IFT
IMACOX FINANCIAL TECHNOLOGIES
Creating opportunities, Changing lives. Challenging the present, transforming the future.
The Market - Africa Agricultural Industry
Agriculture is by far the largest employer on the continent. The industry employs 65 percent of Africa’s labor force and contributes to more than 32% of the GDP of most African countries.
We see this sector as virtually unexplored, and we are investing across the agriculture value chain, from inputs to production, to storage and distribution, through IMACOX Consulting and processing – our core focus.
Agricultural performance has improved since 2000, but growth is not yet fast enough. Agricultural GDP growth in sub Saharan Africa has accelerated from 2.3 percent per year in the 1980s to 3.8 percent per year from 2000 to 2005. Growth has been mostly based on area expansion, but land is scarce and many countries are facing limits to further expansion. Land and agricultural productivity must increase because African farm yields are among the lowest in the world.
Higher and sustained growth will require attention to five core areas of public action:- Facilitating agricultural markets and trade;- Improving agricultural productivity;- Investing in public infrastructure for agricultural growth- Reducing rural vulnerability and insecurity; and- Improving agricultural policy and institutions.
African agriculture is at a turning point, and a long-awaited “green revolution” may be within reach. Many of the continent’s governments are adopting market-friendly policies and committing more resources to the sector. Traditional big-donor countries are increasing their expenditures on agriculture, while China and Brazil are also beginning to contribute to the effort. African’s agriculture’s private-sector investment is rising rapidly (see sidebar “Sizing Africa’s agricultural opportunity”). High, volatile food prices underline the importance of such development efforts and create not only pressure but also political space for policy makers to act.
The Economist recently named Africa "the hottest frontier" for investing, noting that Africa's shortage of capital "creates an opening for rich-world investors seeking a better return than is available at home." The main markets in Kenya and Nigeria have increased in value by 50% over the past year. The economy of Nigeria grew by 7.1% in 2012, Angola by 7.9%, with the East African economies of Rwanda (7.7%), Ivory Coast (8.6%), Congo DR (7.2%), Ghana (7.1%), Burkina Faso (8.0%), Tanzania (6.5%), Niger (13.1%), Kenya (5.1%), Zambia (7.3%), Togo (5.0%), Mozambique (7.4%), Uganda (4.2%), Cameroon (4.9%), and Burundi (4.3%) also showing impressive growth.
The agricultural sector in sub-Saharan Africa is projected to increase 2.5% annually through 2030 - the fastest growth anywhere in the world.
Amid the resounding growth, African agriculture faces many challenges. The absence of standardized product grades, proof of ownership for commodities, and proper storage facilities limits agricultural potential.
Access to markets and finance also pose significant barriers. We see these challenges as tremendous opportunities and intend to invest in Africa's smallholder farmers over the long term to overcome them together.
For investors who desire impressive returns while creating positive social impact, there is no better place than Africa, and there is no better time than today.