The African Transformation Report 2017 sets out a bold new agenda for African development, powered by a revolution in agriculture.

The report unveils a radical program of reforms to trigger economic transformation far beyond the farming industry. The report highlights the immense contributions that agriculture can make and offers practical examples, lessons and recommendations.

Overview

For the most part, agriculture in Africa remains backward and tied to a commodity-exporting economic model that countries are trying to move away from. Yet for many countries, agriculture presents the easiest path to industrialization and economic transformation. Increasing productivity and output in a modern agricultural sector would, beyond improving food security and the balance of payments (through reduced food imports and increased exports), sustain agroprocessing, the manufacturing of agricultural inputs, and a host of services upstream and downstream from farms, creating employment and boosting incomes across the economy.

Many of today’s successful economies followed that path to economic transformation. It is even more relevant for Africa today, given its factor endowments and emerging global trends in manufacturing technology, demand patterns, and location decisions of lead firms in global value chains. These global trends are making an industrialization strategy based on exports of labor-intensive manufactures, used so successfully by East Asia, more difficult. But fortunately, African countries can combine that strategy with one based on modernizing agriculture and developing agro-based manufacturing and services. African countries have the opportunity to pursue a dual-track to industrialization – one track that leverages their relative labor-abundance for labor-intensive and export-oriented light manufacturing, and another track that leverages their advantages in agriculture for globally competitive agriculturally based manufacturing. These two tracks are complementary and reinforce each other.

Agricultural transformation can power economic transformation

Many African governments are beginning to look at agriculture through a transformational lens, prioritizing the sector in economic planning. That new perspective is reflected at the continental level in the African Union’s 2003 Maputo Declaration on Food Security and Agriculture in Africa and the 2014 Malabo Declaration on Accelerated Agricultural Growth and Transformation and the associated Comprehensive African Agriculture Development Program (CAADP), and at the country level by some countries’ explicit pursuit of agro-based industrialization strategies, particularly Ethiopia.

Agricultural transformation incorporates two main processes: transforming or modernizing farming by boosting productivity and running farms as modern businesses, and strengthening the links between farms and other economic sectors in a mutually beneficial process, whereby farm output supports manufacturing (through agroprocessing), and other sectors support farming by providing modern manufactured inputs and services. Modernized farming has the following characteristics:

• Higher land, labor, and total factor productivity, achieved through greater use of modern agricultural inputs and scientific approaches to farming.

• More farmers running their operations as a modern commercial enterprise.

• Diversification of products from the farming system as a whole, but with specialization on individual farms.

• Greater resilience against weather variability and climate change.

• More trade with other sectors of the economy. Achieving them will require action on four fronts:

• Assisting the nearly 8 in 10 African farmers who are traditional smallholders, and often uneducated, to acquire the knowledge and inputs to modernize their operations, boost their productivity, become more commercially oriented, raise their incomes, and become more resilient.

• Attracting and assisting some educated youth to take up farming and operate small and medium-size commercial farms.

• Encouraging the small number of large commercial farms to develop mutually beneficial links with small and medium-size farms.

• Removing barriers to women in farming so that the energies and enterprise of all farmers – not half of them – will be unleashed to accelerate the pace of farm modernization.

A modernized farm sector with strong linkages to other economic sectors will contribute to overall economic transformation by:

• Boosting the production of food staples to improve food security and keep living costs low, making it easier to keep wages competitive and support labor-intensive manufacturing (the second track of the dual-track industrialization strategy).

• Supporting agroprocessing with raw agricultural outputs at the scale, quality, and reliability required.

• Supporting other agribusinesses by purchasing their products and services, including businesses manufacturing agricultural machinery, implements, and intermediate inputs and those providing transportation, logistic, and financial services.

• Raising farmers’ incomes and expanding markets and jobs throughout the nonfarm segments of agricultural value chains.

• Expanding markets for nonagricultural sectors, such as those producing nonfood or durable consumption items.

• Improving the balance of payments by expanding and diversifying exports and substituting domestic production for food and other agriculture-based imports that can be produced competitively at home.

• Increasing government revenues and personal savings through higher agricultural incomes, which can be converted to national investments for growth.

Opportunities and challenges

Africa is blessed with many natural advantages and rising market opportunities that could be leveraged for agricultural transformation. These include abundant uncultivated arable land, estimated at over half the world’s total; a young and growing labor force, projected to be the world’s largest by 2050; tropical and subtropical climates, permitting long and multiple growing seasons; and urbanization and a growing middle class, expanding national and intraregional markets for agricultural products.

But Africa faces difficult challenges in leveraging these advantages and opportunities. Although arable land is abundant, it is not readily accessible to those who want to farm, particularly on a commercial basis. Land tenure systems in many parts of the continent do not provide security of tenure or support efficient land rental markets. Large tracts of land are inaccessible because of ongoing conflicts or poor transportation infrastructure (or both, as for example in Democratic Republic of Congo, the country with the largest expanse of uncultivated arable land).

The average age of farmers in Africa is estimated by some sources to be as high as 60, and few in the large and growing African youth population are poised to step in to revitalize the ranks of farmers. Youth are not interested in agriculture as it is now practiced in Africa, where the farming technology is still primitive and requires back-breaking manual work. An increasing number of youth are educated, and education systems do not prepare them for farming (and even orient them away from it). And most farming does not provide an income that can support the lifestyle to which educated youth aspire. This lack of interest in farming among African youth is contributing to the aging farming population and farm-labor shortages in some localities, particularly during planting and harvesting seasons.

Nor can African farmers take full advantage of the long growing season because only about 5.4% of agriculture is irrigated. As a consequence, much farming stops in the dry season or crops are devastated by a lack of precipitation. Productivity of land (yields) and of labor (output per worker) is low, because of lack of access to knowledge of modern farming techniques, high-yielding seeds, fertilizers and other inputs, irrigation, and mechanization.

It is also hard to exploit the growing urban and intraregional markets. Roads and other transport infrastructure are inadequate, significant barriers to intraregional trade remain, and many consumers, especially city dwellers, believe that domestically produced foods are inferior to competing imports. Africa’s urban areas are increasingly dependent on food imports, now at around US$68 billion a year for the continent, US$37 billion for Sub-Saharan Africa. And agroprocessing and other agriculturally related manufacturing are held back by the usual policy, regulatory, and infrastructure constraints that weigh on manufacturing, stifling the opportunity to use agriculture to kick-start industrialization.

By reviewing challenges and proposing solutions, this report aims to convince African policymakers and their development partners of the benefits and feasibility of prioritizing agricultural transformation as the driver of overall economic transformation. The report should also be of value to the private sector, farmers, and educated youth who might consider farming or opportunities in agricultural value chains as profitable and appealing occupations.

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Download: African Transformation Report 2017 (PDF)