An array of facts and features characterizes the reality of the agribusiness sector in the Eastern and Central African Region.
First the region is blessed with some of the best natural conditions and resources for the exercise of agriculture: excellent temperature and light regimes, varied agro-ecological zones, vast extensions of virgin land with soils of excellent conditions and sound water resources. The ideal scenario for the growing of virtually all kind of crops, all year round, at the highest productivity levels and lowest production costs.
Population rises rapidly in the region and it is expected to keep rate for some years to come. This will challenge the respective states to deliver all basic services demanded if social standards are set to be improved or at least maintained, being the very first demand of all, the assurance of sufficient food for all.
An additional phenomenon linked to demography is happening and expected to grow sensibly: the migration of the people from rural areas to urban CENTREs in search of better conditions of life.
This will transform the food markets. First, in its size as a consequence of a growing demand; urban food markets are set to quadruple in the next two decades in this region of Africa. Second, the type of products demanded from the urban market are totally different to those in the average and rural populated areas. Urban consumers demand more processed, convenience and varied products with an upgraded quality; in summary, more added value products.
All this together represents unprecedented opportunities, and for sure changes, for upstream and downstream agribusiness industries.
On the other end of these prospects, is yet to be seen the evolution of poverty. Different estimates point that 46% of the population in Kenya and 26% of Uganda live below the poverty line. Food security is still a challenge for a significant part of the population in the region. Efforts from local governments and foreign parties will continue in their pursue of securing food availability to a greater number of people and make it consistently.
Different and profound are the reasons for which rural property structure has become a major constraint for the capacity to generate wealth of the agricultural access to financing for mechanization and improvement, the result is a subsistence agriculture dominating the industry. The producers structure is dominated by smallholder farmers with 70% of production and 30% down to medium and large scale farmers.
Export of agricultural products gather huge potential because of a number of favorable factors, such as competitive costs and geographical location considering the condition of poorly supplied demand of the vast market that means the rest of African countries. Beyond, there exist further potential in countries such as the Middle East and Europe. But the paradox is that probably the most attractive opportunity may be in the home market, given the lack of supply that exists for a growing and changing demand.
The access to agricultural production inputs has become a major constraint. Low quality, high prices and inconsistent supply chain of essential elements such as seeds, fertilizers and agrochemicals are among the reasons for the low yields of African farms.
Many are the voices in the debate of climate change world wide and varied the assumptions on the effects of it in agriculture at global scale. However, the places of the planet where agriculture is less mechanized and more dependent on climate are undeniable the ones which suffer most. This is the case of Eastern and Central Africa, where rain fed agriculture is predominant.
A chapter of fundamental negative effect on the agribusiness sector in the EAC region is the poor condition of the main infrastructures. Paved roads account for a tiny fraction of the total inventory of roads; some categorized main roads are unpaved, which in a tropical region means that are impracticable for a major part of the year, causing great disruption to traffic and making specially painful and costly the merchandise transport.
Railway lines are too limited in coverage and quality of service is poor in reliability. Irrigation networks and storage infrastructure and facilities are far behind the potential and demand for them. Public-private partnership, which so much success have experienced in other countries in the world in the development of irrigation infrastructure at large scale are basically inexistent in relative terms.
ICT Information and Telecommunication Technologies have experienced an impressive development in the EAC region in recent years if compared with other services and utilities. The rate of penetration of mobile telephones in all layers of society is very high, specially remarkable in the rural areas. The indicators on the number of users are still low compared to more developed countries, but the trend is clearly positive.
Energy supply is a major problem. Territorial coverage is too low, being the rural areas the most affected ones. Not only that, reliability and consistency of the service is poor. And that happens in a region blessed with outstanding natural conditions for power generation from hydraulic, solar and biomass sources, among others.
Processing, storing and market infrastructures and facilities are insufficient for the existing demand. The operative ones are mostly dedicated to a reduced number of main crops, such as tea, coffee, grain or sugar. Again public-private partnerships are poorly developed and coverage is minimum.
These condition of the essential infrastructure strangle the potential of development of the agribusiness industry like maybe no other factor.
Despite the importance of agriculture in the economies of the EAC countries, financial facilities are not adequate for the characteristics of the industry. Farmers find difficult and expensive to get financing for their activities; the most badly affected, the smaller ones.
There´s a deeply rooted lack of skills and knowledge in the professionals of all the layers of the agribusiness industry in the region. From basic farmer to managers and entrepreneurs, the problem is evenly spread in the system, keeping the performance of the farms and businesses at minimum levels.
Many reasons are involved, but the quality of education at technical, vocational, university and postgraduate level is a fundamental one.
The public sector plays a crucial role in the configuration of the agribusiness industry, due to its intervention in regulations, infrastructure, trade, education and policies of support to the sector. Fostering entrepreneurship and facilitating the consolidation of businesses should be a priority. The Ease of Doing Business Index (World Bank) indicates that there is significant room for improvement.
The Agribusiness Centre must be immersed in the reality of the EAC´s agricultural industry and it also must be oriented to supply the significant lacks that nowadays the sector suffers, specially in subjects related to training, the implementation of technology, the reinforcement of the commercial skills and the establishment of new business models in agriculture, so that it can become a relevant actor in the international context and being able to adapt to the world agriculture challenges.