At a time when the rest of the world is re-thinking its approach to commercial agriculture, Africa has a clear opportunity to refresh its approach to the sector and become an emerging force. Big shifts are already happening in food production, land and water use, and the integration of agri-tech and product tracing. If African firms take an early lead during this transition, they will be well placed to compete globally by building enduring assets and commercial advantages beyond primary production.
The financing of new investments in agriculture has always relied on a healthy financial eco-system: active banks, sound insurers and lively futures markets. The next set of gains will come from new platforms that allow small and large firms to connect to each other and to their shared stakeholders. Reciprocal exchange of market data will make smaller, efficient players more visible to large buyers.
"Without continued advances in agricultural productivity, the whole project of African advancement is at risk," according to Linda Manda, sector head agribusiness, corporate and investment banking at Stanbic Bank's parent company, Standard Bank.
"The stakes are high for all of us", says Ms Manda, "because communities in Africa rely on the agriculture industry for much more than food: employment, investment and infrastructure development are all part of the deal." Over half (52 percent) of all people in Sub-Saharan Africa are employed in agriculture (2019).
Three recent developments: Higher value incentives
Three recent development milestones suggest that African firms are ready to move beyond low-margin primary production while remaining active in agriculture. According to Sola David-Borha, chief executive of Africa regions at Standard Bank, "'higher-value economic activity is even more likely if finance, technology and trade move deeper into African agriculture. Larger and more open markets, strong supplier networks and technology investments will drive Africa's growth."
Trade data, and Standard Bank's own long experience of trade finance, shows that Africa has been a net importer of food for almost two decades although the trade deficit has narrowed recently. Despite impressive export growth of certain key products, other food imports continue to rise. The covid-induced disruption to imports are a reminder that regional resilience in food supply is a practical imperative, not an intangible aspiration.
A larger, more open, internal market in SSA
First, the African Continental Free Trade Area (AfCFTA) should create a much larger internal market that gives producers access to a larger and more open market. Local production can better compete with the current import-and-distribute model. Large-scale production will arise when the returns are not stifled by trade friction. As an African bank, Standard Bank's role is to put our strong balance sheet to work, lending to the new crop of agri-entrepreneurs.
Multinationals are already active cross-border distributors, but we expect new African producers to be attracted to the intra-African produce-to-trade and value addition opportunity. Africa also needs to be ready for the next disruption in trade. Some global imports will always be required but it would be wise to ensure that key inputs can also be sourced regionally.
Second, the contrived distinction between the produce of small-holder farmers and very large commercial producers is beginning to fade. The new financial platforms being offered by Standard Bank will confirm the extent which large and small farming operations can complement one another. Out-grower programmes offered by large global firms allow smallholders to establish themselves as suppliers to the biggest and most profitable value chains.
Tobacco, sugar and sorghum are all good case studies. Our banking platform is a place where buyers can meet producers, surrounded by market data on inputs, crop prices, volumes, regulations, trade advice and currency movements.
From the top of a tall grain silo, the neat polygons of monocrop plantations appear to be the only advanced outposts of progress. By contrast, small-holder farmland can seem rough and rudimentary remnants of a pre-industrial age. Our own experience is quite different. Smallholder farmers that have access to the right platforms and better yields are also able to compete on quality and cost. Local knowledge of weather, grains, indigenous varieties, insects, and soil has accumulated over many years in Africa and is becoming a treasure of indigenous competence and resourcefulness. The huge expansion of biological patents attests to the large commercial value of small, local insights.
Adoption of technology and optimization logistics
The third recent milestone is the broad acceptance across Africa that advances in technology are not peripheral to growth. Grudging acceptance has given way to enthusiastic adoption. Healthy livestock, fertile plantations, productive greenhouses and efficient cold chains all require technology partnerships to keep them productive and profitable. Two decades of smartphone penetration in rural communities has probably eased the transition from guesswork and speculation to data-driven decisions and GPS mapping.
To make the most of this milestone, every hectare of land, every seedling and every bag of fertilizer must be used optimally. On-farm losses and unreliable methods are simply unaffordable during health pandemics and economic recessions.
Private investment in telecoms, machinery and pipelines will eventually work alongside publicly funded infrastructure: roads, rail and bulk water supplies.
Policy reforms need to support more public-private partnerships that have shown they can build and maintain high-quality infrastructure assets.
Consumer demand for less waste and more conservation will support investments in new systems that supply micro-nutrients to digitally-mapped crops and livestock. Food-insecure communities in Africa can cheer this development as much as time-starved households in wealthy countries: a regular surplus of well-priced food is the best guarantee of the social stability in which economic growth can best be cultivated.
Minister of Energy, Newton Kambala, has appealed to companies in the country to be innovative and vibrant saying these have potential to complement governments effort in creating jobs.
The minister made the remarks when PUMA Energy Malawi launched mobile application dubbed E-Puma portal on Wednesday at Sunbird Mount Soche in Blantyre where the fuel company say it intends to empower customers to order fuel online.
Kambala believes that if companies in the country are innovative enough the economy can generate more jobs opportunities through business growth.
"Am very delighted to see this kind of innovation where people will be able to do transactions while seated in their homes or offices and am sure people will be able to do their transactions while travelling in their cars considering we need to observe social distance among ourselves due to Covid- 19," the minister said while describing the introduction of E-Puma portal as a timely intervention.
He, therefore, urged companies in the country to create more favorable business conditions which will complement to the government drive to create one million jobs.
"I believe this will be complimentary to government plans of creating one million jobs in a space of 12 moths," Kambala said.
PUMA Energy Malawi Managing Director, Dr. Davis Lanjesi said the company is determined to improve efficiency, cost-effectiveness and create solutions in the digital world.
"Puma Energy continues coming up with innovative solutions in the industry as we have come up with this application which will enable customers to download in their smart phones and access our dynamic range of services including making payments." Lanjesi added.
PUMA Energy Malawi assured customers that the new application is convenient and cost-effective means of transaction.
"The exciting thing about this application is that customers can make use of it without any mobile data charges attached and we have done such an arrangement having appreciated the cost of data in the country." PUMA Energy Malawi Managing Director said.
Lanjesi assured that with the introduction of E-portal no one will lose job but will rather boost the business and more job opportunities will be created for Malawians.
"The E-portal should not bring any fear that some people are going to lose their jobs. Yes when you improve on technology like what PUMA has done, some people would think that other workers will lose their jobs, but no, the innovation will help PUMA to have good business environment," he said.
PUMA Energy Malawi has plans to build more filling stations across the country in which one site will create 30 to 50 jobs.
Lanjesi said this should excite Malawians as PUMA Energy Malawi has more job opportunities to offer.
PUMA Energy Malawi is the first company in Africa to have E-portal and is among 4 countries that have introduced the E-portal in their operations worldwide.
Source: Nyasatimes
High data costs in Africa have long been cited as an impediment to greater use of Internet services on the continent, even though Africans technically have full Internet access.
Now, a new service that will promote increased access to low-cost Internet services and expand social, digital and financial inclusion will soon be rolled out in Zimbabwe through a partnership by two digital and telecommunications companies - Cassava Fintech International (CFI) and Liquid Telecom Group (LTG).
The service, which will be made available through the Sasai wi-fi finder, will be "rolled out at thousands of hotspots across Africa", and allows "greater connectivity in a variety of locations, including retail, healthcare, education, government and small business trade facilities".
CFI Group chief executive officer Mr Darlington Mandivenga said the service to provide an "expansive network of data access points" would be facilitated through tie-ups with various service providers.
"We see this launch as a critical piece in the social digital inclusion agenda we are driving on the continent," said Mr Mandivenga.
"Through Sasai wi-fi finder, we plan to establish an expansive network of data access points across Africa and build 'Africa's missing network' through partnering with broadband providers, internet service providers and local community hubs."
LTG, which boasts of Africa's largest independent fibre network stretching over 70 000km, will be providing the infrastructural backbone for the new offering.
"We are proud that our best-in-class broadband infrastructure network is the backbone of this service and is enabling more Africans to access the digital and financial benefits of the internet," said LTG chief operating officer Ahmad Mokhles. "This partnership is providing consumers with affordable wi-fi access, while local franchisees and partners are able to grow their businesses and the economies of their countries. This is a true example of the transformative power technology can have across the value chain."
Digital and financial integration is considered as integral in facilitating business and narrowing digital divide in Africa, particularly at a time when Covid-19 has affected businesses that depend on human contact.
A GSMA report last year claimed that affordability remains a significant barrier to internet adoption in Africa, resulting in social, digital and financial exclusion.
The Sasai wi-fi finder will be an in-app feature on the Sasai app that will allow users to identify hotspots at which they can access affordable data.
Sasai chief operating officer Mr Tapera Mushoriwa said: "When a new smartphone user has registered on the Sasai app, or when an existing user opens the app, they receive automatic notification "pop-up" alerts showing available #Sasaiwi-fi finder hotspots nearby.
"They also receive additional services, such as distinct indoor and outdoor wi-fi hotspot markers, directions to wi-fi hotspots, session usage, range and signal strength details - making it easier than ever before for African users to access the Internet."
The partnership between CFI and LTG will see the progressive roll-out of the Sasai wi-fi finder in other countries such as Kenya, Tanzania, Uganda, Rwanda, Democratic Republic of Congo and South Africa.
CFI has core operations in mobile money, social payment services, digital banking, international remittances and mobile micro insurance.
At the Kenya-Uganda border towns of Malaba and Busia during the initial stages of Covid-19, queues of lorries stretched up to 65km as the Ugandan authorities imposed compulsory coronavirus tests on Kenyan lorry drivers before they entered the country.
Kampala implemented the measure in late April when it became clear that truck drivers were key vectors of transmission. Similar issues unfolded at busy border crossings across the six countries that make up the East African Community (EAC) as governments failed to harmonize preventative measures at the regional level.
At the Rwanda-Tanzania border crossing of Rusumo, for example, Tanzanian drivers were forced to hand cargo over to Rwandan counterparts who took it onwards to Kigali.
The sudden disruption spelt disaster for the industries and businesses that rely on fluid borders in a region routinely heralded as the most integrated in Africa. The cost of moving goods around the region rose by an initial 30%, according to TradeMark East Africa (TMEA), though the trade body believes this figure has since decreased as the region adopts a more coordinated response.
“Covid-19 has been really disruptive in terms of cost structures,” says Frank Matsaert, TMEA’s CEO. “I expect things to normalise now that we have much more agreement between EAC member states. The tailbacks at the Ugandan border are down to 15km – that’s more than it’s been in many years – so there are still things to be done but I believe that it will happen by the end of July.”
Initial disruption
Most of East Africa’s imports pass through Kenya’s port of Mombasa or Tanzania’s port of Dar es Salaam, both of which saw trade volumes fall during the initial stages of the virus.
Mombasa, which accounts for roughly 60% of regional imports, saw a 4.7% reduction in volumes between January and May as Chinese exports in raw materials and capital goods fell, says Gilbert Langat, CEO of the Shippers Council of Eastern Africa.
While this affected Kenya’s manufacturing sector and other industries, it spelt greater trouble for landlocked countries like Uganda, Rwanda, Burundi and South Sudan which rely on the port of Mombasa for imported goods.
Around 85% of the cargo landed at Mombasa is loaded onto Kenya’s standard gauge railway (SGR) and transported to Nairobi before it is moved by truck to Uganda and beyond via the “northern corridor”. Kenya is the main transit hub for the EAC region, accounting for around 46% of total exports and 41% of total imports.
While most countries allowed nationwide logistics to continue despite implementing widespread lockdowns, much of the intra-regional activity was greatly reduced due to border issues.
Before Covid-19, it had taken cargo around 3.5 days to be transported from Mombasa to Kampala, 7 days to Kigali, 10 days to the DRC and 14 days to South Sudan. The virus more than doubled the length of time taken to transport goods: the journey to Kampala extended to 7-10 days, while it took 21 days to Kigali and far longer to the DRC and South Sudan.
“Before Covid-19 we were able to get cargo to Kampala for between $2,000 to $2,200 – now it has increased to $3,200,” says Langat.
Technology offers solution
The delays were largely driven by regulatory changes implemented by each country to minimize the risk of foreign lorry drivers spreading the virus. A Kenyan truck driver driving to Rwanda via Uganda would likely need to be tested for Covid-19 three times – once in each country – rather than being able to use paperwork accepted across the entire region. At the beginning of the pandemic, these tests were analysed in urban centres far from national borders leaving truck drivers stranded for days in inhospitable border towns.
This level of mistrust and lack of coordination led to calls for a regionally mandated response from the Arusha-based EAC Secretariat. The regional body published a set of “administrative guidelines” for the movement of goods and services during Covid-19 – which included advising countries to use gazetted routes and encouraging truck drivers to travel with a maximum of three people – but many believed it did not go far enough.
To facilitate border crossings, TradeMark East Africa (TMEA) has worked with EAC member states to develop an app that stores health certificates issued by test centres working to agreed standards.
“The test results are put on the app, which is recorded on blockchain so it can’t be faked, and then the truck driver is tracked all the way,” says Matsaert. “They can only stop at certain places along the corridor so that the driver doesn’t pick up an infection. It should create a lot more trust between partner states.”
The app was rolled out in late July, and the CEO hopes it will have an immediate impact on some 10,000 trucks operating in the region.
While it is initially being offered as a bilateral agreement between states, it is hoped that it will eventually be adopted at the regional level. This could offer a model for how East Africa looks to overcome logistical challenges in the future, using what TMEA calls safe trade zones (STZs). These zones would implement agreed health and safety measures between countries, allowing traders who meet requirements to cross borders.
Along with the impact on established businesses, the border closures have been disastrous for informal traders who have mostly been barred from making crossings. Around 90% of informal cross-border trade has ceased since Covid-19.
Now that countries are beginning to lift lockdowns and resume international and domestic air travel – despite rising cases – informal trade is expected to resume.
Landlocked economies will be hardest hit
A recent report from the Brookings Institution on the effects of Covid-19 on trade in East Africa identifies “a concerning scale of disruption to intra-regional commerce” and some particularly worrisome trends for the landlocked countries of the region.
Authors Andrew Mold and Anthony Mveyange cite figures from the Economist Intelligence Unit predicting that Uganda and Rwanda’s imports will fall by 18.8% and 14.1% respectively in 2020 as a result of the restrictions on trade. In contrast, Kenya and Tanzania’s access to international trade via the ports of Mombasa and Dar es Salaam will help to minimize the costs of such restrictions on their economies – their imports fall by just 2% and 6.2% respectively.
The authors conclude that “a coordinated EAC-wide approach is critical for intra-regional trade to remain buoyant… and for ensuring vulnerable countries are cushioned from the Covid-19 crisis fallout.”
They also highlight the urgency of implementing the African Continental Free Trade Area (AfCFTA) to mitigate the negative effects of Covid-19 on trade.
Political tensions
The EAC obtained the highest overall score for regional integration of all Africa’s trade blocs in UNECA’S Africa Regional Integration Index 2019, which was based on measurements of the free movement of people, infrastructural integration, macroeconomic integration, productive integration and trade integration. It has a higher percentage of intra-regional trade than the other regional blocs, but traders and businesses are quick to criticize the shifting landscape of tariff and non-tariff barriers, while political tensions between member states continue to slow down efforts towards further integration.
Tanzania’s response to coronavirus has largely been at odds with the rest of the bloc. After declaring his country virus-free despite carrying out very few tests, Tanzania’s President John Magufuli blasted his neighbours for implementing lockdowns. Neighbouring Kenya and Zambia have closed the borders amid disquiet over his coronavirus response.
“The president of Tanzania encouraged his country¬men to sell goods to Kenya at a very high cost,” says an African Development Bank infrastructure expert, speaking on condition of anonymity. “This might just be politics, but the underlying current is hostility. All these things add up and when you take them together it will lead to lasting problems unless the leadership says let’s look at this together.”
As a member of the Southern African Development Community (SADC), Tanzania has been criticized in the past for prioritizing its southern neighbours over the eastern bloc.
Elsewhere, the standoff between Uganda and Rwanda since 2017 has seen trade volumes plummet between two countries that were once thriving partners. Rwanda and Burundi’s trade ties have similarly been held hostage to fraught political relations, although new leadership in Bujumbura following the death of President Pierre Nkurunziza in June offers the chance for a reset. Despite such difficulties and the coronavirus fallout, experts see regional integration continuing on a progressive path.
“There will always be ups and downs as part of the integration process,” says TMEA’s Matsaert. “But I do see these disputes around a longer-term trend of cooperation. We need to make sure that there are regional institutions strong enough to arbitrate on disagreements. Whenever I talk to businesses, they always stress just how important the EAC is to investing in the region. It is a great asset.”
Source: African Business
AGRICULTURE sector grew by an average of 5.2 per cent in the past five years and still remains one of the biggest pillars of the country's economic growth.
And, for almost five years, products from farmers contributed about 17 per cent in the country's Gross Domestic Product (GDP), the government has said.
According to Permanent Secretary (PS) in the Ministry of Finance and Planning, Dotto James, the sector also raised employment opportunities by 58 per cent as of 2018.
Mr James who doubles as the country's Pay Master General (PMG) made the speech, while officially opening the National Workshop on the implementation of Warehouse Receipt System and Tanzania Mercantile Exchange (TMX) on Sesame and Cashew nut farming products.
The workshop was organised by TMX in collaboration with other stakeholders including Financial Sector Deepening Trust (FSDT), Warehouse Receipt Regulatory Board, Cashew nut Board of Tanzania (CBT) and Tanzania Cooperative Development Commission (TCDC).
In his speech read on his behalf by the Commissioner of Financial Sector Development, Dr Charles Mwamwaja, the PS said that between 2015 and 2019, the agriculture sector continued to grow at an average of 5.2per cent, while the sub sector of agricultural products continued growing at an average of 5.8per cent.
However, Mr James pointed out that based on the fact that the agricultural sector was key to the country's economy, the government saw the importance of organizing a workshop to convene stakeholders in Sesame and Cashew nut products so as to address the challenges in order to increase efficiency.
"Because of this, the main agenda of this meeting is to look on supervision of Warehouse Receipt System (WRC) and selling of agricultural products through TMX on Sesame and Cashewnut," he noted.
According to TMX Chief Executive Officer, Godfrey Malekano, his institution was the first commodity exchange in Tanzania.
The exchange was established as a platform where farmers, traders, exporters and other various market actors should be able to access domestic and global market and obtain a fair price in selling or buying of commodities.
He insisted that TMX was an organized marketplace, providing a platform where buyers and sellers come together to trade, and become assured of quality, quantity, payment, and delivery.
Equally, he underscored the need for the government to improve the Warehouse Receipt System so as to increase efficiency to farmers and as well allow local and international businesspeople to purchase products online.