Series of AfDB reports reveal strong potential for agriculture development in Africa

The African Development Bank (AfDB) published a series of country focus report which analyse challenges, drivers and opportunities for economic growth in some selected African countries, with recommendations on how to strengthen regional integration and trade, leveraging the African Continental Free Trade Area (AfCFTA) and their membership in the various Regional Economic Communities (RECs) active in the continent. The AfDB reports do not provide only policy recommendations to governments, but they also give guidance to potential investors with up-to-date and accurate data to inform their investment decisions. Countries analyzed are: Comoros, Tchad, Senegal, Niger, Madagascar, Guinea Bissau, Gabon, Congo, Cameroun, Burundi, Benin, Zimbabwe, Zambia, Uganda, The Gambia, Tanzania, Sudan, South Sudan, South Africa, Somalia, Seychelles, Sao Tomé and Principe, Rwanda, Namibia, Mozambique, Mauritius, Malawi, Liberia, Lesotho, Ghana, Ethiopia, Eswatini, Cabo Verde, Botswana and Angola.

The scenario that emerges from the reports is, for most of African countries, that of economies with a strong concentration in only one sector (e.g., agriculture, mining/oil, tourism, etc.), with a manufacturing sector that is still marginal. The service sector continues to show a particular dynamism in most African countries, with services that seem to increasingly take on a cross-border character. On the negarive side, access to finance remains a common denominator in all African countries, that acts as a main impediment the development of the manufacturing and industrial sector. This remains still today an unresolved chapter in the development history of the continent which is one of the main barrier to the economic growth of Africa. As Nurske explained in what he called the "vicious circle of poverty": poverty means low incomes - low incomes means that most of people cannot have savings - no savings means no capital available for local investment (or capital is available at high cost). And without investment there is no improvement in productivity, and consequently, no increase in income. In the period 2010–2021, sub-Saharan Africa had one of the lowest rates of savings, an average of 19 per cent against the 37 percent of East Asia, which explains to a large extent why this region has the highest investment rates among developing regions. As Daron Acemoglu explains in "Why nations fail", the ready access to capital is key for potential investors to develop their industrial ideas, noting that this is what favored the industrialization in the United Staes, where already at the beginning of 1800 there were 338 banks in operation with total assets of 160 million USD, which became 27,864 banks one century after, with total assets of 27.3 billion USD. The author concludes by stating that the banking and financial intermediation sector was crucial facilitator of the rapid growth and industrialization of the United States. In Africa, on the other hand, there is huge trade finance gap, as often pointed out by the WTO, that constitutes a considerable obstacle to its industralization.

A similar potential in agriculture is attributed to Rwanda and South Sudan. In Rwanda, even though the country has experienced low productivity gains in this sector in recent years, the recommendation is to explore solutions aimed at increasing the labor productivity, by investing in value-addition and commercial farming, establishing stronger backward and forward linkages with other sectors, as well as by promoting the use of improved food production technologies and solutions for modernizing the agriculture sector (e.g., through mechanization, new irrigation techniques, etc.).

Seychelles, on the other hand, is a case of a country that has a particularly strong potential in services. The country has a comparative advantage in the ICT, which should try to expand to other African countries, so to reach a wider market, profiting from the opportunities offered by the AfCFTA and its membership in other RECs, that can be instrumental for supporting the integration of Seychelles with other continental States of Africa. The Seychelles study calculates that in the ICT sector, the country has the second highest continental score after Mauritius. Agriculture and agribusiness on the other hand, though constrained by the limited land availability, are indicated as a necessary area of diversification of the island's economy, where there is an untapped potential for enhancing food security, as most of agricultural products available in the island are imported. In this case - and this is valid not only for Seychelles, but for all African countries - innovations in sustainable farming practices, such as vertical farming, hydroponics, and organic agriculture, can overcome the challenges posed by limited arable land, but also can be an opportunity for reversing the negative record of Africa as the most food insecure continent in the world.

These conclusions are in line with another just-released report, the African Union Africa Sustainable Development Report 2024 (to which the AfDB contributed as well), which raises the need for African countries to address food insecurity and empower smallholder farmers, highlighting the importance of fostering agri-entrepreneurship and strengthening regional agricultural value chains. The report argues that by addressing food insecurity, African nations can build resilient and sustainable food systems, boosting agricultural productivity and efficiency. In this regard, it recommends to strengthen agricultural infrastructure (e.g., irrigation systems, roads, storage facilities and market access points). In fact, improved infrastructure can better connect farmers to markets. Even better if infrastructure development plans include the creation of logistical hubs, as they can streamline the distribution of agricultural goods. Better agriculture infrastructure also helps to reduce post-harvest losses, ensuring efficient supply chains and facilitating access to markets, benefiting both producers and consumers. The report lastly recommends to adop sustainable farming practices, such as crop rotation, intercropping and agroforestry, which can enhance soil fertility, reduce environmental degradation and mitigate the impacts of climate change. Climate-smart agriculture, including drought-resistant crops and efficient water management techniques with mulching and rainwater harvesting, is also mentioned as crucial for building resilience to the extreme weather events that are hitting many African country in a particularly violent manner.