Africa holds the largest reserves of untapped arable land on the planet— meaning the potential to plough and grow crops is a massive asset to African communities. Despite this, Africans are caught up in an overreliance on foreign imports to meet their needs. For example, Russia’s war in Ukraine has caused a shortage of wheat and other goods across the continent; African nations must take advantage of their agribusiness potential to stop bearing the brunt of the burden from external influences.
A few countries in Africa are particularly vulnerable to soaring food and energy prices. In Nigeria, Africa’s largest crude oil producer, the price of diesel had tripled. Morocco, South Africa, Nigeria, Ghana, Kenya and Ethiopia are particularly dependent on fertilizer imports, the price of which increased by 34% between February and March 2022. Although it is full of the raw materials needed to manufacture fertilizers, Africa depends mainly on imports to boost its soils.
In South Africa, for example, fertilizers account for 36% of input expenditure. Côte d’Ivoire and Kenya have seen their outbound agricultural trade activities plummet, with the breakdown of supply chains. Although these nations powered through the COVID-19 pandemic and are geographically distant from Russia’s war in Ukraine, they are nevertheless paying a heavy price.
Inflation combined with the food crisis could lead to major social unrest. The region has already experienced several coups since 2020, on top of a prolonged economic downturn. However, despite rising uncertainties, economic indicators point to the continent as the next big growth region.
What’s Next?
Africa is well positioned as an alternative to meet the agribusiness and energy needs of international markets and take advantage of this to diversify these supply and value chains. A few pan-African initiatives have emerged. Last month in Lomé, for example, three heads of state and ministers from sub-Saharan Africa gathered to highlight the need to make quality fertilizers accessible to producers in order to ensure food self-sufficiency.
In addition, Nigeria, Senegal, Mozambique and Tanzania, which account for more than 10% of the world’s known natural gas reserves, could benefit from Europe’s energy diversification. However, this would require significant investment; the strong demand for gas would lead to the development of new infrastructures.
Africa’s potential as a market for goods and services goes beyond agribusiness and energy; African countries can align their industrial development with many sectors, from financial services and manufacturing to chemicals and pharmaceuticals. The vast potential of African countries need to be reconsidered in a new light.
