African agriculture an opportunity for Indian investors: Experts
Going by reports of global consulting firms on African agriculture, Indian investors would need to turn their attention to an area that promises high returns.
A report by the international accounting firm KPMG has said agricultural growth in Africa has failed to reach its potential and there was need for a concerted effort at improving techniques, markets and access to credit for small farmers.
The report also drew attention to the need for government policies to attract foreign investment to spur commercial agriculture and increase value added.
“Potential for growth in the agricultural sector on the continent is huge,” it said.
KPMG said the Indian government was determined to achieve a target of $70 billion in trade with Africa and one way this could be achieved is through India’s investments in agriculture.
The telecommunications sector also may have a more direct economic impact on the lives of ordinary Africans as 70 percent are engaged in some form of agriculture, and at least 30 percent of whom have access to a mobile phone.
“Unfortunately most governments on the continent are under severe fiscal pressure, with inefficient revenue collection practices, large public wage bills and severe infrastructure deficiencies. As such, the necessary funds needed to kick-start the agricultural sector may not always be available on time,” KPMG said.
“Africa houses a large proportion of the globe’s unexploited arable land and there is significant scope for improvement with regard to irrigation, use of fertilisers and improved technology,” the report added.
With more than a quarter of the world’s arable land, the continent generates only ten percent of global agricultural output and is a net importer of food.
“Furthermore, the return to political stability is some key countries and programmes by governments and NGOs could unlock significant value in the medium to long term,” KPMG said.
Other proof that the continent has very high potential comes from the Alliance for Green Revolution in Africa, which says: “The value of Africa’s agriculture output is about $280 billion, yet it has the potential to reach $800 billion by 2030.”
“It (agriculture) could address a major problem in Africa by providing economic opportunities for the 200 million people between 14 and 24 years old that make Africa home of the youngest population in the world.”
Global accounting firm PricewaterhouseCoopers (PwC) has also said Africa “represents the ‘last frontier’ in global food and agricultural markets”.
“The continent houses almost 60 percent of the world’s uncultivated land and an abundance of natural resources.”
It also said due to the large percentage of uncultivated fertile land and the presence of water, sub-Saharan Africa was specifically attractive.
In addition, the lack of finance to invest in the sector has also been a problem. It is, therefore, Africa’s largest economy, Nigeria, was turning to China to develop its commercial agriculture.
The country’s permanent secretary in the ministry of agriculture, Sonny Echono said the Chinese agricultural development model suited Nigeria’s Agricultural Transformation Agenda and Nigeria was working to improve its milling capacity in rice and cassava.
The PwC report suggested that to take Africa’s agriculture to the nest level, “public-private partnerships throughout the value chain as a whole are key,” adding that the role of governments in supporting the private sector to grow their businesses should not be underestimated.
The third India-Africa Forum Summit coming up in New Delhi next month will afford an opportunity to deepen India’s involvement in improving Africa’s agriculture.