Transforming agriculture is transforming Africa

by Tony Elumelu

27/05/2016
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Elumelu with Tony Elumelu Entrepreneurs from across the continent, at last year's Tony Elumelu Foundation Entrepreneurship Programme Bootcamp in Lagos.

I am a firm believer in Africapitalism - an emerging economic philosophy that espouses the role of Africa's private sector in leading the continent's socioeconomic transformation. It is this belief that no one but us will develop Africa that led to the conceptualization of the Tony Elumelu Entrepreneurship Programme, the flagship programme of the Tony Elumelu Foundation. Launched in December 2014, the programme sets to identify and support 1,000 African entrepreneurs every year for the next decade - currently, there are 2,000 Tony Elumelu Entrepreneurs from 54 African countries and across 35 sectors and subsectors. Selected startups benefit from business training, active mentoring, seed capital financing and access to key networking opportunities.

As I have traveled across the continent on business engagements, I have introduced our entrepreneurs from Gambia, Ghana, Senegal, Uganda, Zambia and Mali to their respective Presidents and Heads of States, who have in turn, been blown away by the ingenuity, resilience, and discipline embodied by these budding entrepreneurs. The 2015 class of Tony Elumelu Entrepreneurs has completed the programme cycle and gone on to accomplish impressive success stories which I have talked about in my open letter to African entrepreneurs and in a blog for the Chicago Council.

In the two years since its launch, the Foundation has received 65,000 applications competing for space for only 2,000 startups. This speaks to the boundless youthful talent and creativity on the continent that is yet to be effectively harnessed. More than a third of total applications have come from agriculture, signaling vast untapped and unrealized potential particularly in the sector. What can we do as concerned stakeholders to support our young entrepreneurs who, contrary to mainstream belief, have demonstrated that employment in agriculture appeals to them?

The Tony Elumelu Entrepreneurship Programme democratizes access to opportunity where any African entrepreneur with a feasible business idea is eligible to apply. But entrepreneurs do not exist in isolation and in order to succeed, need to operate in conducive business environments regulated by SME-friendly policies that allow them to thrive, generate income and create employment for others. To achieve such an enabling business climate for startups, the research arm of the Foundation carries out and produces research that is accessible and relevant to policymakers and officials vested with authority to create laws and policies that can make or break SMEs.

In line with our goal to generate evidence-based data to support policymakers in addressing key issues on the continent, the Tony Elumelu Foundation released the "Unleashing Africa's Agricultural Entrepreneurs" report at the recently concluded World Economic Forum on Africa in Rwanda. The report's insights come from case studies based on the experiences of Tony Elumelu agricultural entrepreneurs in 34 African countries, as well as expert commentary from established stakeholders, practitioners and investors along the value chain. Recommendations and steps for decision makers to improve competitiveness in the sector are also included.

Fortunately, the African Development Bank's prioritization of agriculture (Feed Africa) in the "High-Fives" of the Bank's ten-year Africa transformation agenda, comes at the perfect time. It is a smart policy because Agriculture employs over 65% of Africa's labour force and contributes 32% of the continent's gross domestic product (GDP), positioning agriculture as the sector offering the highest potential for sustainable and inclusive growth. Increased investments will certainly result in reduced hunger, poverty and inequality and improved productivity, welfare and income. Poor transportation and storage infrastructure and fractured value and supply chains exacerbated by a lack of access to training, inputs, financial services and markets remain bottlenecks that threaten the viability and scalability of small-scale agribusinesses on the continent. How do we assist them to achieve sustainability, profitability and commercialization in order to guarantee food security while boosting industry and processing activities?

In the paragraphs below, I discuss the important roles that different stakeholders must play in transforming agriculture and share my ideas on how to develop the enabling environment for SMEs. For instance, aggregators and accelerators are best placed to integrate value and supply chains and reduce unnecessary segmentation and fragmentation. ICT entrepreneurs can increase productivity via technology and digital tools to improve access to information such as prices, input availability and weather. Academic institutions should become more involved in agriculture R&D, and extension services programmes, while local cooperative members have valuable skills and can mentor young startups. Women in agriculture empowerment, innovative access to finance, and a reform of the agriculture curricula are other important areas that I touch on.

The Africapitalist approach to development is a multi-stakeholder approach where all parties work together for far reaching impact. This inclusive style is missing in the agricultural ecosystem, which is fraught with fragmented segments, leading to fractured value chains that decrease efficiency and sometimes, cause the collapse of industries. A malfunctioning part of the value chain affects the entire ecosystem. Such fractured chains typically lack free flow of information that results in idle capacity, substandard practices and general inefficiencies. Here ICT can potentially play a role in opening up access to relevant information. For example, leasing and insurance has picked up in Kenya as innovative entrepreneurs employ technology to produce digital solutions to combat information hoarding and increase access to information. This will especially empower youth and women - groups most at risk of being excluded because they can't afford extensive market research or similar alternatives. Supply chain facilitators like aggregators, commodity exchanges, and accelerators can also play an important role in integrating the value chain.

More focus must also be given to vocational and technical education in agriculture. While there is a prevalence of technical and vocational education and training (TIVET) activities in artisan-related industries as construction and bricklaying, such initiatives are missing in agriculture. To solve under-productivity in agriculture, we must scale TIVET opportunities both in depth and breadth. A majority of farmers still employ harmful traditional farming and harvesting practices that can be corrected with training for extension service officers. In Ghana, for example, local political leadership now invite private universities to lead these extension service programmes. This presents opportunities for academia to test theoretical frameworks in practical settings, hopefully translating research to visible impact. In addition to this training, mentorship is vital. Local cooperatives and farmer organizations offer pools of qualified and experienced talent to serve as mentors that can share knowledge, build resilience, ignite passion, deepen practical skills and transfer best practices.

There is also a gender imbalance in the representation of agribusinesses. While 80% of rural farmers are women, very few women are involved in accessing loans and finance for building agribusinesses. This phenomenon can partly be explained by the implementation of land and inheritance customs that disproportionately exclude women. Thus, it is important for stakeholders to come together to build a movement that actively pushes for more women to become more involved in agribusinesses as opposed to remaining at the subsistence level. This movement must also address capacity and skills gaps, and recognize the importance of technical assistance to help small women farmers gain sustainability. We can't afford to perpetuate the old imbalance where men get money, women get sent to the farm and remain underrepresented in the business scene.

National agriculture curricula across the region need revision as current training content and materials are no longer applicable and effective. Academic training obtained in agriculture institutes and schools of agriculture should be holistic, with emphasis placed on creativity, risks, initiative, collaboration and entrepreneurship. Students should be taught to save, invest and grow. Recent graduates are ill-equipped for jobs, farms and entrepreneurial endeavours, indicating the need for overhaul of existing curricula.

To improve access to finance, the traditional definition of collateral must be redefined to become more SME-friendly. General understanding of the proper methods of financing the agriculture sector is limited, and not well understood. Very few financial institutions understand the importance of deploying long term patient capital to agriculture businesses. Perhaps, loans should be tied to future farmer incomes instead of land or other such assets that farmers often do not have. Lenders and financial institutions must understand the sector and its subsectors, in order to more fully support market opportunities across the value chain (planting, harvesting, storage, transportation, processing, distribution, etc.) Equally important, we must improve financial literacy of agricultural entrepreneurs and change attitudes towards personal finance, savings, and relationships with business groups and community associations/cooperatives.

The 304 Tony Elumelu Entrepreneurs in agriculture in the class of 2015 have created over 5000 casual and fulltime employment in the past year of operation after receiving direct support from the Foundation. Imagine the hundreds of thousands of jobs that we can unleash on the continent with more targeted interventions carried out on a large scale to expand opportunity, increase productivity and build resilience in the agriculture sector. The potential that agriculture offers us to utilize our demographic dividend to actualize significant and sustainable economic dividends is enormous and should not be ignored. I will reiterate that no one but Africans can develop Africa. Let's work together to reform, refine and rebuild agriculture because transforming this sector will unlock jobs and stimulate the economic transformation of the continent.


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