In Africa, up to 40% of food is lost between farms and markets, with two-thirds lost in the first mile. The economic impact of the food supply chain is critical for obvious reasons: farmers want to get their products to market and receive payment as soon as possible, and consumers wish for food at reasonable prices.
The continent’s inability to address this dual challenge is a significant reason it is still a net food importer.
Despite our abundant natural and human resources, Africa spent $64.5 billion on food imports in 2016, with the African Development Bank (AfDB) projecting that figure will rise to more than $110 billion by 2025. Our reliance on food from other continents is due to a lack of transportation, distribution, and storage infrastructures.
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 IFC publication, a 1,000-kilometer journey in Africa typically takes six days, compared to 48 hours in other parts of the world.
The Issues
There is 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%.
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% 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 FAO report titled Global Food Losses and Food Waste, the absence of a reliable cold chain accounts for an estimated 30% loss in meat commodities and 50% in roots, tubers, fruits, and vegetables in Sub-Saharan Africa alone.
Postharvest losses in perishable supply chains on the continent can reach up to 30%.
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.
Solutions
1. Fix Infrastructure: Africa must address 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 must be filled.
In 2018, the AfDB estimated that the continent’s infrastructure needs between $130 billion and $170 billion per year.
2. Funding: 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.
3. 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% in cereals to 50% in roots and tubers and up to 70% in fruits and vegetables.
The East African Community is becoming more strategic in repairing its food supply chain. Regional blocks, especially Western and Central African countries, should follow their eastern neighbours’ lead.
4. Builders –
To repair the continent’s food supply chain, intelligent entrepreneurs must participate in the following focus areas:
- Manufacturing and infrastructure
- Infrastructure for a long-term cold chain
- Energy technology that is both clean and affordable
- 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.
About the Author:
Olumide Fayankin is a firm believer that success is achievable through dedication and teamwork. He inspires innovative problem-solving by embracing adventure, transparency, empathy, respect and ownership as core motivators.
As a Co-Founder and Chief Operating Officer at Vendease (the leading online marketplace for Africa’s food businesses), Olumide is responsible for Vendease’s exponential growth, supply, procurement, and financial operations. During his leadership, more than a thousand food businesses in Nigeria’s three largest cities – Lagos, Ibadan, and Abuja – have been served by Vendease- aptly dubbed “the Amazon Prime for restaurants.”
His illustrious career in various managerial positions spans over a decade in sectors such as Oil & Gas, Marketing, Media, Telecommunications and Supply Chain Management in both the UK and Nigeria.
Olumide has a Bachelor’s degree in Electrical and Electronic Engineering from Igbinedion University, Okada in Nigeria and a Master’s degree in Oil and Gas Engineering from the University of Aberdeen, Scotland.
Olumide is also the former COO of Statecraft and as well as serial-entrepreneur passionate about delivering services which provide social impact.
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