awakening africa’s sleeping giant prospects for advancing inclusive and sustainable agricultural...

Awakening Africa’s Sleeping GiantProspects for Advancing Inclusive and Sustainable

Agricultural Mechanization in Africa

by:Simeon K. Ehui & Chakib Jenane

Agriculture Global Practice, World Bank Group

Fifth World Summit on Agriculture MachineryJanuary 21, 2016 ~ Istanbul, Turkey1

Presentation outline

Importance, challenges and opportunities for agriculture in SSA

What are we doing to respond and scale-up?

Overview of agriculture mechanization in SSA

Future prospects – Industry perspective

Concluding remarks

Fifth World Summit on Agriculture MachineryJanuary 21, 2016 ~ Istanbul, Turkey 2

Importance, challenges and opportunities for agriculture in Africa1

Fifth World Summit on Agriculture MachineryJanuary 21, 2016 ~ Istanbul, Turkey

Importance of agriculture in Africa

• A key contributor of overall growth, accounts for about 20 % of GDP.

• Ranging from 3% (in mineral/oil rich countries) to more than 50% of GDP.

Growth

• Higher poverty impacts from agricultural growth relative to other sectors.

• About 300 million rural poor, 90 million could migrate by 2030.• 210 million poor people remaining in rural areas to be lifted out

of poverty by 2030.

Poverty

• Half a billion more people to feed by 2030, 45% more than today.

• Africa currently imports about 30 percent of cereal consumption.

Food


Challenges and Opportunities for Agriculture in Africa: Broaden growth and jobs …

5

11 13

74 3 2

Numb

er of

SSA c

ountr

ies

Cereal Yield Range (kgs/hectare)

Recent growth, scope for further gains Need to capture market opportunities

Food demand ~60% higher by 2030, more than any other region.

Opportunities to expand agribusiness, jobs and mechanization across value chains as food demand increases.

Annual growth rates (%) 2000-13

Agricultural value added +5.1

Cereal yield growth +2.1

Cereal area expansion +1.8

Relatively strong recent growth ...

… scope for further gains.4x irrigated area

200m ha uncultivated land potentially available

Change in food demand in SSA by 2030 %Cereals, food 56Roots and tubers 47Sugar and sugar crops (raw sugar eq.) 62Pulses, dry 60Vegetable oils, oilseeds & products (oil eq.) 64Meat (carcass weight) 63Milk and dairy, excl. butter (fresh milk eq.) 50Other foods (kcal) 48Total foods (kcal) 55

Challenges & Opportunities for Agriculture in Africa: Scale smallholder success…..New models for larger farms

Scale smallholder success New models for larger farms

• Countries with significant cereal yield growth & significant poverty reduction through smallholder production e.g.

• Has not happened everywhere. E.g. Zambia & Malawi had annual cereal yield growth of 5.9% & 8.5% from early 2000s, but more limited poverty reduction. Lesson learning.

• Significant interest from private investors.• 31 agribusiness investment funds with

target capitalization ranging from $8m to $2.7bn have sights on Africa.

• ~200 million hectares of uncultivated land potentially available.

Countries [time period basedon poverty survey years, over about 10 yr period]

Cereal yield

annual growth

(%)

% change in poverty

headcount rate (%)

Rwanda [2000-2010] +7.2 -21

Ethiopia [1999-2010] +4.9 -33 Mechanization will be

required for both farming

models

• Significant negative impacts for Sub-Saharan Africa

• +1.5oC warming by 2030 could lead to about 40% of current maize area no longer suitable for current cultivars.

Climate change

• Increasing pressures on land and water use

• Land degradation is increasing

Natural resource use

• Avian influenza – not gone.• Wheat rust spread across

Africa (susceptible varieties still in use).

• Periodic desert locust

Disease risk


Challenges & Opportunities for Agriculture in Africa: ….Ensure sustainability and appropriate mechanization

Jobs and growthin the food system to meet poverty reduction targets

Able to feed every person, every day, in every country with a safe, nutritious and affordable diet

Improved health outcomes• Meet ending hunger

targets• Reduced child stunting• Reduced food related

NCDs• No net increase in

obesity

Improved sustainability• Climate

resilience/mitigation• Improved land & water

management• Protected local

communities & biodiversity

World Bank 2030 Vision for Agriculture in Africa - Looking at the Broader Food System

SDG Goal 2 End Hunger, achieve food security and improved nutrition, and promote sustainable agriculture

Malabo Declaration Accelerate agricultural growth and transformation for shared prosperity and improved livelihoods

What are we doing to respond and scale-up? 2

Presenter

Presentation Notes

Why is agriculture one of the two priority sectors in our regional strategy? Huge economic importance in Africa, making it the key to shared prosperity High poverty impact

Increasing the level of our support and growing the set of regional programs

700

1.010

1.509

-

200

400

600

800

1.000

1.200

1.400

1.600

FY06-08 FY10-12 FY13-15

IDA/IBRD Support for Agriculture and Related Sectors in SSA ($ millions, annual average)

Regional Approach - Focusing on transformational projects Technology

• Southern Africa ($90m)• Eastern Africa ($120m) • West Africa ($400m)

Pastoralism• East Africa ($197m)• Sahel ($248m)

Irrigation• Sahel ($125m)

Growth corridors• Kivu-Tanganyka Growth

Poles ($120m)

Engaging on the broader policy agenda (examples)

Policy areaDeveloping analytical underpinnings &Policy reform support instruments

Land • Land Governance Assessment. • Land administration projects.

Agricultural public spending efficiency

• Public expenditure reviews as key entry points for policy dialogue and investment plans.

Business environment

• Enabling the Business of Agriculture.• Business climate assessments.

Input (seeds & fertilizers)

• Subsidies.• Seed production, trade, quality control, certification. • Fertilizer distribution, private sector participation.

Finance and risk management

• Agriculture Sector Risk Assessments .• Risk sharing and Insurance.

Markets and trade • Groundnut value chain reform in Senegal. • Trade policy review in Nigeria.

Micro-grants for investments to help diversify income generating activities, and development and maintenance of socio-economic infrastructure and facilities.

Training and skills development for on-farm and post harvest processing.

Territorial and spatial developmentto bundle infrastructure, services, and institutions

Rural livelihoods and jobsIncreasing assets, skills, and opportunities

Overview of the current state of agriculture mechanization in Africa3

Presenter

Presentation Notes

Why is agriculture one of the two priority sectors in our regional strategy? Huge economic importance in Africa, making it the key to shared prosperity High poverty impact

Compared with other world regions, agricultural mechanization has either stagnated or retrogressed

• The greatest source of power for agriculture in SSA remains human muscle power: Less than 20% of mechanization services are

provided by engine power In Central Africa an estimated 80 percent of

cultivated land is worked manually.

• In 1960, Kenya, Uganda and Tanzania each had more tractors in use than India. However, by 2005, India had 100 times more tractors in use than all three countries combined.

• Large disparity of tractor use per country: more than 50% of tractors in South Africa and Nigeria.

010203040

Tractor use per 1000 ha arable land in 1985

and 2003

1985 2003

SSA is the only region where the number of agricultural workers per hectare is very low compared to other regions (Asia).

Not only does SSA has an acute lack of human resources available for agricultural production, it also has very few tractors available as an alternative source of power.

Source: FAOSTAT/AGS (2005).

Source: FAOS, (2013).

Opportunity for

Mechanization


Optimism on agriculture in SSA Current changes in policy towards agriculture are leading to significant investments in the sector.

Investments in irrigation, rural infrastructure have increased significantly in recent years.

Demand for agric. commodities and high-value products across SSA to increase from US$ 50 billion in 2000 to US$150 billion in 2030.

Potential income to farmers due to increased trade in domestic and regional markets is expected to increase to US$30bn by 2030.

The policy-makers recognize the need for a pro-growth environment for agriculture mechanization.

SSA is leapfrogging in other sectors – Cell-phones, transportation, financial services and education sectors

Market opportunities for agriculture machinery !

15

While still limited, there is clear signs for new investments in agricultural mechanization….

• Formulation of national mechanization strategies:

Sudan, Cameron, Burkina-Faso, etc.

• Provision of soft loans to purchase tractors and implements:

Tanzania, Senegal, Ghana, etc.

• Promotion of tractor custom-hire services:

Ghana, Kenya, Nigeria, etc.

• Joint ventures for the assembly of tractors:

Mali

• New suppliers:

China, India, Brazil and Turkey.

But, there is a clear need to establish an integrated supply chain

Mistakes of the 1960s and 70s are still possible due to a lack of a supply chain approach to mechanization


Future prospects – Industry perspective4


How important is Africa for your company?

How do you see the future potential of

the agricultural machinery market in

Africa?

How do you see the role of public-private

partnerships in developing sustainable

mechanization in Africa?

Fifth World Summit on Agriculture Machinery January 21, 2016 ~ Istanbul, Turkey

Survey on the importance and future potential of the agricultural machinery market in Africa (lead by CEMA)


Data sources162 companies responded

15 countries representing the main suppliers of tractors and other agricultural machinery• Austria• Brazil• Canada• China• France• Germany• Hungary• India• Italy• Japan• Korea• South-Africa• Ukraine• United Kingdom• USA


0 10 20 30 40 50

Basil

France

Germany

India

Italy

Japan

USA

China

Number of responses per

country

Fifth World Summit on Agriculture Machinery January 21, 2016 ~ Istanbul, Turkey 21

0

5

10

15

20

25

30

35

Not important Of little importance Of average importance Very important Absolutely Essential

How important is Africa for your company, % ?

CURRENT IMPORTANCE GROWTH IN IMPORTANCE OVER THE PAST 5 YEARS

45%

42%

What has improved/worsened in your business dealings with Africa in the past 5 years?

Worsened• Political stability• Currency exchange• Import regulations • Financing potential• Growing competition locally

and from China and India• Subsidies • High volatility of commodity

prices• Difficulties to find a strong

partner

Improved• Demand for farm mechanization• Technical knowledge• Better understanding of the

farmers for quality products• Understanding of the markets• Communication and response• Less corruption• Distribution network• More knowledge of how to trade

in Africa (north and south)• Commercial farms


Fifth World Summit on Agriculture Machinery January 21, 2016 ~ Istanbul, Turkey 23

0

5

10

15

20

25

30

35

40

45

No potential Little potential Avergae potential Great potential Very strong potential

How do you see the future potential of the agricultural machinery market in Africa, % ?

EXPECTED MARKET POTENTIAL IN THE NEXT 5 YEARS

EXPECTED MARKET POTENTIAL IN THE NEXTS 5-15 YEARS

72.6%

49.6%

What needs to improve in Africa for your company to get more involved/invest more?

Government

•Policies and regulations

•Business environment•Political and

economical stability •Development

mechanization strategy•Reduced custom tariffs• Less corruption•Develop basic

infrastructure

Finance and Market

•Credit availability•Reliable banking

system•More stable currencies•Payment issues and

line of credits•Market dynamics

knowledge

Industry

•Develop dealership network

•Companies needs to know better each other

•Exhibitions, trade fairs and B2B meetings

• Local production• Field testing of

equipment

Farmers and skills

•Technical know-how –education

•Change in the Agricultural methods

• Focus on quality rather than price

•More commercial farmers

•Awareness on technology



0

5

10

15

20

25

30

35

Not important Of little importance Of average importance Very important Absolutely Essential

How do you see the role of public-private partnerships in developing sustainable mechanization in Africa, % ?

CURRENT IMPORTANCE EXPECTED GROWTH IN IMPORTANCE IN THE NEXT 5 YEARS

Which best practice features come to mind when thinking about successful PPPs on ag mechanization in Africa?

• Exhibitions• Knowledge

sharing

• Clusters• Assembly

lines

• Technology centers

• Demo farms

• Access to credit lines

• Risk sharing

FinanceEducation/

skills

CommunicationLocal manufacturing


Concluding remarks5



Doing nothing is terms of promoting agricultural mechanization in SSA is not an option

Support is critical given the range of different

challenges on the ground

A new approach is needed:•Reinforce institutional support

for agricultural mechanization in a new form

•Strengthen cooperation with the private sector

Main Pillars: A tailored, inclusive and integrated approach for agricultural mechanization in Africa

Tailored

• To local/regional conditions and needs. This means that different aspects are considered such as the local farming system and farm practices, existing farm infrastructure, as well as the broader socio-economic situation of farmers.

Inclusive

• Benefits must reach farm holdings of different types and sizes and the overall rural community.

Integrated

• Broader approach which foresees public-private partnerships and the active participation and support of farmers and other key agri-business stakeholders (food processors, industry producers, and financial institutions such as the World Bank).

Capitalizes on renewed impetus for growth and development through increased agricultural

investment

Make agricultural development and food

security policies,strategies and programs

as well as national African

agricultural policies “mechanization smart”

Promote greater inclusion of the private

sector in public/institutional

activities by enhancing PPPs

Source: Based on CEMA, 2014

Thank Youwww.worldbank.org

http://www.worldbank.org/�

awakening africa’s sleeping giant prospects for advancing inclusive and sustainable agricultural...

Presentations & Public Speaking