Agricultural imports are exceeding agricultural exports in Africa by about USD 40 Billion. This is a huge loss for African economies and places the population at greater risk for food security.
The good news is there is potential to change this. Businesses are moving to formalize domestic, regional and international trade, improving livelihoods of smallholder farmers and dependent communities. But the movement is slow going, as finding suppliers and processors that can produce at competitive price, consistent quality, right time and compliance to requirement can be challenging. At the same time, there are small medium enterprises (SMEs) with high potential that lack access to affordable capital and management capabilities to become top-class suppliers or processors. At IDH, we help to accelerate the transformation of African domestic regional and international trade, through developing value chains in partnership with various strategic partners across the continent. We call this “Value Chain Development” or the inclusion of SMEs, smallholder farmers into the premium markets.
The IDH Value Chain Development approach is two pronged – we develop country value chains by selecting sectors with comparative advantage and develop supply base for large off-takers operating in Africa and beyond. To do this we work closely with SME’s, farmer groups and government agencies to increase high quality inputs, productivity, quality, food safety the ecosystem and inclusive growth (particularly among youths and women). The resulting high-quality produce are then supplied to premium markets in Africa, Europe, etc., while developing domestic and regional markets also receive good quality food, to balance the trade deficit and food import.
An example of is the Hortinvest project in Rwanda, where IDH works in a consortium, to increase food security and nutrition of targeted households. In addition to supporting smallholders in gaining access to quality inputs and good agricultural practices Hortinvest has made investments with Rwandan export companies in their main pack houses, transport logistics and cold chain management. These investments help to guarantee continual produce and increased accessibility. When a stable and high-quality production system is in place, long-term planning, production can be guaranteed and becomes an attractive market for importers and investors. This also applies to domestic and regional markets.
As we advance our Value Chain Development work, we notice change and transformation in the business operations of the SME’s and farmers we work with. We see the results in scaling business operations, creating permanent employment, reducing food insecurity and providing economic opportunities for women and youth. The industrialization and commercialization of agricultural value chains and increased intra-African trade can have a transformational impact on the economic prospects of thousands of households in Africa. It also implies increased tax revenue, foreign exchange and increased leveled playing field for African countries and companies in the international trade and on the world markets. A fair share of billions of dollars in food imports into Africa can now remain on the continent and contribute to sustainable agri-business growth.
More about IDH and World Food Day or read the other blogs in the Food Security series on Fish farming in Africa or the impacts of service provision to smallholder farmers.