Tapping Opportunities in Crises — An Urgent Imperative for Africa
Once, a village chief suffered the wrath of his subjects for doing what the village residents considered unethical. Amidst an unfolding disaster, the chief called an emergency meeting compulsory for every resident. The entire village showed up expecting to get answers on how to address the disaster. But the chief had different ideas. In his mind, he considered the disaster to be an opportunity for a village lecture on how to avert future disasters. So, when he stood up to speak, he spoke at length about how the village needed to urgently learn from the disaster to ensure such never befall them. However, the villagers reacted negatively, shouting the chief down and demanding immediate solutions to address the current disaster.
The question is — was the chief right or wrong in the approach he took?
Of course, the chief could have used a bit of more wisdom in addressing his village mates, bypassing the right message at the right time. But this does not discount the chief’s thinking that times of crisis ought to jog our minds into lessons and opportunities that we can draw and apply to emerge better at the tail end of the crisis.
The past two years have been a marathon of crises for Africa and the rest of the globe. From health crises to food crises to energy crises, climate change has further compounded these crises’ impacts. These emergencies have caused a significant shrinkage of economies’ fiscal space, further dampening the ability to respond.
In early 2020, just before the full blow of the COVID-19, the horn of Africa experienced the worst locust outbreak. The worst in as much as 70 years in some countries. The cost of damages caused by this outbreak is estimated at over $8billion. Even before the dust could settle on the locust crisis, Africa and the world was hit by the COVID-19 emergency.
But even as countries were trying to rebuild following this devastation that has been going on since 2020, a new emergency came onto the horizon in 2022- the Russia — Ukraine conflict, which has put additional strain on economies struggling to recover. The impact has accelerated inflation in two of the most important consumer products — food and fuel. The global monthly food price index for March 2022 had increased by up to 12.6%, the highest increase in 3 decades. The cost of primary food items such as cereal, meat, sugar, and vegetable oil went up almost 13%, 17%, 20%, and 34%, respectively. Food prices account for up to 40% of Sub-Saharan Africa’s consumption basket, and these increases have impacted populations significantly. Beyond food, in a few months, oil prices increased by up to 40% compared to 2021, exceeding highs last recorded in 2014.
Amongst these crises is the escalating threat of environmental risks –the triple planetary crisis of climate change, pollution & waste, and ecological degradation — because of anthropogenic activities. On climate change alone, African economies already lose over $20billion every year conservatively. On ecological degradation, Africa loses up to $65billion every year, while air pollution alone costs Africa over $400billion every year.
The big question we must answer is, how does Africa tap opportunities in crises to reshape its economic development and enhance economic competitiveness?
Re-imagining Africa’s growth for economic competitiveness and environmental resilience
The answer is a re-imagination of solutions to accelerate economic competitiveness & productivity while enhancing environmental resilience. And for this, Africa needs to re-imagine its developmental policy positions in 5 critical areas, including by injecting environmental resilience: food, energy, cities, connectivity infrastructure, and innovative financing blending both modern and traditional approaches. The objective function of this re-imagination is to maximize productivity and enterprise creation potential of these areas by leveraging lessons arising from crises. It is to unlock this potential through specific policy leanings that can catapult the region out of perennial vulnerability and economic competitiveness. These are as follows:
Re-imagining food systems should be geared towards climate-proofing them and maximizing their productivity through value addition and trade to spur local opportunities and buffer the continent against international food price shocks. In 2019, Sub-Saharan Africa’s spiralling food import bill — stood at $43 billion. Under the status quo, this is projected to reach $110billion by 2025. This money should be flowing in to support African businesses, not out. At the same time, Africa is losing between 30% — 50% of all the food produced. These are losses that have topped $48 billion in a year. With these losses, up 25% of fresh water and 20% of farmland are wasted on unconsumed food. Through value addition, where clean energy is decentralized to power processing, these losses can be recouped and turned into much-needed incomes to build stronger, resilient economies that can withstand economic emergencies and adversities. This value addition does not have to start at the highest level.
Decentralizing simple climate action solutions of solar dryer solutions to dehydrate perishables and increase shelf-life has been proven to increase earnings up to 30times among informal food traders who supply up to 90% of Africa’s food. This has simultaneously mitigated over 200,000tones of CO2 compared to an alternative fossil fuel value addition solution.
Closely linked to value addition is trade. The proportion of African countries’ food imports originating from other African countries is deficient and has been so for many decades averaging about 20%. This is a cumulative market size of GDP exceeding over $3trillion that trades only 20%. The total market size of value-added agro produce demanded in Africa exceeds $150billion every year. The African urban food market is projected to grow 4-fold to exceed a total annual worth of US$ 400 billion by 2030 — just eight years from today. The total value of the agri-food system business (from farm to table) required to meet Africa’s booming demand is estimated at $1trillion. But the fact that most of this food is imported from outside Africa represents a missed opportunity for the continent to build much more robust local enterprises at individual country levels. That would accelerate the competitiveness of the local agro production while retaining foreign reserves within the African borders to strengthen economic resilience and buffer against external shocks. There is a real opportunity to tap this regional trade angle with the full implementation of the Africa Continental Free Trade Area Agreement (AfCFTA), which needs to be prioritized.
Closely related to trade and food systems is the urgent need to increasingly consume local alternative foods for which the region has a comparative advantage. This need has come into sharp focus with the global increases in wheat prices, already by 50%. Africa, which imports up to 85% of its wheat, has borne the brunt of this increase. With several countries already facing inflated prices of wheat and its derivates. The top African importers are facing increased costs. In Cameroon, wheat prices have almost doubled. In Egypt, bread prices have increased by 1.5times. Import prices have increased by 1.6times, and the wheat import bill by over $900million. Nigeria has seen a 50% increase or 1.5times higher for food items made out of wheat. In Kenya, wheat product prices are set to increase up to 1.2times. These increasing import prices directly affect depleting foreign reserves that would otherwise play a key role in strengthening local financial markets and economies in general. As an alternative, the region needs to prioritize substituting wheat with a more climate-resilient indigenous and high-value starch alternative — cassava.
Even with increasingly harsh weather and moisture stress occasioned by the changing climate, cassava is the lowest risk crop, registering the lowest losses at 8%, compared to 20% for the second closest staple on the continent. In addition, cassava is a high-value crop that can be value-added into 300 diverse products. It is gluten, grain and nut-free, and a vegan, vegetarian, and paleo carbohydrate, making it a leading “allergen-free” food whose global market is worth $23.5 billion.
These advantages have already been projected for Africa’s largest producer — Nigeria — which put together a cassava bread policy to substitute wheat in bread with cassava, a more indigenous alternative. The full implementation of the cassava bread policy has been projected will create hundreds of thousands of employment opportunities — about 260,000 in cassava farming, over 40,000 in the processing of high-quality cassava flour, and about 3000 in manufacturing equipment — including accessible equipment like climate action solutions of solar driers. These are reserved estimates — for flour only. Let’s consider the 300 products that cassava can be processed into and factor in a multiplier effect of just 2. It translates to over 600,000 jobs, excluding transportation and bread improvers value chains.
Finally, the re-imagination of food systems should also target to tap the organic foods market through prioritizing using nature-based, non-chemicalized, climate-resilient approaches to cultivate food on the continent. These approaches are compatible with the methods used by small scale farmers who produce up to 80% of African food. The organic foods industry is a growing market segment of consumers ready to pay up to 3 times the price of conventional foods for certified organic, healthy, and environmentally complaint food. By leveraging national standards, such standards can be rationalized to become tools to enhance the consolidation of the continent’s lucrative food market. It can be leveraged as fuel to build local enterprises and a resilient economy against external shocks.
Look out for my take in the upcoming newsletters on Energy systems, African cities, Transport & connectivity infrastructure and Tapping non-traditional financing
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