How can Africa increase its food processing capacity
Africa is giving away economic opportunity that it can ill afford to lose – namely the profit, economic development, and jobs it could be bringing home if the continent had the capacity to process even a quarter of the primary food products it exports onto world markets.
Instead, by exporting millions of tonnes of low-value, primary agricultural commodities every year, Africa passes value-generating opportunity to other countries who have invested in the means to process and transform raw product.
The potential value that could be captured if Africa could extract more value from its own product is significant: UNCTAD estimates over $1.8bn of untapped export value exists in the manufactured food sector in the African Continental Free Trade Area.
Others see opportunity closer to home, noting that with the highest population growth rates in the world and rapid urbanisation, dietary demand for higher-value processed foods is growing keenly within Africa itself.
If the continent’s food processing sector is unable to respond to clear trends and opportunities in both external and domestic markets, it is giving away its own opportunities for agricultural transformation, to create higher-value jobs in the mid-stream of value chains and to increase the availability of healthy foods for its citizens in an era of worsening malnutrition.
Take a sector like cashew – currently experiencing booming global demand as rich-world diets become less dependent on dairy products and animal proteins. The continent produces 60% of global raw cashew. Many African producer countries have the potential to scale-up production – Côte d’Ivoire has been successful in doubling its production volumes over the past decade.
Yet, the continent gives away the opportunity to reap maximum value, processing less than 10% of its own product and exporting the vast majority of raw cashew nut to Vietnam and India, the world’s cashew processing giants transforming around 90% of global raw cashew.
This is despite West Africa’s proximity to the growing European market, which gives it competitive advantage over Southeast Asia on transport costs. It is also despite the duty-free access to the US market that many sub-Saharan African countries enjoy, facilitated by the African Growth and Opportunity Act (Agoa).
Read full article at African Business