COVID-19 reinforces the need for Africa to accelerate food production and improve security of supply

 

Africa Opportunities Impact Fund calls for increased local and regional production in order to reduce the present high levels of dependence on imports.

APRIL 10, 2020: The COVID-19 pandemic highlights the urgency of reducing Africa’s dependence on food imports and dramatically ramping-up regional production by strengthening existing businesses and supporting a new generation of food producers, according to the Africa Opportunities Impact Fund.

For more than a decade Africa has been a net food importer [1] and currently imports around $40bn of goods annually. This situation was already highly questionable given Africa’s extensive natural resources and huge amounts of land available for agriculture and food production, but the fragility of global supply chain gatekeepers such as China during the current crisis surely means that it is now unsustainable.

For any individual country, becoming overly dependent on one or two primary manufacturing hubs means that its ability to access essential suppliers can be severely compromised if the output of those centres is dramatically reduced at short notice. COVID-19 has underlined the drawbacks of international supply chains and emphasised the need for greater self-reliance – a requirement that will only become more acute in the context of accelerating climate change and population growth.

Coronavirus has also highlighted the need to insulate Africa’s food processing and associated industries against further crises. The continent’s hospitality industry is entirely shut-down with a knock-on effect in the food & beverage, retail, logistics, trading and consumer services sectors. In fact, most of the pipeline companies that Africa Opportunities Impact Fund is currently working with report one or more challenges to their normal operations. In Kenya, whilst a company such as a healthy snack manufacturer has recorded an increase in local demand, a dairy processor and a horticultural products exporter are having to adjust to significant reductions in international demand. In Swaziland, organic chilli sauces and chutney manufacturer is operating on reduced hours and only to fulfil confirmed orders. Meanwhile, in Malawi, financial difficulties stemming from recent political instability have been exacerbated for many suppliers by the shutdown of the tourism industry.

Fully aware of Africa’s huge latent potential for mass-volume production, the Africa Opportunities Impact Fund is focused on realising this potential by transforming agriculture and empowering women in Africa through investment, capacity building, and linking companies to markets. The Fund combines rigorous and proven investment management expertise with world-leading food security consultancy training and mentoring to deliver targeted investments that will build the food supply chains of the future.

Jenni Chamberlain, CEO of Altree Capital, comments: "The global crisis caused by COVID-19 provides us with an invaluable opportunity to scrutinise Africa's current over-reliance on food imports and make significant changes that mean the continent is better prepared for future events of this magnitude. We need to significantly increase our local and regional production, and the best way to do this is to support existing food suppliers and encourage the development of new ones through targeted investment, skills development and market linkages.

Despite current challenges, we are confident that our pipeline companies will emerge more unscathed than those in other sectors and with a stronger vision of their future opportunities. But to ensure that they can capitalise on these possibilities they require funding, so now is the time for international investors to step up and provide the capital required to allow these businesses to embark upon the exciting next phase of their development. Out of the present crisis there will emerge a tremendous opportunity for Africa, and so we urge all stakeholders to start investing for the future.”

 

Note:

[1] Food and agriculture organization of the United Nations: Why has Africa become a net food importer? 2011: http://www.fao.org/docrep/015/i2497e/i2497e00.pdf