Is Asian agribusiness example perfectly suited to Africa

Is Asian agribusiness example perfectly suited to Africa

More practicality, less nit-picking

Most African food and agricultural markets are fragmented along local or national lines, so that the same crops travel along the same supply chain each year. Greater integration could enable small scale producers to gain higher prices for their crops.

In July, the United Nations Conference on Trade and Development (UNCTAD) recommended that sub-Saharan Africa should seek to emulate Southeast Asia in terms of promoting agricultural processing and R&D. The basis of agricultural development in the region was regional cooperation, with the Asian Development Bank helping to fund many projects. Countries sought to share facilities and cross-border transport links were improved. In addition, poorer countries in the region, such as Laos, were given extra financial support to help food manufacturing companies in their own country.

Taffere Tesfachew, the UNCTAD director for Africa, says: “What we found interesting was that it went beyond trade to include a common industrial policy, common investment policy and pulled up the poorest countries. We thought it was something African countries can learn from.” 

It is easy to understand why the countries of the Mekong Delta were chosen as a model for Africa, as the focus of its agricultural development model was precisely what the African continent lacks. Just 17% of all trade in food by African countries involves another African country. By contrast, most Asian, European and North American trade in food involves another country in the same region.

The UNCTAD report states: “Success in boosting intra-African trade will depend largely on the extent to which countries are able to foster entrepreneurship and build supply capacity, establish a credible mechanism for dialogue between the state and business, build regional value chains, implement existing regional trade agreements, rethink their approach to regional integration, and maintain peace and security.” 

David Kruyer of Concargo Global Logistics agrees: “There needs to be an ongoing drive to foster total regional economic integration in Africa. An imbalance in inter regional trade between the different countries due to the lack of manufacturing and production facilities also impacts negatively on transport costs.” 

Yet African governments have been reluctant to reduce trade barriers. There are eight regional trade blocs on the continent, each with different rules and regulations on cross-border trade in agricultural produce and processed food. As a result, there is very little trade between West and East Africa, for example, so that Kenyan farmers would not consider marketing their exports in Nigeria but would target South Korea or the UK.

In addition, new seed and fertiliser varieties are tested for up to three years before being licensed by individual African countries. Yet even when proved successful in one country, other governments usually begin the whole process again before sanctioning use. This is a waste of valuable time and money. What is needed is more hard-headed practicality, as the Asians have demonstrated, and less bureaucratic nit-picking. 

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