Staple-crop processing zones: a new hope for the agro-processing sector in Africa to take off?

Agro-Industrial Parks (AIPs) have historically played an important role in the emergence of agri-businesses, export-oriented firms in a number of Asian countries like Taiwan, South Korea, Malaysia, China, and Vietnam. They have been critical in driving the economic transformation of these nations. In Africa, an increasing number of countries, such as the Democratic Republic of Congo, Ethiopia, Gabon, Gambia, Mali, Mauritania, Nigeria, Senegal, South Africa, Tanzania, and Zambia has tried to replicate these experiences by reshaphing them in new and more sophisticated economic development tools. Some of them have taken the form of integrated agro-industrial parks (IAIPs), special agro-industrial processing zones (SAPZs), agro-corridors, and staple-crop processing zones (SCPZs).

SCPZs are a particularly interesting model that many African States are trying to develop. They are agro-based spatial development initiatives designed to concentrate agro-processing and industrial activities within areas of high agricultural potential to boost productivity and integrate production, processing and marketing of selected agro-commodities. Their goal is to enable agricultural producers, processors, aggregators and distributors to operate in a common area of proximity so as to reduce transaction costs. More importantly, they allow these operators to avoid the intermediation of the many agents that usually connect different actors in in the agricultural supply chain. This is a well-known feature of the African agricultural sector, where the links between these actors are ensured by an endless series of intermediaries, which greatly increase the cost of final products, especially when they are destined for export markets.

The reduction of transaction costs is obtained through sharing facilities and business development services among a multitude of operators, which reduces their fixed costs and increase productivity and competitiveness. The setting up of SCPZs at high agricultural production areas along road corridors has been promoted especially by the African Development Bank, that has funded projects for their establishment in Ethiopia and Mozambique, among others. These structures are a particularly successful model in Africa, as they have prompted the transformation of rural areas from areas of economic misery to areas of prosperity, opening up market opportunities for the communities living there through the creation of new jobs. In some cases, additional tax incentives and streamlined regulations primarily addressed to export-oriented industries have been developed by government authorities to encourage companies to relocate within these parks. But not all the development tools aimed at promoting agro-business serve the same purposes. For instance, AIPs and SAPZs focus on industrial and agro-processing activities within a contiguous area, while agro-poles encompass wider geographic areas that integrate both high-productivity farming and processing centres benefiting from public infrastructure and services. Examples include the Bagre Growth Pole in Burkina Faso and the Senegal RiverValley near Rosso, which are characterized by irrigated and high-productivity agriculture linked to processing hubs. Unlike AIPs and SAPZs, agro-poles bring together both agricultural production and processing, often across non-contiguous areas, thereby supporting a broader economic ecosystem.

The “Accelerating the Private Sector for Food Systems Transformation in Africa” report recently published by AGRA (an African-led institution focused on scaling agricultural innovations that help smallholder farmers towards increased incomes, better livelihoods, and improved food security), gives an overview of such clusters of economic development, pointing out how important they are for the economic development of Africa. The agriculture sector is dominant in Africa, but most of African nations have not been able to fully exploit it, being them still heavily dependent on food imports, although the strong concentration of their economies on this sector. IAIPs, SAPZs, agro-corridors, and especially SCPZs can be the right answer to promote its development in Africa, by overcoming some of the typical problems affecting this compartment of the economy. But we are only at the beginning…