What African agribusiness can learn from Brazil
Over the past year, we’ve seen the strength of various economic sectors across the globe being tested by the pandemic. Through this, the agricultural sector has remained robust, especially in Africa and South America, writes Natalia Dias and Yinka Sanni.
Over the past year, we’ve seen the strength of various economic sectors across the globe being tested by the pandemic. Through this, the agricultural sector has remained robust, especially in Africa and South America.
The African continent is gearing up for high population growth and increased urbanisation over the next 20 to 30 years. Fifty percent of the African workforce is in agriculture, two thirds of the world’s arable land lies in Africa, and the sector accounts for 14% of GDP in Sub-Saharan Africa, making this a key sector for investment and growth.
There is massive demand for agricultural commodities from Africa, and both Africa and Brazil have the raw materials and supply to keep up with the demand for agricultural goods but also need to ensure that they are not left behind. Food insecurity is a concern in Africa that is particularly well understood by Brazil, having experienced this in the past.
The private sector has been vital to building up Brazil’s agricultural sector, through both capital and technology investments. Brazil has gone through similar challenges to Africa, brought on by a growing middle class, an increase in incomes and trying to feed the world.
Brazil is one of the most relevant agriculture exporters worldwide. The country is one of the leading producers of soy, sugar, corn, ethanol, orange juice, coffee and animal protein due to huge investment programs with cooperation between private companies and public sector such as universities and research agencies.
Since the 1970’s, Embrapa, a Brazilian research centre funded by the government, developed innovations and technologies that made it possible for the Cerrado (the Brazilian savanna) to be used for soy and corn farming. The result was an immense increase in productivity that gave competitive advantage to Brazilian companies.
Through increased cooperation between Latin America and Africa it is possible to share insights and identify solutions that have benefits at both a local and national level, creating much needed value on the ground.
We believe that Africa has a clear opportunity to refresh its approach to the sector and become an emerging force. However, agriculture investors are looking very closely at ESG concerns and prioritising the positive social and environmental outcomes.
There is a need to preserve natural resources and take care of distribution so that all involved benefit; including those that work on farms, consumers and businesses.
One way in which Standard Bank is addressing ESG concerns in the agricultural sector, is through the Climate Smart Agriculture programme being run in partnership with UN Women. In October 2019, Standard Bank and UN Women partnered to empower over 50,000 women farmers in Malawi, Uganda, Nigeria and South Africa through modern and environmentally friendly farming technologies that increase productivity and incomes.
Through the Climate Smart Agriculture collaboration, women farmers, authorities, local farmer organisations and cooperatives are addressing the structural inequalities in rural economies in Africa, starting with the difficulties that women face in securing tenure for quality farmland.
Through the use of new technology, Brazil has been able to tropicalise specific seeds, which has given the country a massive competitive advantage in terms of exports. As this technology advances, there is reason to believe that Brazil could become the world’s largest exporter of agricultural products.
While these advancements are good news for Brazil, we are seeing a lack of engagement between the country and other emerging markets, especially in Africa. There is a vital need for a more open dialogue between Africa and Brazil to learn from each other and create the connections that will help in further growing Africa’s agricultural sector, amongst others.
This is why four years ago, Standard Bank Group started hosting the annual Focus on Africa conference, to bring together investors, policy makers and business leaders to share experience and expertise.
Africa has a thriving digital ecosystem. It is estimated that there are more than 600 technology hubs in the continent, more than double the numbers from 2016, and around 400 fintechs, 80% of which are “made in Africa.”
Africa has been able to leapfrog technology before with great success, and there is an opportunity for the continent to achieve this again in one of its strongest sectors.
Africa’s agricultural sector is primed for growth thanks to an abundance of natural resources, innovation in agritech, and a concerted focus on environmentally friendly farming practices. Through further collaboration with other emerging markets, such as Brazil, Africa can take advantage of this growth opportunity.
Natalia Dias is CEO of Standard Bank Brazil Yinka Sanni is Chief Executive for Africa Regions, Standard Bank Group
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