East Africa is undergoing a silent but definite revolution courtesy of the enhanced purchasing power of the region’s consumers. The sheer size of the East African market (135 million people, not including South Sudan and DR Congo), which has witnessed tremendous growth in recent years, has caught the imagination and incited business interests of top global conglomerates. From sole traders to small and medium sized enterprises (SMEs) to multinational corporations, East Africa’s economic potential has never been greater.
Agriculture remains a mainstay of development, employing more than 80% of the region’s population. The UN’s Food and Agriculture Organization has observed that whenever agriculture grows, the economy grows and poverty reduces with evidence indicating that every 1% increase in agricultural yields translates to a 0.6–1.2% decrease in the percentage of absolute poor.
However, for such growth to be meaningful, East Africa will need to become a home for value-added business, not just “a basket case with commodities.”
In their report “Why Africa can make it big in agriculture” (Africa Research Institute, 2010) Mark Ashurst and Stephen Mbithi state that “agriculture is the continent’s most neglected – and important – potential competitive advantage. It is Africa’s best answer to globalisation. Until farming is commercially viable, there will always be hunger in Africa.”
Today, one in six people (a billion people) are hungry. If, by 2050, the global population has risen by a third as forecast, Africa’s population is set to double. Once an exporter, a quarter of Africa’s food is now imported. At the same time, average cereal yields in Africa have shown no improvement since the 1960s.
Ashurst and Mbithi argue that “Global demand for food is a strategic opportunity to rebalance the inequities of world trade in Africa’s favour.” This means East Africa should be far more ambitious than just planning for self-sufficiency. The land, low labour costs and improved farming, irrigation, processing and storage techniques mean that the region’s potential as a cost-effective producer of food for export remains largely untapped.
Value-added agriculture offers the possibility of changing the rural face of East Africa by increasing returns to the region’s farmers and – with the right investment – making East Africa the food factory of the world. However the required infrastructure is currently lacking, calling for investment in the agricultural value chain by both the private and public sectors.
An additional critical factor to consider is climate change: the geographical positioning of East Africa – and Uganda in particular – along the Equator, makes investment in East Africa’s agriculture industry particularly attractive and the region should rightly become the breadbasket of Africa.
If a lack of money (or access to financing) is the root of poverty in Africa – not a lack of food – the agriculture industry needs to secure the investment and thus the infrastructure and expertise urgently needed. Only then will the region have food security – and a chance to redress the balance in world trade in its favour.