Paving the Way to Stability
1 April 2011 Africa’s challenges are well documented and widely discussed, yet optimism about its potential continues to bubble up from industry, governments, and increasingly non-governmental organizations (NGOs). In the past decade, these NGOs are moving the needle on some of Africa’s most critical issues, including infrastructure, trade harmonization and agriculture.
Improving distribution is instrumental to the continent’s ability to nurture industry, stabilize borders and facilitate better trade policies. In East Africa, a precarious and inefficient port system is the first barrier to trade in the region. The instability surrounding ports in Sudan, Somalia and Eritrea often pushes imports to the region through Djibouti, Ethiopia; Mombasa, Kenya; and Dar el Salaam in Tanzania. Because of their relative stability, these ports are often inundated with heavy and unpredictable volumes, resulting in congestion and the subsequent inefficiencies for imports and exports alike.
Transportation on land is perhaps a larger frustration. Lacking a true freeway system from country to country, piracy is incubated to crisis levels along its myriad rural routes. The overwhelming majority of Ethiopia’s imports and exports move along the Addis Ababa-Djibouti corridor, a 925 kilometer trek that typically takes three to four days.
According to a 2008 survey of the East African Business Council, truckers traveling between ports and inland cities will encounter dozens of weigh stations, checkpoints and roadblocks that require payments and bribes to pass. About $8 million is paid to police and opportunists each year in unforeseen transport fees. A February report by the NGO TradeMark East Africa says about 75% of the value of exports can be lost to transportation costs, which is up to 70% higher than transportation costs enjoyed in developed countries.
Even more troubling might be the estimated 12 hours per trip that can be occupied by these stops. For agriculture, these delays can be critical considering the lack of refrigeration infrastructure for perishable produce and horticulture exports.
Improving Infrastructure
However, conditions are improving, drastically in many areas. The roads themselves have been a focus for investment and prioritized by many as a pathway to better stability, economic growth and prosperity for the region. The region’s major transcontinental routes are the Logos-Mombasa corridor, which runs east-west through Kenya and Uganda, and the Cairo-Gaborone corridor, which runs north and south like a backbone through East Africa. Improvements are currently underway to improve these roads, which are not entirely paved throughout the region and plagued with broken asphalt in many parts that are.
The widely publicized Thika-Nairobi Road upgrade ($360 million) is a key example of how better infrastructure is being developed to encourage commerce and trade. The road serves as a gateway to Northern Kenya and neighbors Ethiopia and Somalia, and forms a vital stretch of the trans-Africa highway.
A multibillion-dollar project in the port city of Lamu in Northern Kenya is underway, funded in large part by the Chinese government to facilitate trade. The East African Community (EAC), a key trading bloc, agreed in March to funnel $4.1 billion into the region’s highways. The Northern and Central corridors, which run from Mombasa and Dar es Salaam, respectively, anchor trade for the region as well as international trade.
In Malawi, recent government initiatives targeting improvements in the road infrastructure, together with private sector participation in telecommunications, have begun to drive private investment. A Millennium Challenge Corporation (MCC) Compact approved in January 2011 promises to significantly improve access to power; electricity sector negotiations also have been underway with the World Bank.
These investments are enormously significant not only because they are of crucial necessity, but also because they show the increasing cooperation and homogeneity of the nations that constitute EAC: Tanzania, Kenya, Uganda, Malawi, Rwanda, and Burundi. They also represent an acknowledgement by the region of the importance of regional stability as a driver for international trade and harmonization with the rest of the African Union, including COMESA (Common Market for Eastern and Southern Africa), which EAC formally joined in 2008.
About Agriculture
These improvements are key for facilitating better agriculture trade, both for inputs moving into the region and commodities moving back out. Currently, 18 projects are underway, including energy, health and agricultural schemes organized by national governments, regional trading blocs and some NGO investment. The improvements are drawing private investment into the region as well, as corporations are more likely to sink money into the region with improving stability and greater demand for food due to a growing population.
Not only is the population expanding, but the lion’s share of workers depend on agriculture for their livelihood. Ironically, despite the sheer number of farm workers, the region’s food security is as precarious as anywhere in the world because it is so dependent on weather patterns. The solution is to optimize the yields on the region’s arable land by bringing small shareholder farmers better technologies.
In the same ways NGOs are stepping in to finance the region’s troubled infrastructure, a surge of investment is making its way into agriculture as well. Plagued with insufficient government funding for agriculture for decades, NGOs are paving the way for more regular investment from governments and private industry alike.
Notably, the Alliance for a Green Revolution in Africa (AGRA), headed by former United National Secretary General Kofi Annan, is creating programs that nurture the distribution of agriculture inputs across borders. The organization focuses on four key areas: seed, soil fertility, market access for agriculture businesses and policy reforms that give farmers access to the best technologies and financing.
• Africa: About the Region
“Kenya has one of the highest uses of crop inputs in the region,” Dr. Augustine Langyintuo, policy officer for AGRA, told FCI at his office in Nairobi. “But even if you have good soils, the right crops and good technologies, sustainable agriculture will not succeed without policy that is conducive to that goal.”
AGRA’s reputation for coalition building makes it a lightning rod for intergovernmental discussion on furthering agriculture infrastructure, which ranges from roads and refrigeration to seed and crop inputs. The organization will play a key role at the FCI Trade Summit’s Policy Roundtable on May 16 in Nairobi.
AGRA, whose board members include the Bill and Melinda Gates Foundation and the Rockefeller Foundation, represents an emerging sect of NGOs that use private money exclusively to enact change. Part of this investment runs through an agro dealer network that it is helping to administer along with CNFA, which specializes in developing the value chain through private investment. More than 6,000 CNFA-certified agro dealers reached more than 3 million small shareholder farmers last year in Africa.
CNFA, also funded by the Bill and Melinda Gates Foundation, works primarily in enterprise development to create sustainable agriculture businesses to drive better food security and encourage more private investment into agriculture. It works to create better distribution of agriculture technologies to farmers, which in turn creates better yields and better farm incomes. CNFA will also be part of the FCI Trade Summit program in Nairobi.
Not-for-profit IFDC also focuses on the value chain in East Africa. Its work in creating better fertility in the region serves as a template for best practices in distribution, and its Extending Agro Deal Networks program is expanding its focus to distributing crop protection products and seed as well.
Like AGRA and CNFA, IFDC drives the adoption of agriculture technologies and best practices to create better agriculture businesses and farm incomes, and its new initiative is taking the guesswork out of purchasing for farmers by offering them price reports from various regional agro-dealers. AMISTA, improving access to market and technical information in East Africa, is a website that logs prices for crop inputs, including seed, fertilizer and crop protection products. It collects monthly data about key inputs sold so farmers can feel confident about purchasing products from their local dealers. The goal behind the program is to create more transparency and confidence in the purchasing chain and ultimately create better adoption of these technologies with small shareholders.
“There is an information gap at the farm level, and farmers will not use the appropriate inputs without the knowledge and information necessary to make good purchasing decisions,” says Philip Karuri, project coordinator for IFDC’s Extending Agro Dealer Networks Program. “AMISTA creates an information system for input management and price information that allows farmers to create linkages with the value chain, which ultimately helps the entire system.”
The AMISTA data center, which IFDC administers on behalf of COMESA and EAC, provides international, regional and local prices for key inputs, as well as production statistics, trade statistics and directories of agriculture dealers, importers, exporters, and service providers. IFDC will also share its expertise with Trade Summit Delegates in Nairobi.
What’s Next
When looking at East Africa, it becomes clear that industry must rely on the organizations that are effecting change to blaze inroads into distribution and market access for both imports and exports. The landscape is diverse, fragmented and prioritized by a litany of shareholders. Like other emerging economies, vetting and selecting the right distribution partners will ultimately facilitate success.
And Africa holds its own requirement: Businesses that intend to profit from the region must show a sincere investment into the region with capital and genuine passion for creating better options for the value chain and farmers. The region needs education about products, agronomy and sustainability. Businesses that are willing to provide this intellectual and social investment will be the ones with the market share in the end.
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