Agriculture is a key driver of economic growth and development in sub-Saharan Africa, yet investment remains limited and the sector dominated by small-scale producers. Expanding the large-scale agribusiness sector could boost production and bring to Africa the fruits of a second green revolution.
East-African Experience
Big agribusiness has become increasingly prominent in East Africa in recent years, with the establishment of a number of large-scale plantations (and many more such developments being planned and negotiated with the region’s governments). This has been linked to the promotion of biofuel production in East Africa and elsewhere in sub-Saharan Africa.
Investment Hurdles
As well as increasing revenues from agricultural production–a key sector in East African economies–agribusiness is seen as a potential tool for increasing overall agricultural productivity. It is expected to promote better practice, improve inputs and create a more efficient infrastructure linking the rural sector more effectively into global markets. However, big agribusiness faces several key challenges in establishing itself as a significant contributor to African growth and development, and its long-term future is far from assured.
Infrastructure: Transport infrastructure in East Africa, especially that linking the member countries of the East African Community, remains weak, and significant investment will be required to support a large increase in export-oriented agriculture. Tanzania’s ports are already overloaded and subject to long delays; Uganda’s links to coastal ports are reliant on a single rail line through Kenya.
Political Realities: Protests against high food prices in 2008 have targeted the use of land for biofuels rather than food–some demonstrators in Kenya had to be disbursed by police with tear gas. Such resentment has the potential to feed into bouts of economic nationalism, as occurred in Tanzania during the 2005 election campaign and at the peak of the food price boom.
Politicians accused foreign companies of excessive profiteering and proposed legislation that would increase taxes and royalties on foreign investors. While nothing came of the rhetoric, such tensions are present throughout the region, and politicians have shown themselves only too willing to manipulate popular demands.
Economic conditions: Perhaps the greatest challenge large-scale agribusiness faces is the current economic climate. East Africa has been relatively insulated from the global economic shocks so far, but the crisis may result in a fall in donor assistance, which is critical for rolling out a second green revolution. Credit is already difficult to access for the agricultural sector in East Africa, and this is likely to worsen in the short term.
