Credit: This is Africa
Highlights from the Economic Development in Africa report for 2018 of the United Nations Conference on Trade and Development (UNCTAD)[1], indicates that after the 1960s, Africa recorded one of its longest periods of sustained economic growth between 2004 and 2014 with a growth rate of more than 5% per year. In spite of the global economy’s sluggish growth after 2014, economic growth has been resilient in Africa. In 2019, the economy of Africa grew at 3.4% with real (Gross Domestic Product) GDP growth expected to be 3.9% and 4.1% in 2020 and 2021, respectively.
Additionally, six countries in Africa were listed among the top ten fastest-growing economies in the world: Rwanda (8.7%), Ethiopia (7.4%), Côte d’Ivoire (7.4%), Ghana (7.1%), Tanzania (6.8%) and Benin (6.7%) – According to the African Economic Outlook report for 2020[2], the five largest economies on the continent: Nigeria, South Africa, Egypt, Morocco and Algeria accounted for 55% of economic growth in Africa in 2019.
Although North Africa remains the largest contributor with 44%, economic growth in Southern Africa and East Africa has declined from 6% to 4% and more than 32% in 2016 to less than 20%, respectively. However, the recovery from recession for Africa’s largest economy, Nigeria[3], has been essential to the boost in growth from less than 7% to more than 28% in West-Africa. Africa’s economic growth is skewed towards a few countries as the five largest economies contribute more than half of growth on the continent – with a robust economy and revenue from the Zohr gas field, Egypt’s contribution represents the largest share thus 1.1 percentage point out of the aggregate growth rate of 3.4%, recorded in 2019.
Even though economic growth has been satisfactory, only a third of African countries have attained inclusive growth that has decreased inequality and poverty. To achieve a more inclusive growth that could have an enormous impact on poverty, the African Economic Outlook report recommends the need for Africa’s agricultural sector to adopt climate-smart agricultural techniques. The adverse effects of climate change poses a major threat to sustainable growth on the continent despite Africa contributing the least to global warming – GDP exposure of countries impuissant to acute climate change effects is expected to increase from $895 billion in 2018 to about $1.4 trillion in 2023, representing 50% of the Africa’s GDP[4].
This is mainly because many African countries depend largely on rainfed agriculture systems which employ a colossal proportion of the region’s population[5] – agriculture accounts for about a quarter of the region’s GDP, employs 65% to 75% of Africa’s workforce and serves as a source of livelihood for 90% of the entire population on the continent. A detailed analysis of data on cross-country growth by the Food and Agriculture Organization of the United Nations[6]indicates that growth in the agriculture sector in resource-poor low-income economies reduces poverty in poor households, provided income inequality is not excessive.
According to a recent World Bank report[7], most of the World’s poor live in SSA – the population of the poor has increased from 278 million in 1990 to 413 million in 2015.
Source: World Bank
A large proportion of the population in SSA live in extreme poverty – in 2019 the Food and Agriculture Organization (FAO), International Fund for Agricultural Development (IFAD), United Nations Children’s Fund (UNICEF), World Food Programme (WFP) and the World Health Organization (WHO) published a joint report on ‘‘The State of Food Security and Nutrition in the World’’ – the report shows that more than 90% of the 260 million hungry people in Africa in 2018, were in SSA with 22.8% of the population in the region being undernourished[8].
In Sub-Saharan Africa (SSA), where agriculture accounts for 23% of GDP and employs more than 60% of the total population, agricultural growth is eleven times more effective in reducing poverty than non-agricultural growth. Unfortunately the full potential of agriculture in SSA is yet to be tapped – data from the World Bank reveals that SSA has 200m hectares[9] of arable land that is not used for agriculture. This land area is larger than the cultivated land in the United States and almost half the size of the world’s total cultivated area. Furthermore, the International Labour Organization[10] asserts that SSA has the World’s youngest population with young people between 15 and 35 years accounting for 65% of the entire labour force – by 2035, a population of 275 million young people is expected to join the work force as the labour force continues to grow at 3% annually. In spite of all these resources the region hosts most of the poorest poor in the world – to assuage the level of poverty in SSA, agricultural techniques should be improved. According to PricewaterhouseCoopers[11] growth in agriculture in SSA is a function of three major factors: farmland expansion, yield growth and reduction in post-harvest losses.
A study published in, volume 48 of the Food Policy[12] (Elsevier) reveals that even though SSA has a large percentage of uncultivated land, between one-half and two-thirds of these lands are located under forest cover, conflict zones and in the hinterlands where inputs and output markets are difficult to access. To prepare these uncultivated lands for top-notch agriculture with the capacity to reduce poverty, it imperative for governments and relevant stakeholders to make adequate investments to improve infrastructure: road networks, ports electricity networks, storage facilities, irrigation etc.
With about 4% – 6% of irrigated lands[13], rainfed agriculture is predominant in SSA, specifically in the rural areas, where 70% of the poor reside and depend mainly on agriculture for their livelihood. This condition makes the development of agriculture an essential tool for eradicating poverty – but the reality is that, SSA has a chronically overburdened water system which is partly as a result of high demand for water in urban areas, drought, pollution of water bodies, and mismanagement of resources. Another study[14] published in the volume 36, issue 6, of the Food Policy (Elsevier) shows adequate irrigation on farmlands can improve agricultural productivity by at least 50% in SSA and conversely, low irrigation also reduces agricultural productivity – currently farmlands with irrigated facilities constitute about 13 million hectares, representing only 6% of the total cultivated area. The study suggests it will cost more than $65 billion to extend irrigation facilities to 15% of the total cultivated area.
Again, the use of agricultural inputs has been low in the region – according to the Food and Agriculture organization of the United Nations, SSA has a high soil nutrient deficit yet fertilizer[15] application on farmlands account for only 3% of the global fertilizer consumption. – a paper published by PLoS One[16] in 2020 attributes low crop yield to low fertilizer usage in SSA. Comparatively, the price of fertilizer in SSA is far more expensive than in any other region. This is as a result of several factors; most farmers do not know the benefits of fertilizers, farmers lack credit to purchase fertilizers and the cost of producing, transporting, stocking and distributing fertilizer to farmers in rural areas is high for fertilizer manufacturers, making it impossible to benefit from economies of scale. To improve agricultural productivity, the price of fertilizer should be subsidized – although the contribution of fertilizer subsidies in National food security strategies has been controversial, relevant stakeholders should improve on the design and model implementation of fertilizer subsidies to increase the effectiveness of these policies.
Also, Governments and other relevant stakeholders in Sub-Saharan Africa should prioritise the mechanisation of the entire food value chain. Adequate investments should be channelled into designing and developing technologies that do not only improve the production of agricultural products but also reduces postharvest losses and improves the processing of raw materials into high quality finished products. – a joint report from the World Bank, Natural Resources Institute (NRI) and the Food and Agriculture Organization[17] shows that postharvest losses in Sub-Saharan Africa for all grains is $4 billion per year – this amount exceeds the value of food aid SSA has received in the last decade[18].
About the Author
Alexander Ayertey Odonkor is a chartered financial analyst and a chartered economist with a stellar expertise in the financial services industry in developing economies.,
References
[1] United Nations Conference on Trade and Development ‘‘Economic Development in Africa Report 2018: Migration and Structural Transformation’’ New York, United States. Available at: https://unctad.org/en/PublicationsLibrary/aldcafrica2018_en.pdf (Accessed: 10 May, 2020).
[2] African Development Bank Group ‘‘African Economic Outlook 2020: Developing Africa’s Workforce’’ Available at: https://www.afdb.org/en/documents/african-economic-outlook-2020 (Accessed: 10 May, 2020).
[3] Naidoo, P. (2020) ‘‘Nigeria Tops South Africa as the Continent’s Biggest Economy’’ Bloomberg, 4 March [Online].Available at: https://www.bloomberg.com/news/articles/2020-03-03/nigeria-now-tops-south-africa-as-the-continent-s-biggest-economy (Accessed: 10 May, 2020).
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[8] FAO, IFAD, UNICEF, WFP and WHO (2019), ‘‘The State of Food Security and Nutrition in the World Safeguarding against economic slowdowns and downturns’’, Rome, FAO. Available at: http://www.fao.org/publications/sofi/en/(Accessed: 11 May, 2020).
[9] The Economist (2018), ‘‘Africa has plenty of land. Why is it so hard to make a living from it?’’, 28 April [Online]. Available at: https://www.economist.com/middle-east-and-africa/2018/04/28/africa-has-plenty-of-land-why-is-it-so-hard-to-make-a-living-from-it (Accessed: 11 May, 2020).
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