China's green fingers can help African farmers grow
Teodoro de Jesus Xavier Poulson says Africa is ripe with opportunities for Chinese firms in the agribusiness sector, and their expertise and technological support are essential to spur local innovation
In recent history, the world's fastest growing economies have been largely fuelled by oil, gas and minerals. Sustained economic growth, however, must be based on the proliferation of non-extractive industries, particularly those that drive innovation, feed a domestic supply chain and boost exports. China has demonstrated that agribusiness is one such industry. So what can Africa learn from the Chinese model?
China's modernisation has turned small-scale farms into larger production zones. Increasing efficiencies and maximising output requires hi-tech farming machinery. While China is a global force in the manufacture of farming equipment, it still relies on the importation of the very latest high technology. Data from Beijing-based Zeefer Consulting shows that China's agricultural industry has so far relied on domestically manufactured small-scale, low-end to mid-range machinery. It says that there is "a clear disparity between China's agricultural machinery manufacturing technologies and those of developed nations".
In this respect, China and Africa face a similar challenge - transforming farms through the use of foreign hi-tech machinery while also trying to stimulate domestic technological innovation. China is several steps ahead of Africa - it boasts over 1,800 medium-sized enterprises producing farming machinery and is the world's second largest manufacturer of farming equipment.
Right now Africa is bursting with opportunities for Chinese agribusiness firms, from animal feed technologies to irrigation systems, cereal processing technologies, packaging, new fertilisers and innovations in disease-free crops. According to the World Bank, around 69 per cent of all sub-Saharan Africans work in agriculture. Huge numbers are small-scale farmers trading locally or simply supplying themselves and their families with self-produced staple food.
Imported agri-machinery can transform the industry and in turn support home-grown innovation. The industry is already benefiting from investment in infrastructure - in Angola for example, new train lines and highways are making logistics easier for producers and processing firms. The World Bank projects that sub-Saharan Africa's agribusiness sector will be worth US$1 trillion by 2030.
African governments are creating programmes to help entrepreneurs in the agribusiness supply chain grow. In Angola, the government launched a public venture capital fund called FACRA in 2012, which provides a unique venture capital model for entrepreneurs. It provides growing companies with the capital they need to grow, alongside business support services. However, more importantly, it also acts as a partner for international companies looking to set up in Angola - helping foreign companies to find great growing businesses that they can invest in. Agricultural entrepreneurs in Angola now have a direct route to meeting foreign companies that have the expertise and technology they need to expand.
Regionally, the Africa Commission has launched an initiative to help young people in agribusiness to create new technologies. The Chinese Ministry of Agriculture has signed 31 cooperation agreements with 17 African countries. It has built 22 agricultural demonstration centres across the region and deployed hundreds of agricultural experts to help train young African entrepreneurs.
As in China, the agriculture sector in Africa employs millions. With concerted regional input and foreign technologies, it can offer sustainable long-term job prospects for millions more.
Teodoro de Jesus Xavier Poulson is a member of FACRA's investment committee