in achieving their stated objectives (AU, are plenty of opportunities for regional trade in food and
2012). Hence, the Southern African Customs Union has agricultural products that are not being exploited by African
made significant progress in allowing for the free movement countries.

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4| Challenges to Africa’s agricultural by small-scale producers prevents them from acquiring basic
transformation inputs, investing in technology and innovation, and thereby
improving their productivity. This is also compounded by the
Though full of enormous potential, Africa’s agricultural sector lack of secure land tenure, which prevents land to be used
is still enmeshed in numerous challenges that impede its as collateral. Only about 10 percent of rural land is registered
structural transformation. in SSA; the rest is undocumented and/or informally admi-
nistered, thus vulnerable to land grabbing and illegal
First, the structural changes undergone by many SSA expropriation. Moreover, it takes twice as long and costs
countries have not been accompanied by the emergence of twice as much to transfer land in SSA as in OECD countries.
a diversified and buoyant manufacturing sector. The ratio of
value added in agribusiness to that of farming remains the On the other hand, insufficient access to market information,
lowest in the world, at 0.6, compared for example to 5 in Latin particularly in remote rural areas, undermines farmers’ ability
America or 13 in the US. Moreover, across agricultural value to take well-informed and timely decisions and negotiate
chains, very little processing takes place on the continent, better deals for their agricultural products. Moreover, evidence
leading to substantial losses for exporters. For example, Africa has shown that credit markets are not gender or youth
produces approximately 70 percent of the world’s raw cocoa neutral. Many financial service providers often remain reluctant
beans by weight, but only 16 percent of intermediate cocoa to provide services (credit, savings, and insurance) to rural
products, which are typically worth 2-3 times more per ton youth due to lack of collateral, credit experience, and financial
than raw cocoa (AfDB, 2016b). Most indicators of industrial literacy, among other reasons. In 2014, only 20.5 percent of
development have deteriorated in recent years: Africa’s value young African adults (aged 15-24) held an account at a formal
added in manufacturing per person was the lowest in the financial institution– including banks, credit unions, micro-
world, at only US$ 45 in 2011, less than a third of South and finance institutions and post banks– compared to 33.1
Central Asia; the share of manufacturing value added in GDP percent of older adults (aged 25 and above) (World Bank,
fell from 13 to 11 percent since 2000 (Figure 7); and the share 2016). Other estimates also show that the gender gap in
of manufactured exports also declined from 43 percent in accessing credit still exists in many SSA countries: in Uganda,
2000 to 39 percent in 2008. for example, only 1 percent of available credit in rural areas is
received by women entrepreneurs, while in Nigeria and Kenya
This disappointing performance of Africa’s industrial sector around 14 percent of males obtain formal credit compared to
significantly limits the scope of agricultural transformation and around 5 percent of females (FAO, 2011). The constraining
regional trade which rely on a buoyant manufacturing and factors noted here limit youth and women’s ability to engage
agribusiness sectors to strive. in profitable activities, acquire modern agricultural inputs and
tools, and improve both their productivity and earnings
Second, limited access to credit, market information, and (Mukasa and Salami, 2015). Promoting financial products
output markets undermines the emergence of a strong catered to the youth and women may thus help remedy their
African agricultural sector. Lack of access to affordable credit chronic credit constraints.

Figure 7 Value added, manufacturing sector (% of GDP)

Source: The World Bank, http://data.worldbank.org/

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Third, poor planning and lack of coordination, coupled with Fifth, Africa’s landscape has long been defined by a lack of
low investment have undermined the process of agricultural institutional capabilities, endemic inefficiencies, and chronic
transformation in Africa. Indeed, one of the main reasons for corruption, compounded by bad economic and political
the disappointingly low rate of agricultural mechanization in governance. The degree to which countries provide an
Africa is the fragmented approach to mechanization adopted enabling environment differs significantly across regions, but
by African governments. In most cases, no serious and is strongly linked to their overall institutional development and
forward-looking planning for sustainable mechanization has capabilities. In that regard, African institutions fall short of
taken place and where agricultural mechanization strategies expectations and one of the most important Achilles heels of
have been formulated, they have only remained on the the continent has always been its lack of good governance
shelves and never come to fruition. This is also compounded and accountability, which impedes progress and often leads
by the lack of coordination within and between government to suboptimal use of natural and financial resources. The
agencies and their recurrent competition with private-sector quality of institutions has improved in most African countries
initiatives. Consequently, the mechanization gap keeps but not sufficiently enough to put African institutions on a
widening on the continent: current statistics indicate that there sustainable pathway. Some countries, such as Rwanda,
are about 470,000 tractors in Africa, while 3.5 million are Capo Verde, Kenya, and Senegal, have performed well in
needed to put Africa on par with other regions of the world. terms of quality of their policies and institutions, while others
Worse, the use of tractors in sub-Saharan Africa has actually (such as Sudan, Eritrea, and South Sudan) have performed
declined over the past 40 years, while during the same period, weakly. The 2016 Country Policy and Institutional Assessment
the number of tractors used in Asia and Pacific region almost (CPIA) Africa report indicates indeed that the pace of
doubled, from 7.8 to 14.9 per 1,000 ha of arable land (Houmy improvement in Africa’s governance has slowed in 2015,
et al., 2013). underpinned by lack of transparency and accountability and
high corruption rates, particularly in the public sector.
Furthermore, African agriculture suffers from chronic lack of
investment in agricultural infrastructure. Most agricultural Sixth, unsustainable agricultural practices are still widespread
systems in Africa are still based on subsistence farming, across Africa. In some areas, an inappropriate application of
unable to generate sufficient surplus cash to purchase modern inorganic fertilizer, pesticides, and other agrochemicals has
tools and machinery. The lack of investments in production- caused ecological damage, soil degradation, unsustainable
enhancing technologies has also led to a weak, often use of resources, outbreak of pests and diseases, etc.,
non-existent agricultural machinery industry in most African causing considerable health problems for both livestock and
countries. Though few farm tool and machinery factories have humans. Such practices have resulted in degraded natural
been established in SSA, essentially in Southern Africa, efforts resources (farmlands and rangelands) and declining yields
in other parts of the continent have not survived competition that impede agricultural productivity growth. In the long run,
from cheap imports of tools from countries such as China and they are likely to deplete the soil of nutrients necessary to
India. The economic cost of such a poorly developed increase productivity and ensure food security. It is projected
agricultural machinery industry is sizeable: it is estimated that that investment of about US$ 20 to 30 billion per annum is
this market is worth US$ 1.5 billion per annum, but less than needed over the next 10 to 20 years to reduce the continent’s
10 percent is supplied by African producers. Further, there are climate vulnerability and cap the potential negative economic
less than 100 agricultural machinery companies in Africa, impact equivalent to approximately 1.8 percent of Africa’s
employing less than 1 percent of the total industrial labor force GDP. In most African countries, the budget share allocated to
(Ashburner and Kienzie, 2011). climate change adaptation and mitigation strategies is still
pathetically low, while it is estimated that US$ 16 billion per
Fourth, despite their potential contributions to economic year are needed to support the continent to adapt to climate
development, youth are mostly unemployed in sub-Saharan change.
Africa at a rate higher than adult unemployment. Ten million
youth enter the labor market annually, but youth in SSA are Finally, lack of farmer’s skills represents yet another bottleneck
twice as likely to be unemployed as adults (Brooks et al., for Africa’s agricultural transformation. A typical African farmer
2014). In 2012, the youth unemployment rate in SSA was 11.8 is a subsistence farmer with little (essentially, primary) or no
percent and is projected to remain unchanged in the coming education, generally mismatched with his agricultural activities.
years. Furthermore, it is estimated that around 20 percent of In many SSA countries, agricultural education is poorly
SSA’s working youths earn US$ 1.25/day or less. This developed, and there is little inclusion of meaningful agricultural
“working poverty rate” jumped at 64% in 2013 at US$ knowledge in a curriculum which lacks a focus on markets
2.00/day, suggesting that SSA’s youth unemployment problem and soft skills alongside of know-how. Though many African
is both qualitative and quantitative. Despite the unprecedented governments have increased the provision of advisory and
economic growth on the continent between 2000 and 2013, extension services, access to new technological knowledge
with an average GDP growth of 4.7-5.8 percent, this growth remains relatively low on the continent. The low literacy rates
has not been “pro-youth” enough (AGRA, 2015). Referred to in the agricultural sector have undermined the adoption of
as a “jobless growth”, African growth has occurred in sectors modern technologies, including agricultural mechanization.
that generate less job opportunities for Africa’s youth, leading Sometimes, the lack of farmers’ knowledge about suitable
to both a youth jobs crisis and an increasing supply of young equipment and the lack of operating skills have led to a misuse
labourers in quest of work. and mismanagement of sophisticated machines.

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5| Conclusion and policy linked to improving its governance and the quality and
recommendations accountability of its institutions. African governments need to
put in place transparent and accountable systems of
Increasing agricultural productivity is an imperative for a strong governance of their agricultural sector. Strong political will from
and competitive African agricultural sector and a successful African leaders will also be required, as well as involvement of
transition from substance-oriented agriculture to agribusiness. citizens, civil society organizations and private sector.
Indeed, it is difficult to conceive of any improvement in the
agricultural sector without substantial increases in farm Programmes aiming at supporting agricultural education for
productivity. First, this implies radical changes in farmers’ young people and women should further be promoted, as
agricultural practices which are still unsuitable for comm- they are crucial for the development of their skills. To reduce
ercially oriented agribusiness. To achieve these changes, the educational gap between men and women engaged in
transition from subsistence farming to large-scale, industrial the agricultural sector and tackle the growing mismatch of
agriculture will require adequate financial instruments adapted youth skills and current labor markets’ needs, there is an
to the specificities of the agricultural sector. Innovative urgent need to equip these marginalized groups with the right
agricultural value chain finance for product financing (like agricultural skills for the job market. Initiatives that are being
trader credit or input supplier credit), warehouse receipts, or undertaken across the continent need to be scaled up and
risk mitigation products (such as crop or weather insurance supported. The Ouagadougou Declaration and Plan of Action
and forward contracting) will be needed. Easier comm- on Employment Promotion and Poverty Alleviation, the African
unication systems such as mobile phones and mobile Youth Charter, the Continental Strategy, the Malabo
banking (for instance M-Pesa in Kenya) should be popularized Declaration and Decision of Youth Empowerment, the Social
across the continent. Protection Plan for the Informal Economy and Rural Workers,
and Agenda 2063 are among those initiatives.
Technology innovation is also of utmost importance for a
competitive African agricultural value chain. Uptake of modern Improving intra-African trade will require concerted efforts and
technologies at each stage of the value chain will help strong political will from African governments, moving from
intervening actors improve their productivity, reduce their political discourses to concrete actions. In that regard, policies
transaction costs, facilitate their sales transactions, and access to boost intra-African trade to ensure a successful trans-
to price information, while enhancing their bargaining power. formation of African agriculture should urgently address
supply constraints and improve farmers’ productive capa-
Increasing the levels of public and private investments in cities by taking advantage of Africa’s enormous endowments
agricultural mechanization is also a prerequisite for the in natural and mineral resources and its buoyant private
transformation of Africa’s agricultural sector. In fact, African sector. They should also reduce Africa’s infrastructural gaps
governments need to prioritize investments in mechanization and improve countries’ trade logistics while facilitating intra-
related to agro-industries by significantly increasing the share regional trade by eliminating trade barriers. This involves
of public budgets for agricultural mechanization. This will making visa restrictions more flexible, reducing the scope of
require the diversification of the sources of government protectionist measures, and improving free movements of
earnings so as not to crowd out other important public people across countries’ borders.
spending, such as education, health, transportation, or
access to water and electricity. In addition, this will imply not Fortunately, achieving a successful transformation of Africa’s
only increases in the number of agricultural tractors, but also agricultural value chains is not confined to only East Asian
improvements in tools and equipment used by farmers, from countries (such as South Korea or Japan), India, or Brazil.
clearing and cultivating the land to planting, harvesting, and Significant improvements in input markets, expansion of
also transport, storage, and processing. innovative agricultural finance, and crucial land policy reforms
have helped some African countries successfully improve key
Financing for climate-smart agriculture needs to be scaled up agricultural value chains. Examples of these country-specific
considerably to ensure a sustainable African agricultural success stories include Nigerian farmer registration and input
transformation and green growth. The Malabo Declaration of distribution, floriculture growth in Ethiopia, horticulture
2014 wherein African leaders endorsed the inclusion of development in Kenya, improved rice yields in Senegal and
Climate Smart Agriculture (CSA) in the NEPAD programme on Mali, rapid and material malnutrition reduction in Rwanda,
agriculture and climate change suggests that African vertical integration and agro-processing in Morocco, and
governments are increasingly concerned by climate change cotton production in Burkina Faso. These experiences mean
issues and their adverse impacts on agriculture. In particular, that with appropriate incentives, political commitments, public
they committed to ensuring that, by 2025, at least 30 percent and private investments, other African countries could also
of farm households are resilient to climate variability and other transform most, if not all, of their agricultural value chains into
related shocks. Further, financing commitments on climate a more productive, competitive, and business-oriented sector.
change from the international community and other develop-
ment partners have to be met to realize CSA targets. As a development bank aimed at fighting poverty on the
continent, the African Development Bank has put the
Moreover, there is ample evidence that ensuring a successful transformation of Africa’s agricultural sector at the center of its
transformation of Africa’s agricultural sector is intrinsically action, with the overarching objective of moving Africa to the

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top of export-oriented global value chains where the continent The transformation of African agriculture is critical to averting
possesses a comparative advantage. Indeed, between 2006 foreseeable food challenges on the continent. Africa’s rapid
and 2014, the AfDB approved and financed 198 operations population growth, coupled with a changing global food
in agriculture and agribusiness, amounting to US$ 6.2 billion, landscape means that African agriculture must grow to feed
making it the premier source of agricultural finance on the the rising population, reduce its external food dependency,
continent. Furthermore, the AfDB has recently elaborated its and ensure food security for its population. To achieve such
“Feed Africa: Strategy for Agricultural Transformation in Africa ambitious objectives, the agricultural sector needs to be
2016-2025” to help transform African agriculture into a radically transformed. Agricultural value chains must be
competitive and inclusive agribusiness sector that creates modernized, agribusiness promoted, agricultural mechani-
wealth, improves lives of Africans and secures the zation widespread among farmers, land and credit constrains
environment. Through this Strategy, the Bank intends to help removed, agricultural infrastructure gap closed, youth and
mobilise USD 315-400 billion in investments required women empowered, climate-smart agriculture supported,
between 2016 and 2025 to transform key commodity value strong and efficient institutions encouraged, and intra-African
chains in which the continent has a comparative advantage. trade boosted. It is only under such circumstances that the
It therefore envisages to increase its agricultural investments transformation of African agriculture will be successful and will
to USD 2.4 billion per year from 2016 onwards, against its become a driving force for economic growth and inclusion on
current USD 0.6 billion per year. the continent.

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DESIGN AfDB PCER / 2017

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