Garlic farmers in Rwanda have appealed for government support, saying that the lack of access to market is hurting their earnings.
According to figures from National Agricultural Export Development Board (NAEB), the country has over 13,000 garlic farmers grouped in 11 cooperatives, who produce over 3,000 tonnes of garlic every year
The produce is sold both locally and in the export market.
However, the closure of borders with neighbouring countries in order to contain the spread of Covid-19 affected Rwanda's garlic exports; as a result, farmers now heavily rely on the local market.
This, they say, has led to oversupply of garlic and effectively occasioned a drop in prices.
A kilogramme of garlic drastically decreased from between Rwf3,000 and Rwf4,000 to between Rwf350 and Rwf700, plunging farmers in enormous losses.
"We are counting huge losses," Emmanuel Semugeshi, a garlic farmer from Musanze District told The New Times
Since March, Semugeshi planted 1,200 kilogrammes of garlic seeds on two hectares in an investment worth over Rwf4 million.
"Currently I am stuck with four tonnes of garlic. The produce is rotting as we do not even have proper storage facilities," he noted.
Semugeshi might lose Rwf15 million in potential revenues from over four tonnes.
François Hakizimana, another farmer from Nyabihu District, said he has one tonne of garlic but sells a kilogramme at Rwf500 in Byangabo market
Saddled with bank debt
Semugeshi is also struggling to pay a bank loan of Rwf1.2 million.
The farmers have appealed to NAEB to set up market centres for garlic at borders.
DR Congo, Kenya, South Sudan among others are the major destinations for garlic from Rwanda. The Covid-19 outbreak slowed cargo traffic to and from these countries.
Lack of post-harvest handling facilities
For some time now, farmers have also complained about the lack of modern technologies to store their produce.
"We heard that there was a project to set up modern drying facilities that could help us avoid post-harvest losses," he added.
The proposed eight modern drying facilities and a factory to add value on garlic was announced in November, 2019. They are supposed to be set up in Gataraga Sector of Musanze District to offset post-harvest losses for farmers. The factory seeks to produce drugs, cosmetics, flour and spices from the garlic.
The Rwf1 billion project is supposed to be implemented by Business Development Fund (BDF), Post-harvest and Agribusiness Support Project (PASP) and Rwanda Agriculture and Animal Resource Development Board (RAB) as well as the districts.
Officials speak out
Andrew Rucyahana Mpuhwe, the Vice Mayor in charge of Economic Development in Musanze District said they are aware of the issue and are working with NAEB to link farmers to both local and export markets.
He said some drying facilities have been completed but the factory to add value to garlic is yet to be completed.
"We are working with NAEB to rescue garlic farmers from losses. For instance, the investor in value addition will, this week, buy 26 tonnes from farmers. There is another investor from Egypt in negotiations to buy more tonnes of produce," he said.
Pie Ntwari, NAEB's Communication Officer, told The New Times that they have recommended that garlic be dried and be transformed into spices to make it more suitable for export.
"We also encourage farmers to always farm crops for which they have contacts with buyers," he added.
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
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.
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