With over 40 per cent of food lost between farms and markets, with two-thirds lost in the first mile, Africa’s supply chain ecosystem obviously needs total restructuring to remain relevant in the unfolding world economic order.
This is crucial as the economic impact of the food supply chain is critical for several reasons. For one, farmers want to get their products to the market and receive payment as soon as possible while consumers desire for food at reasonable prices.
However, the continent’s inability to address this dual challenge is the reason it is still a net food importer.
Despite Africa’s abundant natural and human resources, it spent $64.5 billion on food imports in 2016, with the African Development Bank (AfDB) projecting that figure would rise to more than $110 billion by 2025. It’s reliance on food from other continents is due to a lack of transportation, distribution and storage infrastructure. The distances between Africa’s food production centres (often in rural areas) and commercial hubs can be much greater than in other parts of the world, making it challenging to implement distribution models perfected elsewhere on the continent.
According to an International Finance Corporation (IFC) publication, a 1,000km journey in Africa typically takes six days, compared to 48 hours in other parts of the world.
There is, therefore, an urgent need to improve road and rail connectivity and reduce travel time between rural farming areas and food markets; large amounts of produce are wasted due to inadequacy in the rural road network. KPMG estimates that transportation costs in Africa are 50 – 175 per cent higher than in other parts due to poor infrastructure. Poor road conditions, particularly along the Economic Community of West African States (ECOWAS) corridor, cost Nigeria up to $1 billion (N2 trillion) per year, limiting the growth of inter-African trade.
Another issue plaguing Africa’s food supply chain is unreliable energy supply. According to the AfDB, over 640 million Africans lack access to energy, resulting in Africa’s lowest electricity access rate of just over 40 per cent. Farmers must invest in generators to power machinery and storage facilities to combat the continent’s lack of electricity. These investments come at a high cost to more than 60 per cent of Africa’s farming population.
Cooling within hours can extend the shelf-life of many fresh products from weeks to months and add logistical flexibility. According to a 2011 Food and Agriculture Organisation (FAO) report titled, “Global Food Losses and Food Waste”, the absence of a reliable cold chain accounts for an estimated 30 per cent loss in meat commodities and 50 per cent in roots, tubers, fruits and vegetables in sub-Saharan Africa alone. Post-harvest losses in perishable supply chains on the continent can reach up to 30 per cent.
The continent desperately needs efficient cold chain infrastructure close enough to bridge the time difference between the first and last miles. According to the Nigerian Institute of Transport Technology (NITT), an efficient cold chain infrastructure could save the country $9 billion annually and prevent the waste of 15 million metric tonnes of perishable goods.
To bring solutions these challenges, Africa must address its infrastructure gaps. According to experts, the continent’s agribusiness will be worth $1 trillion in 2030 and $29 trillion in 2050. The continent’s infrastructure gaps, therefore, must be filled. In 2018, the AfDB estimated that the continent’s infrastructure needs between $130 billion and $170 billion per year.
In addition, the funding challenge must also be tackled. With a current market valuation of $2.3 billion and a projected market valuation of $1 trillion by 2030, Africa’s agritech industry is underfunded. More agritech startups are emerging to address pressing issues plaguing the agricultural sector. These outliers are managing logistics, inadequate storage facilities, a lack of market analytics and poor farming practices, to name a few issues. However, to scale, multilateral development institutions like the African Development Bank (AfDB) and the World Food Programme (WFP) must do a better job of providing grants/donations. Startups in Africa are building infrastructure to support the continent’s food supply chain.
Furthermore, solving Africa’s food problem will require the various countries forming regional blocs. Food sustainability is a continental concern that African states must address collaboratively. While policies such as the African Continental Free Trade Agreement (AfCTA) are admirable, I believe that issues such as food security are best addressed in smaller groups. Eastern African countries appear to have recognised this, with annual post-harvest losses (PHL) ranging from 30 per cent in cereals to 50 per cent in roots and tubers and up to 70 per cent in fruits and vegetables. The East African Community is becoming more strategic in repairing its food supply chain. Regional blocs, especially Western and Central African countries, should follow their eastern neighbours’ lead.
To repair the continent’s food supply chain, entrepreneurs must participate in building key focus areas, including manufacturing and infrastructure for a long-term cold chain, energy technology that is both clean and affordable and food supply automation. Africa’s food supply chain has the potential to meet the demands of the continent. Processes must be implemented to fix infrastructure deficits, increase manufacturing capacity, construct long-term cold chain infrastructure, leverage digitisation to boost productivity and employability and promote food security.
