Millions of small and medium-sized enterprises (SMEs) in Africa are sourcing their produce directly from farmers, creating a huge industry that is enabling many in the continent live off agriculture, a new report that was launched in Nairobi on Tuesday has revealed.
The report by the Nairobi-based Alliance for a Green Revolution in Africa (Agra) revealed that 64 percent of food consumed in Africa is handled by the SMEs, therefore, offering mostly women along the value chain a livelihood.
“These SMEs source directly from millions of smallholder farmers across sub-Saharan Africa. These businesses are often women-led, and they include food processors, wholesalers, and retailers,” said the 2019 Africa Agricultural Status Report.
The SMEs provide a range of services, from transport and logistics to the sale of inputs such as fertilizer and seed to farmers.
“SMEs are the biggest investors in building markets for farmers in Africa today, and will likely remain so for the next 10 to 20 years,” said Agnes Kalibata, president of Agra.
Kalibata called for African governments to ensure SMEs are well-grounded to continue offering business to small farmers.
“We live in a global market. Our job today has to be to ensure that these SMEs are grounded enough to provide the right kind of support to family farms; and to be competitive so that they can survive and thrive in an increasingly interconnected and global market. Their success will determine the future of agriculture and food security in Africa,” she said.
The AASR finds that, overall, only about 20 percent of the volume of food consumed in Africa fits the conventional notion of subsistence agriculture — food consumed directly by the farming households that grow it.
“The majority of what Africans eat flows through what are known as private sector “value chains” managed by SME businesses that purchase commodities directly from smallholder farmers and then process, package, transport and sell food products to the urban and rural consumer,” said the report.
The SMEs also play a large, growing and vital role in markets for inputs like fertilizer and seed, as well as farm machines and pesticides.
The report notes that although 70-80 percent of people in rural Africa work on their own farms, this work is often part-time, and comprises only 40 percent of total labor time in rural areas.
It adds that up to 60 percent of rural labor time is spent off the farm, and about 40 percent of this non-farm labor time is in agri-food system work such as wholesale, logistics, processing and retail through both self-employment and wage labor.
“SMEs are the key employers in this sector, intertwined with rural family farmers. This interdependence makes their survival and growth even more crucial, with women and youth particularly benefiting,” said the report.
The report called on governments and donors not to “reinvent the wheel” by duplicating the work of the private sector.
“Setting up state-supported or subsidized businesses, even in remote areas, would crowd out grassroots entrepreneurs. Instead, the key is to create conditions that make it easy for businesses to establish, develop and grow,” noted the report. Enditem