In a 2013 blog post, Stephen Hayes, president and CEO of the Corporate Council on Africa argued that Africa produces more than enough to feed itself. However, many countries on the continent became net importers of food after several decades of being net exporters. Sub-Saharan Africa, today, has the highest level of undernourishment in the world. What went wrong? Hayes said it was infrastructure.
“… the ability to trade regionally and move food across borders is severely limited by lack of infrastructure as well as by the political difficulty of cross-border trade,” he wrote.
For several years, Africa has ignored this fact, treating agriculture as a developmental programme. But it is much more; agriculture is a business with a big value chain capable of creating the much needed jobs on the continent. One of the people to have realised this early is serial entrepreneur and philanthropist Tony Elumelu, who through his Foundation’s Entrepreneurship Programme, TEEP is investing in African entrepreneurs in various sectors, including in agriculture, as well as providing access to evidence-based insight on the African Agricultural sector.
At the recently concluded World Economic Forum on Africa which held in Kigali, Rwanda’s capital city, the Tony Elumelu Foundation launched a report titled Unleashing Africa’s Agricultural Entrepreneurs, with a focus on improving the enabling environment for agriculture.
The Nerve Africa met the Chief Operating Officer of the Tony Elumelu Foundation, Abimbola Adebakin, on the sidelines of the WEF in Kigali where we discussed agricultural entrepreneurship, the need to create a conducive environment for agricultural businesses to thrive and why everyone should collaborate to ensure the development of agriculture.
The Tony Elumelu Foundation Entrepreneurship Programme (TEEP)
The Tony Elumelu Foundation set up a $100 million programmeto identify and empower a thousand entrepreneurs every year for ten years and it is open to all sectors and all ages across Africa.
This is the only Pan-African programme that is sector agnostic, age neutraland one that has beneficiaries across Africa at this scale.
By no inducement whatsoever, what we found out when the 20,000 who applied last year and the 45,000 who applied this year did, was a trend that over 30 percent are in the Agric space. Because it is open to all startups, it gave us a good idea that those who are applying want to be in agriculture for commercial reasons. It is no more a hobby; this is as a commercial venture. Now, if you take 30 percent of 45, 000, we are talking about huge numbers.
— Tony Elumelu FDN (@TonyElumeluFDN) May 13, 2016
Specifically, 26.7 percent applied in Agriculture in 2016; that is over 12, 000 Africans. Now, if you do the demographics, that figure is spread largely amongst the youth since80 percent of the applicantsare in the youth category. So one distinct thing that has emerged for us is that the old paradigm of wanting to encourage the youths to be in Agriculture should be rested; that is no longer relevant. They are interested and are coming into agriculture actively to pursue it as a business.
So, government, policy makers, and organizations in this space ought to change their strategies, because if all you focus on is attracting the youths and the youths have been attracted, then the next step is to keep them in the sector and make it commercially viableso that we will begin to see millionaires and billionaires emerge in Agriculture.
For us, there is no more compelling story than when you bring out a success to showcase. So, how will they succeed? We identified eleven factors that we think are relevant to the success of agric entrepreneurs. And how did they come about? We surveyed over 300 of the 2015 Tony Elumelu Entrepreneurs in agriculture. From their responses and the examples they gave on the challenges they are having as well as their successes, we identified those 11 factors. If those factors are well addressed, then we will enable the environment for agric entrepreneurs to prosper.
Increasing youth interest in Agriculture
I think agriculture provides low entry barriers but when you get into it, to grow, to scale up, it provides you huge challenges. So if you looked at it from the outside, I think agriculture has low entry barriers. Secondly, agriculture makes sense. Our consumption pattern,as highlighted by recent leaders in the space, show a clear market and consumption capacity in Africa. We are not even talking about exporting products. In Africa, we are able to consume what we produce and we can pay good money for it. So, we see a gap in the production and consumption rates. When you consider all the figures that the youths are hearing daily of billions of dollars being spent importing from countries like Malaysia, Thailand and so on, they are seeing it as an opportunity for them to get into the space for profit. We have thousands of entrepreneurs that applied with business in poultryand consistently they stated they could not meet demands. So market demand is clear to them. Those of them that are playing in the field tell a story of not meeting the demand and thussay “come and join us”. But what accelerator programmes like us aim for is to elevate their minds from small subsistence practices to large ticket viable agricbusiness. That is where the impact will be felt.
The TEEP Agric report
The report shows you the demographics, shows you the areas of need, it shows what theagric entrepreneurs are doing, it showcases, even with clear graphics, their businesses, then it now begins to take their feedback to the questions. You wonder, where you are focusing in within the Agriculture value chain? because, that really matters. If majority of them are in the basics in Agriculture and they are not moving along the value chain, then you know you still have a lot to do. If however they are spread evenly, then you know you have good numbers in all the relevant aspects. So what we found is that we have good numbers across the relevant aspects; majority are still in basic crop production and animal husbandry, but we are having good numbers in aggregation, in storage , transportation, in processing and some who are doing the basics are also adding on processing and storage. Iit’s a good thing and a bad thing. You spread yourself thinly if you have to do all the things. If they could have centres that are open where they’d say“Okay, let me focus on production. I know where to take it to for cost effective processing, I know where to be for cost effective distribution, I know the market leaders and I know all my offtakers.” What happens is that the system becomes more efficient and all the parties make money from it. But right now one of the things you find is fractured value chain, so they are having to make up for the fracture in the value chain.
Fractured value chain: whose fault?
You can’t focus on one party and say it is the fault of the government, or the development agencies, or the institutions that were set up to do it or even the Agric entrepreneurs themselves. It’s a collective burden and the burden must be shared. What we are simply putting out there is that when we share the burden, we must know whose role is what and know what we are addressing so that we are not beating about the bush and at the end of the day there is no impact to show. Billions of dollars are spent, yet they are not addressing the issues.
Impact of Tony Elumelu Foundation’s work
If you were the one looking for the impact, you will say “okay, we have talked about training, and the fact that we need more extension services, we need more practical training, more Agric schools,” what you will do if you wanted to measure impact is you look at the base line, then over the years, you do a longitudinal study and say “based on this and the work of so and so agency, this has come out.” You do it over a long period, like ten years, to assess true impact.
Agricultural Entrepreneurs face similar challenges across Africa
WE identified generic problems that you could have in Uganda, Nigeria and Ghana. They are not peculiar to one country. For example, access to market is a pan African issue. Also, access to equipment; because equipment is such a key input into agriculture, it helps to reduce time spent, and it increases productivity. Now, many of the farmers want to go from being small scale to large scale but the amount they have to invest to have the kind of equipment they need will run them bankrupt. So, what they need is access to lease financing, access to joint shared services were they could probably borrow for a period, and access to new equipment, access to locally manufactured equipment, so that they are not open to foreign exchange sensitivities. So those are the kind of issues identified, and they cut across Africa.
Private equity and entrepreneurship
Private equity is needed. However, I think there is a need to increase the capacity of our agricultural entrepreneurs so that they can access the serious money that private equity wants to put in. Managers of Private equity incur a lot of cost before committing, so they would rather deal with bigger tickets than what is available currently. So, we need to increase the capacity of our entrepreneurs. Maybe we accelerate their organic growth so that they stand individually or we can put them in cooperatives, so that they can collectively access this private equity. On the other hand, private equity probably sometimes has its own agenda and that agenda may not be informed from evidence. So, this sort of research that we’ve done provides them evidence, so that were they need to tweak the agenda, they tweak it.
I remember, two weeks ago, we were going to meet the Governor of Ogun State, and one of the people in the programme couldnot made it; he is in Bangladesh right now. He said, “please tell the Governor to issue C of Os.” He has a huge poultry in Ofada area (in Ogun State, south west Nigeria). So what we are doing is that we are bringing the entrepreneurs close to those who can make a change. Therefore, in our research report to the Governor, we quoted this farmer. What we can do is keep letting those who are policy makers and game changers know what the demand is. We went with about 35 entrepreneurs and 22 mentors to meet with him. There and then, he handed them over to the Commissioner for Commerce and Industry, who showed us an array of programmes they were doing that the entrepreneurs could tap into. He demonstrated that there was a free trade zone that was coming up and showed us additional funds available through their partnership with the Bank of Industry. Now, those are the things that government can do. So, they have a role to play. Now, in land, government must sanitize the process of land acquisition for agric business, clean it up, remove opacity, because opacity is really the bane of our development in agriculture. Access to things that you need should be so clear … like here in Rwanda, when you want to start up a business, you go there at 7am, you get your business registered at 12 noon. Can you apply for your land papers at 7am and get it at 12 noon? Agric entrepreneurs want agencies that are responsible to make the process that clear. So, all can learn from other jurisdictions; what are they doing, not necessarily in land, but other industries, then carry it and apply it in agriculture.
The role of ICT
Remember I told you that the program is sector agnostic, so within the Tony Elumelu Foundation’s entrepreneurship program, we have those in ICT whose solutions are addressing issues in various sectors. They are positioning ICT as an enabler. We are bringing the ICT entrepreneurs to see the problem in the agric industry and they are addressing them. The foundation will keep connecting as many parts as we can. If we speak to ICT companies and they understand what we are doing, and they can plug into what our entrepreneurs are doing; they can provide a solution. But our focus now is unleashing the entrepreneurs to see that their solutions can improve Africa.
Role of commodity exchanges
The problem with being small is that your capacity is limited for opportunities. Opportunities exist, just as money exists. So, there are companies who want to buy grains … they want to buy sorghum, maize, but your capacity is too small, you are not showing in the radar. Commodity exchange comes to give you confidence that when I produce this, it will be bought off me and then you invite Mr. A and B you invite twenty others; they are fifty… all the cooperatives and so on, they need the commodity exchanges to buy from them, to assure them ahead that their product will be purchased. And these exchanges can work on multiple products. So, if I was a buyer, I will go to the commodity exchange first, rather than looking for twenty multiple farmers. So, the role of the commodity exchange is so vital. We need them and they need to wake up and improve their activities so that the farmers can benefit from them. But some progress is been seen. We have programmes in East Africa where all the farmers, for example, in dairy, come together under their cooperatives; the banks are funding the buyer to purchase and there is no exchange of money; they are just knocking off on point. So, if you are producing, the cooperative is making money from providing the truck that is trucking all around and it is also linking up with the buyer. The buyer knows they get their dairy products for production…. At the end of the day, the bank then pays the difference to everybody and money is made.
Government has its own role to play. I’d rather government set up the infrastructure that the private sector will come to use and leverage. I’d rather there are more programmes like the Tony Elumelu Entrepreneurship Programme (TEEP), that shows the farmer it is not just about accessing money, but the training, the mentoring, the connection and the support that you can get; those are the values TEEP brings and if there are more programmes like ours focused on the Agric sector, I think when talking about the government, we are talking about all of us playing our roles in improving the sector.