Agricultural Trends in Africa

October 3, 2018

 

When we think of Africa, a few things come to mind and agriculture is at the top of the list. Whether it’s the lack of arable land, the archaic dependence on rainfall, or the increasingly heavy investment from developed countries - agriculture is the livelihood of Africa and the African people. It is the past, present, and future of the world’s most populous continent and will continue to accompany Africa in every aspect of society as it has from the beginning of time.

 

Understanding the role of Africa in the changing economic landscape of the global agriculture market is crucial moving forward. Africa will have a big part in agriculture trends as issues such as population growth, land scarcity, and climate change continue to climb to the top of global concerns. In response to the aforementioned responsibilities, among others, Africa has experienced a shift in agricultural trends that could potentially shape the future of the agriculture industry worldwide.

 

Increasing and changing international demand

 

Food demand is expected to increase between 60% to 90% by 2050. This will be in response to the projected population growth of 9.1B in 2050. In order to keep up, farmers worldwide will need to either increase the amount of land used to yield crops or increase production of existing lands by utilizing technology and improved farming methods. For Africa, projected to be home to 2B of the population by then, agricultural and farming productivity needs to increase more than the global average in order to sustain the African population.

 

While African governments have implemented an array of policies in order to stimulate and increase food productivity, they show little improvement. Many African farmers continue to use ancient farming methods on decaying lands hoping for different outcomes. Technology is favorable but most farmers in Africa operate such small farms that even if the financial burdens of technology didn’t exist, the amount of yield wouldn’t justify the operation.

 

The answer to Africa’s production problem will be answered with digital technology. As barriers of entry continue to decrease, markets worldwide are taking more of an interest in Africa and what its farmers have to offer. The connectivity, accessibility, and affordability of digital solutions for farmers have brought African agriculture into the global sphere by paving metaphorical pathways from African farms to international markets. Small farms in Africa will be able to participate in trade and production via cost models that they can afford.

 

Poverty Reduction

 

Since 1995, the African economy has been improving and in return, poverty has been reduced. Surprising, this has little to do with agriculture and its development in the region. However, in order to ensure that this pattern continues, large and wide investments in agriculture and small-scale farms will prove to be crucial for African poverty reduction.

 

It is widely understood by most economists that agricultural progress is a potent force in poverty reduction in developing countries, specifically Sub-Saharan African. In Africa, investing in agriculture has shown an increase in small-scale farms productivity, diversity in farmers’ income through value chain development, and the creation of jobs. As we proceed into an era of overpopulation and food insecurity, African countries especially should focus on increasing productivity of agriculture through market-based incentives and public support.

 

Using digital technology to link small-scale farmers to each other and to other markets could significantly increase the value of products and their incomes. We’ve only merely grazed the surface of the potential of African agriculture to contribute to national economies, create jobs, and boost the economy.


Alternative sources of agricultural finance

 

Lack of access to finance is a huge factor in African agriculture. In order to reach the goals set for Africa to feed its exploding population, finance for working capital is a priority to meet production costs across African farms of all sizes. Investments are necessary to stimulate agricultural productivity, commercial agriculture, and the development of agribusiness activities, such as supply, logistics, and trade.

 

Previously, commercial banks and financial institutions have been hesitant to finance agriculture in Africa because of sector-specific risks and transaction costs. Recent advancements have been steadily reshaping the way that African farms source finance for agriculture. Regarding bank risks, technology improvements in delivery systems are changing risk mitigation. The projected prospects for agribusiness are turning the African industry into an attractive opportunity, particularly for large banks.

 

Cooperatives have developed financial solutions around savings and loans, run by the people for the people, offering agricultural finance at a community, regional, or governmental level. Solutions include using information and communication technologies to reduce the costs of frequent small transactions by the populations in rural areas.

 

Avenews-GT supports African agriculture

 

Avenews-GT empowers commercial sellers and buyers of agricultural produce to participate in the global market by providing a blockchain powered platform that integrates agri-trade management tools and streamlines transactions of agricultural produce in a secure and transparent ecosystem.

 

Avenews-GT recently participated and greatly contributed to a project for streamlined agriculture trade in Kenya. Several factories, combined more than 50,000 farmers, used the platform to create transparency throughout the trade process and to receive financial services from a major African bank based on validated and immutable trade data registered on the Avenews-GT blockchain application.

 

As seen in the Kenya project, the unique tools on the platform enable commercial sellers and buyers of agricultural produce to transact directly with each other locally and worldwide, simplify transaction processes, reduce distribution costs, create financial security and increase supply chain transparency.

 

 

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