Agriculture is central to African development. Agriculture in Africa generates 40% of the continent’s gross national product. It constitutes 40% of Africa’s export and 70%-80% of employment.
Despite agriculture’s importance to the African economy, it has failed to meet the continent’s growing need for food. From 1960 to 2005 grain yield has increased disappointingly by only 60%. Comparatively, grain yield has increase in East Asia by 220% for the same time period. By 2005, Africa’s food production per capita had declined by 15% in comparison with figures from 1960. Africa’s share in agricultural exports declined from 15% to 3%. Africa average level of cereal food energy per person dropped from 1.086 kcal in 1961-62 to 1.008 kcal in 2008- 10.
Africa went from being a net exporter of agricultural goods in the early 1960s to a net importer of agricultural goods in the 2000s, spending $33 billion on agricultural imports by 2006. Sierra Leone imports 85% of its grain, while Liberia imports 75% of its grain. These are amongst the highest in Africa. Mozambique, Liberia and Senegal total imported rice bill amounts to $2 billion annually. Additionally, there has been widespread degradation of the soil and natural vegetation. An acute lack of skills and political neglect has left African agriculture largely untapped.
African governments and donors have scaled back expenditures on agriculture in the last 3 decades, with African governments reducing their budget allocation from 7.3% in the 1980s to 3.8% in 2000, and donors scaling back from 18% to 3.5% in the same time frame. African agriculture is in decline. Africa is the only region in the world that has seen no appreciable growth in the agriculture sector in the last 50 years. Africa needs to reverse this decline.
Investing in African people is the one investment that holds out the possibility of infinite returns. “Changing people changes history. If people do not change, little else changes in the long run”. “The only real revolution is in the enlightenment of the mind and the improvement of character”. African leaders in partnership with NGOs and nations should invest in the work force, skills and abilities of the people. Skills and abilities will be required to realize Africa’s agricultural potentials and bring about a great measure of food security. But, the future is promising. Read our full report on agricultural development in Africa below.
Rwanda Trading Company-Westrock Coffee
After the Verizon buyout was finalized in January 2009, Scott Ford came to that spring’s PAC meeting with a due diligence team to find an investment opportunity with the most leverage. The team considered several industries, including tea, tourism and banking; however, they found the most opportunity in the coffee export market. The reasons were more economic than social: coffee was a core business in Rwanda and the second largest dollar-traded commodity in the world. It was a liquid market with a global demand, and there were only two well-capitalized players in a capital-intensive industry.
Recent shifts in the industry also pointed to coffee as a successful investment. Rwanda was historically known to produce mediocre grade coffee that attracted little international attention. Although the unprocessed cherries were some of the finest in the world, the market was tightly controlled by the government and mired in a “low quality/low quantity” trap.
After the genocide, President Kagame liberalized the industry, removing trade barriers, creating incentives to invest in coffee production, and facilitating entrepreneurship among small plot farmers. By Scott’s arrival in the country, Rwandan coffee had earned a reputation as a high-quality product that consumers were willing to purchase at premium cost.
Read more about Sagamore Institute's partnership with the Rwanda Trading Company.