Huge youth employment and business opportunities in Africa’s cocoa sector

29/06/2015
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The African Development Bank and the International Cocoa Organization (ICCO) are poised to boost business opportunities in Africa’s cocoa sector, including youth employment and empowering women participation.

Both institutions recently met in Abidjan, Côte d’Ivoire, in order to see how they can cooperate to foster the transformation of the cocoa industry in Africa.

Cocoa is one of the five Cs (cocoa, coffee, cotton, cassava and cashew) that have been selected for support under AfDB’s new Agriculture and Agri-business Draft Strategy.

Africa produces 73% of world cocoa, with over 70% of that coming from Côte d'Ivoire, Ghana, Cameroon and Nigeria. It is a major export earner, yet its production is still in the hands of ageing small farmers with over 70% productivity losses as a result of numerous challenges.

In addition, the processing and market are in the hands of foreign investors.

While global cocoa production is valued at approximately US $12 billion on the export market, with cocoa farmers receiving about US $8 billion in revenue, the world chocolate market is valued at US $110 billion.

In other words, the chocolate value addition in warehousing and other logistical services, chocolate production and packing, retail networks, and all associated logistics is ten times the value of Africa’s cocoa exports.

“The large potential and opportunities offered by the cocoa sector have not been fully exploited by producing countries, nor have they taken advantage of existing technological progress and innovations in the way other commodities have,” said Chiji Ojukwu, AfDB’s Agriculture and Agro-Industry Director.

Cocoa is still produced by impoverished smallholder farmers, and most cocoa producing countries continue to export cocoa beans as raw materials, without adding value. Within the global value chain, most of the money is made after the beans have reached the North. At the same time many cocoa farmers and workers in the South have to get by on less than US $1.25 a day, below the threshold of absolute poverty.

Cocoa growers today receive about 6% of the price that consumers in rich countries pay for chocolate. In the 1980s their share was almost three times as great: 16%.

As a result, the African cocoa sector faces considerable challenges that need to be addressed in order to sustain or even increase its contribution to the economies of producing countries.

“A transformation agenda is required, where cocoa farmers would embrace a business approach and where activities to add value to the raw material would thrive, and generate growth, employment and additional revenues for cocoa stakeholders on the African continent,” said Aly Abou-Sabaa, AfDB’s Vice-President in charge of Agriculture, Water, Human Development, Governance and Natural Resources.

There is a huge potential to increase value addition in Africa, which will be a source of economic diversification, job creation, tax revenues and, indirectly, improvement of farmers’ incomes. New cocoa and chocolate products made available to African consumers would also lead to increased consumption in the continent which represents only 4% of global consumption.

AfDB and ICCO agreed to seek ways to strengthen their cooperation in a series of domains, such as value addition and promotion of cocoa and chocolate consumption in Africa, access to credit, market access and commodity exchanges, adoption of profitable cocoa farming models and thriving cooperatives, logistics and transportation (with more demand on traceability).

Both institutions are also committed to empowering women in the cocoa value chain. Cocoa production is a very labour-intensive activity and therefore a source of rural employment. Many activities in cocoa production, post-harvest processing, marketing functions and value addition could represent a viable source of revenues for women leading to their economic empowerment.