Warnings are increasing about Africa’s deepening food insecurity challenge, as the COVID pandemic has limited the supply of imported inputs (e.g. seed, fertilizer and pesticides) and extension services, while restricting farm labor movement and distribution channels and increasing demand volatility. All this has led institutions like the World Food Program to project that the number of people who are food insecure in East Africa alone could double or more in 2020.
While emergency support is critical in the short-term, attention is now also on the longer-term solutions for local and regional food system resilience. Energy technologies for heat, for cooling, and for electricity to power motors, are a part of the infrastructure needed to grow that resiliency, especially in areas which now have little grid access, or unreliable access where they do have it. Investment in power infrastructure, while not the only enabler, is thus seen as vital to unlocking agri-productivity.
The fact that Agriculture accounts for just 2% of total electricity consumption across the continent is telling, but the World Bank thinks this is all about to change, as large multi-national companies (such as Lorentz, Embraco, and Amiran) enter the African agro-processing sector. A wave of smaller SME agri businesses, from fruit drying, to refrigeration, milling, and egg incubation are also emerging. Last year IFC estimated there are over 100 firms developing off-grid solar DC productive use appliances alone in sub-Saharan Africa, and then hundreds more involved in distributing them – most in agriculture.
However, except for solar irrigation, most of these agro-processing and storage technologies are very nascent and require significant investment to scale, or favor commercial farmers because of smallholder farmers limited financial resources. Yet over 85% of Africa’s agriculture produce is grown by smallholder farmers, often operating on 2 acres of land or less. Thus there is a major difference between the addressable market (meaning the theoretical market able to absorb agri-productivity services) and the serviceable market (meaning the portion of that market that can actually afford the service).
I recently published an entire research brief just on this topic with SAIIA. I find that the reform of local cooperative structures to aggregate farming produce, leverage economies of scale, and organize farmers around price-setting and processing for value-addition could go a long way to balance the scales. Also, incentives to increase access to micro- and commercial finance for farmers and cooperatives, and the roll-out of technology-specific micro-enterprise training that is easily accessible to rural end users would help smallholder farmers best leverage these emerging energy technologies.
Agro-processing currently accounts for very few jobs across the continent, like in Uganda where it accounts for only 2.8% of all jobs in a largely agrarian economy. So growth in post-harvest handling, processing, storage and value-addition activity could also spell opportunities for workforce absorption too, equally important in our new pandemic norm. In fact, the ILO says that over the past 15 years, African governments that have effectively promoted agricultural productivity (such as Ethiopia and Rwanda) have enjoyed faster poverty reduction, higher labor productivity in non-farm sectors, and a more rapid diversification of the labor force from farming into the broader economy.
Doing this analysis helped me better understand the opportunities for agriculture and the importance of solutions to support smallholder farmers. Have a read of my SAIIA brief below: