Home Agribusiness Empowering Africa to feed itself through a demand first approach

Empowering Africa to feed itself through a demand first approach

by Brian Yatich

Food systems are core to a functioning society and greatly influence a country’s economy, society, and environment. Now more than ever, fundamental changes are required to address Africa’s long-standing food system challenges, especially in light of challenges that have been exacerbated by the COVID-19 pandemic.

For too long, most policy interventions, as well as developmental aid in Africa, have been targeted at the supply side of the food economy. But we believe that policymakers and other stakeholders in the African food sector need to shift towards a more holistic approach.

Over the past two decades, billions of agricultural development dollars have been channelled into the supply-side of value chains with a focus on increasing crop productivity, food security, and smallholder farmer incomes.  And while some improvement has been observed, more significant changes and an integrative approach are required to achieve outcomes that are more commensurate with the agricultural development spend.   

A new focus on developing demand could be the transformative shift in food and agriculture that can address the interconnected elements of the food system and lead to better outcomes for health, nutrition, employment and sustainability.

Yet policy is still directed towards growing the supply. It’s easy to see why; supply-side measures lead to economic policies, budgetary allocations, and aid flows that immediately impact large numbers of rural people.  Not only do they generate tangible first-order effects such as income growth and poverty alleviation, but also, they help coalesce political support in the hinterland.

The objective, initially, was to increase the amount of food that Africa’s subsistence farmers produce, enabling them to feed their families as well as enter local – and ideally – international markets with any excess. But incomes have barely risen, according to BCG’s research, with many smallholders living below the poverty line. Yields are also stagnating, and in countries like Tanzania that have invested USD $4 billion in agriculture, cereal harvests have declined by 16%. Prior to the COVID-19 pandemic, Africa was already home to more than 70 per cent of the world’s poorest people, and 50% (about 650 million) of the world’s most malnourished citizens. Globally, the pandemic has led to decreased food security – and the World Bank is suggesting new, innovative, short and long-term methods to rectify the situation.

We should be taking on these challenges from the demand-side. If African governments were to start by developing new policies that focus on demand – and implement them systemically – they may get better results.

Four Steps: Growing Demand, Developing Agents of Change, Pushing Diversification and Accessing Global Markets

Firstly, there must be a new focus on growing industrial demand for agricultural produce. Africa’s verdant and varied primary sector has the potential to support almost any kind of business relating to the production, logistics, processing, packing and retailing of foods.  Growing agribusinesses will help subsistence and unprofitable farmers move to related industrial and service jobs, where they can earn higher incomes, increase their purchasing power, and boost food demand. This will require coordination at a national, regional and county level, but the ultimate goal should be to maximise agricultural output and lower prices in order to make food more affordable for growing populations.

Second, leveraging relationships with food processing companies could be the way to change how consumers think about what they choose to eat. Basically, these companies can influence what consumers eat – thereby changing what farmers grow. “While the private sector is the only scalable player that can help manufacture food for everybody, it usually produces the highest-margin products regardless of their contribution to human well-being.  Governments can counteract this trend through fiscal incentives and health norms,” the report says.

This can be done by incentivising nutrient-rich foods through tax breaks, and much like South Africa’s sugar tax, making excessively unhealthy food more expensive. It is by using these companies as agents of change and investing in cold supply chains that the environmental impact of the sector can also be reduced, ultimately by limiting waste. Nearly 40% of the food grown in sub-Saharan Africa perishes before it reaches consumers, driving up costs.

Third, diversifying Africa’s demand for food will also be vital to creating new markets and opportunities for local farmers. 75% of the world’s food supply comes from 12 plant and five animal species, and rice, maize and wheat alone make up nearly 60% of calories from plants in the human diet. To encourage more food diversity, governments need to also consider using taxation to catalyse the demand for different types of food and convince consumers to try new foods that are more sustainable and healthier.

Lastly, Africa needs to create a global market for its products. Through marketing campaigns via trade fairs and even direct to consumer, industry bodies have an opportunity to create a new brand, called “Grown-in-Africa”.

In today’s connected world, Africa’s food businesses must forward integrate to control the means of distribution and marketing globally.  Doing so will increase the ability to control what they sell where and increase the foreign exchange they earn. While international markets make it difficult for African companies to compete, allocating funds to assist African companies should be a major investment consideration for local governments.

It may sound like a daunting task, but both private and public sector institutions have the power, will and resources to shift Africa’s food systems.

By Zoë Karl-Waithaka Partner at BCG and Chris Mitchell Managing Director and Partner at BCG

You may also like

Leave a Comment

OKB price
5909.46 KES+1.8%