Agriculture is one of Africa’s most important sectors, with a number of African countries depending on it as a source of revenue through exportation. Cash crops like tea, cotton, coffee, pyrethrum, sugar cane, sisal, horticultural crops, oil-crops, cloves, tobacco, coconut and cashew nuts among others are grown on the African fertile soil with high productivity.
Anchor Intermediary Platform presents you the unending agriculture investment opportunities in Africa (Eastern Africa region and Southern African region) and answering the question for investors, "which countries provide the most agricultural opportunities in Africa?"
Agriculture in the Eastern Africa (EA) Region
Eastern Africa (EA) region is amongst the poorest in the world with more than 60% of the population living below the poverty line. It is characterized by low agricultural productivity and thus food insecurity. Contributing factors such as high populations, small land sizes, environmental degradation; Poor marketing structures, Inadequate access to information, Poor physical and institutional infrastructure and Inappropriate government policies have held back the sustainable development of rural areas. The region includes a diversity of farming systems, from the humid highlands of Uganda, the coastal areas of Tanzania and Kenya to the dry lands of Sudan and Ethiopia. Cropping systems including maize, sorghum and teff are common as well as extensive grazing and intensive dairy and vegetable, coffee and tea production.
Agriculture in Uganda
Uganda's favorable soil conditions and climate have contributed to the country's agricultural success. Most areas of Uganda have usually received plenty of rain. In some years, small areas of the southeast and southwest have averaged more than 150 millimetres per month. In the north, there is often a short dry season in December and January. Temperatures vary only a few degrees above or below 20 °C but are moderated by differences in altitude. Uganda's main food crops have been plantains, cassava, sweet potatoes, millet, sorghum, corn, beans, and groundnuts. Major cash crops have been coffee, cotton, tea, cocoa, vanilla and tobacco.
Uganda is the 4th largest plantain producer in the world, losing only to Congo, Ghana and Cameroon, 7th largest sweet potato producer in the world and the 10th largest coffee producer in the world which has been Uganda's most important cash crop since the 1980s. The favorable climate and soil conditions enabled Uganda to develop some of the world's best quality tea. For several years after independence, tobacco was one of Uganda's major foreign exchange earners, ranking fourth after coffee, cotton, and tea.
Agriculture in Kenya
Agriculture dominates Kenya's economy. 15–17 percent of Kenya's total land area has sufficient fertility and rainfall to be farmed, and 7–8 percent can be classified as first-class land. Agriculture is also the largest contributor to Kenya’s gross domestic product (GDP). In 2005, agriculture, including forestry and fishing, accounted for about 24 percent of the GDP, as well as 18 percent of wage employment and 50 percent of revenue from exports.
Farming is the most important economic sector in Kenya, although less than 8 percent of the land is used for crop and feed production, and less than 20 percent is suitable for cultivation. Kenya is a leading producer of tea (3rd largest producer in the world, losing only to China and India) and coffee, as well as the third-leading exporter of fresh produce, such as cabbages, onions and mangoes. Small farms grow most of the corn and also produce potatoes, bananas, beans, peas and chillies.
Given Africa’s rising income levels and rapidly growing population, demand for food will soar in the medium term, creating new growth opportunities in agriculture.
Agriculture in Tanzania
Agriculture is the main part of Tanzania's economy and makes a large contribution to the country's foreign exchange earnings, with more than US$1 billion in earnings from cash crop exports.
The main cash crops are cashew nuts, coffee, cotton, sisal, tea and tobacco.At one point in its agricultural history, Tanzania was the largest producer of sisal in the world. Tanzania is 12th largest cassava producer in the world,4th largest sweet potato producer in the world, second only to China, Malawi and Nigeria, 10th largest banana producer in the world, 13th adding plantain production, 6th largest beans producer in the world, 7th largest peanut producer in the world, 12th largest sunflower seed producer in the world, 5th largest sesame seed producer in the world, losing only to Sudan, Myanmar, India and Nigeria, 11th largest coconut producer in the world and the 6th largest cashew nuts producer in the world. In addition to smaller productions of other agricultural products, like tobacco (107 thousand tons, 8th largest producer in the world), coffee (55 thousand tons), tea (36 thousand tons) and sisal (33 thousand tons). Coffee is grown on a large scale on both estates and by smallholders that form co-operatives and involves over 400,000 farmers. Coffee has been grown in the country since the colonial times and is a major export crop, earning over 17 percent of the country's foreign exchange. Tanzania mainly grows the arabica type; however, small farms in the Kagera Region grow Robusta coffee. Tanzanian coffee is globally more commonly known as Kilimanjaro Coffee.
Dairy Farming In Africa
Eastern and western Africa have the largest goat populations, while cattle dominate East Africa’s livestock sector. cattle densities are highest in the East African highlands, particularly in Ethiopia, as well as in Nigeria. Africa is comprised of 54 countries. The total number of dairy cows in Africa is five times that of the United States (49 vs. 9 million). The highest milk producing countries in Africa are Ethiopia, Kenya, South Africa, and Sudan. Of these countries, Ethiopia has the most cows whereas South Africa has the greatest milk production per cow. Among the top four milk producing countries, only two (Ethiopia and Kenya) are self-sufficient, meaning dairy production meets or exceeds dairy consumption. Therefore, an opportunity exists to expand dairy production throughout Africa rather than needing to import dairy products. Within Africa, two different dairy industry models exist: modern and smallholder. An example of the modern dairy industry is South Africa, which is most similar to the United States. In South Africa, many dairy farms exceed 500 cows and use a TMR feeding system. Most of the milk produced under this model goes to liquid consumption (60%) and the remainder is processed into concentrated products (pre-packaged cheese and ultra-high temperature milk).
One example of the smallholder dairy industry model in Africa is Kenya, where 80% of dairies have fewer than 5 cows. In total, Kenya has over 600,000 smallholder dairies. Comparatively, the United States has only 45,000 dairies total. In Kenya, most cattle are crossbred, exotic breeds that produce only 9 to 11 pounds per cow per day. Dairy producers and their families consume about 40% of the produced milk and the producer transports the remainder to a milk collection station. From there, 15% of the milk is processed and the rest is consumed raw.
The dairy processing industry in Uganda is young, rapidly growing, and vibrant.The cattle kept are predominantly indigenous breeds, accustomed to the weather and husbandry practices as practiced by the herder communities, conditions that many exotic breeds could not withstand. Exotic breeds have been introduced, but the majority of farms have mixed breeds, whose productivity, although higher than the traditional breeds, does not match that of the exotics
Annual milk production in the country had risen to 2.4 billion liters, with export earnings from the sector, bringing in US$100 million per year. However, the earning potential could increase to US$500 million annually, if the country would control the high death rates in exotic cattle, attributable to tick-borne diseases, and resistance of the ticks to available acaricides.
Dairy farming is a major activity in the southwestern, central, and northeastern parts of the country, with the sector contributing significantly to the economic, nutritional, and employment opportunities of the rural communities in those areas. Uganda's Central and Western Regions account for about 50 percent of national milk production. This production is predictable and available all year round. During the dry season, the northern, northeastern, and eastern parts of the country experience a drastic reduction in milk output.
Challenges facing Agriculture in Africa
In fact, there are major obstacles that limit the success of farming in Africa. These obstacles can be categorized in four sections, namely; 1) climate, 2) technology and education, 3) financing and 4) policy and infrastructure.
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Climate;
The current weather event is the strongest in recorded history, and likely to be the longest-running since the 1950s.
Cereal production in sub-Saharan Africa has decreased by approximately 20% and is anticipated to drop further. Small-scale farmers do not have the resources or ability to mitigate or protect themselves from the effects of climate change.
Adaption strategies need to be implemented. The effects of global warming can be managed by optimizing inputs – i.e. fertilizer application according to soil analysis and good-quality seeds with high germination potential. There needs to be a shift from traditionally grown staple crops (specifically maize) to cash crops – niche products with higher yields and margin. This, however, will only be possible by providing education and technology. It’s a complex theory and dependent on expensive research. It’s also limited, to an extent, to large-scale commercial farmers.
3. Financing
How do small-scale farmers secure financing?
The answer is simple (even if the solution is more complicated) – by securing land. Unfortunately, small-scale farmers are not necessarily land-owners, so they can’t use land as security to financiers.
In Africa, this is a political issue that will only be resolved if governments practice a “one continent” philosophy – and not merely by jurisdiction. The trend in more sophisticated African markets is input financing (a middleman will finance the input and have the crop as security in return). The obstacle is infrastructure and policy: farm-gate prices in remote areas versus market prices in most instances do not compare favorably.
What should be done to enhance Agricultural Productivity?
- Develop high-yield crops.
- Mechanization of agriculture
- Increase the use of fertilizers.
- Improve market access, regulations, and governance.
- Adopt genetically modified (GM) crops.
- Make better use of information technology
- Inviting Investors to invest in African agriculture
2. Technology and Education
The agriculture sector in Africa is the least productive in the world (its productivity rate is 36%).It is evident that there’s a need for innovation, science and technology to maximize training and the application of skills to the agriculture sector in Africa.”
African governments should create training initiatives that empower farmers to become self-sufficient in food supply. Cultivation of arable land is essential, with access to quality inputs, and there should be an overwhelming support for the “science agenda” to establish methods of increasing crop yields. But while governments can support these initiatives, if we are to create a sustainable platform where a new generation of small-scale farmers can flourish, what’s really required are affordable financing structures.
4. Policy and infrastructure
In Africa, trade can be restricted by outdated policies, high import duties and border bureaucracy. Inadequate infrastructure within the continent remains an obstacle to small-scale farmers, the majority of whom live and farm in rural areas. The lack of infrastructure does have a silver lining: it creates opportunities for investors who finance physical assets, which could potentially nudge Africa into an infrastructure development boom.
One of the largest obstacles to trade for small-scale farmers, however, is the debate around genetically modified crops. Although research has shown that GM crops themselves do not adversely affect health, some researchers hold that the herbicides used on the crops do.
While African governments face a multitude of challenges, not least the present economic climate, the time is ripe for investment from the private sector. Hunger in Africa still a priority for governments and organizations around the world, and small-scale farmers are at the center of this possibility.
Agriculture Investment opportunities in Africa
Anchor Intermediary Platform presents you the unending agriculture investment opportunities in Africa (Eastern Africa region and Southern African region) and answering the question for investors, "which countries provide the most agricultural opportunities in Africa?"
Investment opportunities in the Agriculture Sector of Kenya;
Kenya has one of the highest agricultural productivity levels in the Eastern African region. 70% of the country’s exports have an agricultural focus and the sector employs 85% of the rural workforce. The sector has continued to grow at almost 5% annually and has huge potential for further growth. Kenya invites investors to explore business opportunities across the Agri-business value chain from primary production to value addition and processing of food produce. Agri-business already attract 20% of total FDI to the region which show its huge investment potential
NOTE: Kenya is the largest exporter of horticulture within East Africa and the third largest Tea exporter globally
Investment opportunities in the Agriculture Sector of Uganda;
The Department of Agricultural Investment and Enterprise Development has the overall objective of supporting Sustainable agribusiness development and management, public and private sector investments and emerging commercially viable agricultural enterprises for improved food security and enhanced household income.
The Uganda Investment Authority (UIA) was established to assist investors to implement their plans and to advise Government on investor-friendly policies and structural. A number of investment incentives are available. An abundant raw material base and access to growing regional and domestic markets are further advantages. Some investment opportunities in agriculture and agro-processing include cut flower production for exports, oil seed production and processing, cotton production, ginning, spinning and weaving, the production and processing of livestock products, fruit and vegetable production and value adding with regard to coffee and grains. There are many opportunities in Uganda’s privatization program as well.
Anchor Intermediary platform (AIP) cant finish the numerous number of agricultural investment opportunities in the different African countries. For more information contact us and our special professional consultants will give you the necessary information in detail to help you understand the system in Africa when it comes to Agri-Investment.