Talk With a Bank Agroindustry Expert on Africa’s Structural Transformation

Share |

As delegates gather in Marrakech for the Bank’s 48th Annual Meetings, some Bank experts have shared their perspectives on Africa’s structural transformation, which is the key topic of the meeting.

Like many of them, Damian Onyema Ihedioha, Principal Agro-Industry Specialist, believes that for Africa to be a player in global economic and development, things must be done differently, i.e. there should be a paradigm shift.

“Africa’s transformation cannot occur if the politics is wrong,” Ihedioha has highlighted.

Question: The Bank’s Annual Meetings this year will focus on “Africa’s structural transformation”. How do you view Africa’s structural transformation?

In my view, there should be a paradigm shift that must not only be in governance and development patterns, but also in our attitudes. I believe that at the personal level, people must change attitudes and accept the transforming effect of change.  We must be prepared to accept new ways of doing things, accept a changing world and the dynamics associated with it. We can build institutions and super structures, but, without inward transformation, not much can be achieved. There must be a renaissance at both operational and personal levels.
It is in the quest of fostering this transformation that the Bank has developed its Ten-Year Strategy (TYS) to champion this course, which I think resonates with the priorities of the Bank’s Regional Member Countries (RMCs).

From a personal point of view, and as an ardent believer in the TYS as a platform for transforming Africa, the following areas should be the priority:

  • The economy of most African countries is public sector/government-driven and this has not helped in Africa’s quest for development. The role of government should be mainly policy reforms and engendering the enabling environment for development. Consequently, the role of the private sector as driver of Africa’s economy is a key structural change that is needed for the continent to get to the next level of development. That is why the TYS emphasized the critical roles of the private sector in transforming Africa’s development;
  • Statistics have put Africa’s growth rate at around 5% and above per annum. It is also evident that these growth rates have not translated into better livelihoods and improved incomes for majority of Africa’s population.  

Poverty is increasing and inequality between the rich and the poor is ever widening. Summarily, these have not brought about an inclusive growth.

It is common knowledge that these growth rates are occasioned by development in the extractive industry. In moving forward, therefore, the economies of Africa countries should be driven by sectors that impact more on people; and in which most of the population are involved.  

It is not surprising, therefore, that the Bank is giving prominence to agricultural sector development; in which most of its people are involved in.  

Along this line is the urgent need for a robust agro-industry development as a platform to create jobs, foster inclusive and broad-based growth and enhanced incomes.

Africa is a continent known as exporters of raw materials to other countries where they are further processed and added value. This trend has not helped African economies.  

The transformation we need is that which will make African countries add value to raw materials produced in Africa; and exported as processed or semi-processed products.  

It is in the process of transforming these raw materials into processed products that jobs are created, improved livelihood made possible and inclusive growth becomes broad-based.

Infrastructure development is synonymous with development. Energy generation, improved road networks, functioning rail systems, air services and even improvement in education and health facilities are areas that need urgent attention in the structural reform and transformation agenda.

Related to infrastructure development is the need to link countries using the infrastructure for regional integration.  

There is population and market in Africa.  All we need to enjoy improved prosperity in Africa is to have free transit of goods and services, from areas of production to areas of need, without undue border controls and impediments;
Another area of urgent attention and concern is our teaming youth population in Africa.  If the energies of the youths are not well channeled, it portends danger for the future of Africa.  
It is therefore very critical that we develop entrepreneurial skills in these young people, so that they do not become willing tools in political and religious rancours.

It is practically impossible to exhaust all the issues in this piece; but what is critical is that the TYS of the Bank resonate with these issues itemized above. I am very optimistic that addressing the above issues will put Africa on the path of structural transformation.
Question 2: The Bank’s ten year strategy emphasizes investments in rural infrastructure to increase productivity. Kaberuka said there is need to revolutionize agriculture. What according to you should be done differently to revolutionize agriculture?

The Bank’s agriculture portfolio must emphasize on support and development of agro-industry as a platform to create jobs, ensure food security, increase incomes, diversify product consumption base, have stable final products of good shelf-life and engender the needed import substitution of imported food commodities in RMCs.  This will in turn strengthen linkages between farmers and agro-industry in order to improve real incomes of farmers through assured markets for their farm produce, enhance supply-chain efficiencies and contribute to the reduction of physical losses and improve food availability.

These can be achieved through investments in agricultural infrastructure that reduce supply chain efficiencies; namely:

Community access and feeder roads: The agricultural portfolio should continue to rehabilitate/construct community access and feeder roads to make movement of goods (especially high perishable farm produce) and services more convenient; reduced the cost of transportation drastically so that smallholder farmers can make more profit; repair and maintenance on vehicles; reduce abrasion and shocks on perishable farm produce being transported and make market access easier. Investments in the infrastructure have access to public utilities such as schools, health centres, etc. a lot convenient.

Construction of rural markets: Construction of markets in catchment areas of production is critical so that produce are easily taken to the market and sold.  The overall average market attendance would increase, there would be increased business activities in the markets and business opportunities would opened up for an otherwise unemployed rural poor. Increased trading means that farmers had more willing buyers for their produce than was previously possible; and this would have direct positive bearing on revenue collection by the local governments. Setting up of cottage agro industry facilities: The Bank’s agriculture portfolios should continue to support the setting-up of agro-industry facilities as a platform to create jobs, ensure food security, increase incomes, diversify product consumption base, have stable final products of good shelf-life and engender the needed import substitution of imported food commodities.  

This in turn will strengthen linkages between farmers and agro-industry in order to improve real incomes of farmers through assured markets for their farm produce, enhance supply-chain efficiencies and contribute to the reduction of physical losses and improve food availability.
Hence, developing agriculture through promoting these types of agribusinesses and fostering public-private partnership (PPPs) represents a robust way forward.

These would significantly significant reduced post-harvest losses of farm produce.

Extension of power grid: Provision of power is very important to transform agriculture. 
Extension of power gird will support the operation of the agro industry facilities and prolong product shelf-life under storage.  For instance, as a result of the quality of rice processed by the rice mills in the Bank supported operations, consumption of local rice in those communities have increased remarkably.

Collaboration between the public and private sector operations: There is urgent need for collaboration between the public and private sector operations. 

This synergy will enable the public sector to look at infrastructure provision, enabling environment for business and demonstrable agro-processing activities, while the private sector window will look at doing business and promoting private sector industries in areas that are business friendly. 

Financing gap in promoting agro industries: There is a financing gap in agriculture created by the operations of the public sector and private sector operations.
The gap is lack of support to cottage agro-processing/business enterprises at the community levels in which majority of the people are engaged, and which drives the rural economies.  Support for these cottage agro industries falls out of the purview of both the public and private sector operations. 

It is proposed that the Bank sets up a financial mechanism to fill this gap, otherwise support for agriculture will not engender the needed broad-based economic development. 

It is important to recall that the needed job creation and economic transformation inherent in agriculture lie at these cottage industries and agro-processing firms that are operated informally. 
In this regard, the development of the Agricultural Trust Fund (ATF) by the Agriculture Department is a most welcome development.

Question 3: How would you link Africa’s transformation and politics?

Development and transformation do not happen/occur by chance. They derive from a thought process that is futuristic, inclusive and visionary.  That is to say that, Africa’s transformation cannot occur if the politics is wrong.  We need enabling environment, policy reforms, investment direction and plans. 

We need political leaders who dream dreams, who are development oriented and passionate about people’s welfare.  Without politics that is stable, transformation of Africa wi ll die on arrival. 
I strongly believe we need to get the politics right for development to take root.  We need to build strong institutions that will propel the transformation under effective and forward looking leadership.