Challenges facing the agricultural sector in Africa.. Where does the solution lie?

Agriculture in Africa is witnessing a sharp paradox; Despite being one of the most important sources of potential strength on the continent, its presence in the global food market is still limited, which reveals a profound development challenge that reflects on food security, living standards, and the ability to achieve Sustainable Development Goals (SDGs). This situation raises a fundamental question about the reasons for the decline in the performance of this vital sector, and how Africa can regain its position in global agricultural trade.

The potential of agriculture in Africa and the challenges of reality

Africa has nearly half of the world’s arable land. Most of these lands are suitable for growing crops, and are not protected or covered by forests, and large areas are characterized by low population density. A study at Strathmore University indicates that the African climate allows the production of up to 80% of the food consumed around the world, which is supposed to give the continent a strong competitive position in agricultural trade.

But the reality is completely different; According to the same study, Africa’s share of agricultural exports has declined from about 8% in the 1960s to only 4% in the current decade, according to World Bank data. This decline not only affects agriculture in Africa, but also limits the continent’s ability to achieve the Sustainable Development Goals (SDGs), especially eradicating poverty (Goal 1) and ending hunger (Goal 2).

Despite this challenge, many governments have not given the issue of agricultural exports the required attention, as the agricultural sector receives only about 4% of government spending, even though it is the largest contributor to the domestic product and employment. The percentage is slightly higher in Mali and South Sudan, but remains less than 3% in Kenya and Ghana. The widespread focus on industrialization as the fastest path to global integration has led to a decline in investment in developing agriculture in Africa.

However, this sector remains capable of leading economic integration if countries adopt clear reforms that include: strengthening financing facilities, documenting land ownership, developing cross-border policies, and making effective use of international trade tools. These pillars represent the basis for building a more sustainable and efficient agricultural system, which supports responsible production and consumption (Goal 12) and improves the management of natural resources (Goal 15). Below is a detailed analysis of each reform separately:

First – Improving financing facilities

The lack of financing represents the most prominent obstacle to the expansion of agriculture in Africa and the development of agribusiness. Financial institutions are reluctant to lend due to high risks, long investment cycles, and weak guarantees, in addition to the sensitivity of profits to price fluctuations. According to World Bank estimates, the agricultural sector receives only about 1% of commercial financing, despite contributing between 25% and 40% of GDP, while the percentage rises to only 6% in Nigeria and Ethiopia. Food and Agriculture Organization (FAO) data also indicates that interest rates on agricultural loans in Uganda are often more than double the national average.

Despite this reality, governments can reduce the financing gap by directing direct investments to the sector. In 2024, Kenya allocated $7.7 million to support the tea industry, while the Tomato Jos Project in Nigeria succeeded in reducing tomato paste imports by about $360 million annually, reflecting the impact of local investment in reducing dependence on imports.

Enhancing agricultural financing requires expanding government lending, in addition to enabling the private sector to participate through risk distribution mechanisms. The Khula Credit Guarantee Scheme in South Africa is an effective model for financing vulnerable farmers by providing government guarantees. The same model has been applied in Kenya and Tanzania with support from the European Union and development banks, enhancing farmers’ access to finance.

On the other hand, private financing has recorded remarkable growth in recent years. According to the aforementioned study, both Nigeria and South Africa will attract about $500 million in venture capital investments in 2024. The continent has also witnessed a rapid expansion in the establishment of startups at a rate six times higher than the global average, while loans from micro-lending platforms have exceeded $8.5 billion, in a clear indication of the rising role of innovative financial solutions in supporting the agricultural sector.

Second – Documenting land ownership

Land ownership remains one of the biggest challenges to the development of agriculture in Africa; More than 80% of arable land is undocumented and is managed according to customary systems that are not linked to a clear legal framework. This situation limits farmers’ ability to use their land as collateral for financing, weakens investor confidence, and delays ownership transfers that take twice as long and are twice as expensive as in OECD countries.

Over the past years, multiple reforms have demonstrated the importance of official land documentation. In Ethiopia, issuing ownership certificates to about 20 million small farmers has stimulated the agricultural rental market and increased land use efficiency. In Malawi, the redistribution of approximately 35,000 acres contributed to increasing household income by 40%. As for Mozambique, Uganda and Liberia, their governments recognized customary institutions within the legal framework, which facilitated the conclusion of formal land contracts. In Rwanda, a comprehensive land mapping project enhanced transparency, increased investment attractiveness, and improved agricultural resource management.

Third – Establishing cross-border policies that focus on export requirements

Regional and global markets need different strategies to ensure the success of agricultural exports. For example, internal trade between African countries benefits from geographical proximity, standardization of regulations, and facilitation of the movement of goods, and trade simplification measures in the East African Community have increased dairy exports within the region by about 65-fold in just one decade.

But the bulk of Africa’s agricultural exports are headed to markets outside the continent, which requires significant investments in infrastructure and logistics services to maintain the quality and speed of arrival of products. Senegal’s agricultural exports rose by 20% annually after investing in express shipping, while Ethiopia’s expansion of flower cultivation relied on the development of air transport and cold chains.

Agricultural policies also need to be crop-oriented. Kenya’s avocado export strategy has made the country the largest exporter in Africa with strong and stable annual growth. In Mali, the mango export policy helped build a value chain capable of competing in European markets.

Fourth – Employing trade policies to raise the level of exported products

Most African agricultural exports still depend on low-value raw materials. In Nigeria, despite being one of the largest producers of tomatoes, most of the production is exported without being introduced into any local industries, so the country imports tomato paste from abroad. In Kenya, although tea is its most important export, only less than 5% of it carries local brands, which loses a significant amount of its market value. Here comes the role of trade policies that can address this imbalance by stimulating local manufacturing and product development before exporting them.

The East African Community succeeded in providing a clear model for this transformation by implementing a gradual customs structure that reduced duties on intermediate goods, while providing thoughtful protection for the local food manufacturing sector, which encouraged increasing value added within the borders before the goods went out to foreign markets. Governments can adopt similar policies, such as imposing taxes or restrictions on the export of unprocessed raw materials, to push producers to develop higher quality products.

But any trade policy will not achieve tangible results unless it is supported by real investments in manufacturing infrastructure. Countries such as Botswana, Uganda and Ivory Coast have tried to impose a ban on the export of raw materials, but the results have been limited due to the absence of specialized factories and the necessary infrastructure to develop local industries.

Crucial Shift

The agricultural sector in Africa represents a huge development asset that has not been properly exploited, despite the continent’s vast lands, a favorable climate, and domestic demand that is increasing at a remarkable pace. Despite these components, Africa’s presence in global agricultural trade is still far below its potential, as a result of institutional accumulations that have hindered the sector’s growth and weakened its competitiveness.

This article presents a practical agenda to reverse this trend, based on four clear pillars: enhancing financing facilities, documenting land rights, and implementing cross-border policies that support the movement of agricultural goods, in addition to employing trade in a way that supports local manufacturing. Adopting this transformation as a strategic choice – not as a temporary measure – is what will give the continent a real ability to liberate its energies, improve its economic position internally, and enhance its presence in global value chains.

The agricultural crisis in Africa today represents a turning point in the continent’s development path. Developing this sector is no longer just an economic option, but rather a necessity to achieve fundamental global goals such as eradicating poverty (Goal 1) and completely eliminating hunger (Goal 2), as enhancing financing facilities, documenting land rights, improving the regional structure of trade, and supporting local manufacturing, all form the basis that can reshape the future of African agriculture.

The Earth Guards Foundation believes that empowering farmers, developing sustainable production systems, and building fairer value chains is the real way to transform Africa’s enormous agricultural potential into a development force that will lift societies out of the cycle of hunger and poverty, and give the continent a stronger position within the global economy. With a serious shift towards comprehensive agricultural policies, Africa can move a step closer to a more food secure and more sustainable future for its coming generations.