Plagued by hunger and famine, Africa is often regarded as a continent that cannot feed itself, but this is a misconception. With 733 million hectares, or 27 percent of the world's total, Africa is the continent endowed with the most arable land. This compares to only 628 million hectares in Asia, a continent that is four times as populous. Not only does it have plenty of arable land, but due to warm temperatures, most regions are capable of growing multiple yearly harvests.
Despite these favorable conditions, Africa is a net food importer and a quarter of the population is undernourished. To reduce food insecurity, thousands of NGOs, UN programs and government initiatives have unsuccessfully attempted to tap into this potential. This article does not try to solve world hunger through charity, since it is too often unsustainable. It is a compendium of cheap, easy and lucrative business ideas to increase food production designed to make its adopters wealthy while improving the socio-economic conditions of millions.
All the sophisticated irrigation systems, fertilizers and machines are useless unless farmers can sell their goods. Unfortunately, due to poor transportation and storage, food often rots on its way to markets. To cut their loses from growing food that they cannot sell, villages stick to subsistence agriculture while cities are forced to import food shipped in refrigerated ships and planes. As a result, despite its huge agricultural potential, Africa has become a net food importer.
Farmers face two important transportation challenges that result in prices in villages to be much lower than in cities: dilapidated roads and railways that makes shipping impossible and poor logistics that make it expensive. The first challenge requires massive investment in infrastructure and fortunately this important investment is being undertaken. In fact, thanks to Chinese and locally funded projects, roads and railways across the continent are being rehabilitated.
Even when there are proper roads, transportation in Africa remains highly inefficient. Farmers often transport their goods themselves by train or bus. This practice is expensive because they lose days of work en route and by selling to individual customers at the market. It is also inefficient because they can only transport a limited amount of goods and the physical space occupied by passengers would be more profitably used by transporting extra cargo.
There are also business opportunities from using different methods of transport. Commercial shipping is not limited to terrestrial transportation. Shipping by waterways is an attractive alternative because it is relatively cheaper since boats carry more cargo than ground vehicles, they use less fuel, and there are no delays due to poor or inexistent roads. In fact, during their industrial revolution, a transition that Africa is currently going through, English entrepreneurs constructed an elaborate network of private canals to facilitate the transportation of an ever greater tonnage of goods.
Although Africa has extensive natural river systems, (i.e. Nile, Congo, Limpopo, Orange, Niger and Zambezi) fluvial transportation remains undeveloped. The industry has historically been small because, due to unreliable electricity, Africa could not build shipbuilding capacity. Navigation was also hazardous because governments were financially incapable of conducting proper river surveys.
Today, entrepreneurs can revive fluvial transportation by opening small shipping yards powered by renewable energy. Whereas surveys used to be the domain of governments, companies using GPS and inexpensive sonar radar can create and sale high quality maps. Finally, using tablets and mobile banking, logistics services can reliably schedule pick up at remote stations.
To profit from the price differential between cities and villages, shippers can build electronic networks linking farmers and resellers. Farmers would be able to arrange for the pick-up of their crop, and shippers, by knowing when and what they will receive, can decide in advance in which market they will sell them. These shippers can take advantage of the newly built roads, river systems, the rapidly expanding rural Internet networks, and the wide adoption of mobile banking.
Irrigation systems, which include the construction of wells, the redirection of rivers and lakes, or the storage of rain water, allow farmers to have a reliable supply of water in dry or rainy periods. Such systems are important in Africa because, apart from the strip of land that lounges the equator, the continent experiences infrequent and unpredictable precipitations.
For instance, most of Africa has dry and rainy seasons. Although, warm temperatures allow for cultivation during the dry season, farmers cannot grow certain crops because they lack water. If they had access to irrigation, these farmers would be able to have multiple harvests, significantly increasing their income.
Other regions, such as the Sahel or the Horn of Africa, experience unpredictable periods of droughts that result in massive crop failures and sometimes famine. Luckily, these regions also sit on top of massive and rather shallow groundwater reserves. The construction of inexpensive wells combined with proper water management practices can go a long way into increasing production in both dry and rainy periods.
Although, due to irregular precipitation patterns, African farmers can greatly benefit from irrigation, such systems are few and far between. Only 7% less than 4% in Sub-Saharan Africa) of the land is irrigated, compared to 10%, 29% and 41% for South America, East and South-East Asia and South Asia respectively.
Entrepreneurs can seize this opportunity by selling inexpensive irrigation solutions to villages. In return, farmers will repay them from the increased profits from higher production.
Whether it be easy tasks such as sorting, cleaning, and packaging, or more complex processes such as chopping, mixing and refrigerating, transforming food adds value and extends shelf life. However, even basic transformation is uncommon in Africa. For instance, until they were prohibited from engaging in petty trade in Cameroon, the Chinese community challenged local makers of donut holes by selling them in individual packages, a simple transformation that was until then never undertaken.
Entrepreneurs can profit by signing long-term supply agreements with farm co-operatives, and then refrigerate vegetables, cook sauces, pack nuts, clean fruits, press juice... If operations are close enough to airports, products can also be cheaply exported. Shipping goods out of Africa is inexpensive because boats and planes, coming with consumer goods, often leave empty.
Entrepreneurs can buy, either individually or in a co-operative, machines in order to open micro-agrofactories. The following is a short list of machines that cost less than $20,000 that transfer typical African crops.
Agriculture is a demanding activity and since humans only have limited strength, yield can dramatically increase with access to electrical or motorized tools. For instance, an important characteristic of India's green revolution, which saw food production jump dramatically, was the mechanization of agriculture. Mechanization not only supplements human physical efforts, but professionalizes farming by improving the timeliness and quality of operations. Although mechanization raises agricultural output, it is barely used in sub-Saharan Africa:
- over 60% of farm power is provided by people's muscle, mostly from women, the elderly and children;
- only 25% of power is provided by drudge animals; and
- less than 20% of mechanization services are provided by engine power.
Governments' solution was to bypass small landholders by opening large modern farms because they did not believe that small farmers could afford to buy modern machines. This approach failed because these large operations were manged by bureaucrats or foreigners who barely knew the land. In regions where agriculture is underdeveloped, it is essential to involve small landowners because, among other reasons, it fosters experimentation as each farmer tries new methods and crops, and successful practices are quickly copied.
A better approach is to share equipment via entrepreneurs who buy machines, from small power tools to sophisticated tractors, and rent them out to farmers. This "sharing economy" allows farmers to use tools that they cannot afford individually. Many of these machines require training to properly operate, training that can be expensive or inaccessible to illiterate farmers. A commercial service provider specializing in tool rental is also better able to maintain equipment and, by working with dozens of farmers, transfer successful practices.
Finally, unlike government sponsored farms, this profit driven approach will ensure that only tools that can provide economic benefit will be purchased. Entrepreneurs, responding to clients' demand, will probably start by renting simple tools, but as farms become more productive, more sophisticated machines will be made available.
Entrepreneurs can purchase and rent out machines to small farmers. This business will provide steady cash flow because, due to Africa's long growing season, planting and harvesting occur throughout the year. Profits will be made from taking a share of the additional production.
By Kasole Nyembo