Economic Opportunity in Africa Beings With Agribusiness

No one sector of the global economy should be more excited about its future and its place in the world than those working in agribusiness.

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In this photo taken on Wednesday, Oct. 10, 2012 farmer Bedlu Mamo, stands in the middle of a field, on his half hectare wheat farm near Debre Zeit, in Ethiopia’s Amhara region. Bedlu says it is the first time he planted the Mangudo variety durum wheat on the farm. The U.N.'s Food and Agricultural Organization is marking World Food Day on Tuesday Oct. 16, 2012, a day dedicated to highlighting the importance of global food security. The FAO said hunger is declining in Asia and Latin America but is rising in Africa. One in eight people around the world goes to bed hungry every night. The International Maize and Wheat Improvement Center says that although maize has long been considered the most important cereal crop in sub-Saharan Africa, demand for wheat is growing faster than for any other food crop.

Stephen Hayes is president and CEO of the Corporate Council on Africa.

A recent trip to Berlin offered me a chance to reflect on an event that was to affect the future of Africa and current events today. It has been nearly 130 since the infamous Conference of Berlin, at which the European powers carved up Africa into territories that would eventually morph into the nations that now cover the map of the continent. Underlying that conference was the sense of permanent empires built on agriculture sufficient enough to fuel those illusory empires for centuries to come. The rubber from the Congo, the cotton from Nigeria and the Sahel, the cocoa from Ghana and Cote d'Ivoire, the ivory from Kenya, and the list goes on.

The empires that divided Africa into arbitrary boundaries have melted away into a new and often unpredictable world. Opportunity has never been greater at a time that seems far more dangerous than the world left behind when the Berlin Wall came tumbling down. The Brandenburg Gate that divided East from West still stands as a silent witness to it all, just as Africa remains in our dreams a continent capable of feeding not separate empires but an entire planet growing unsure of its future food and water supply.

Most of the world's arable but untilled land is in Africa. The great rivers of Africa hold vast supplies of water capable of quenching the thirst of a planet now affected by climate change and the uncertainty it brings to agriculture and life in general. Many of the precious minerals necessary to our communication and IT systems are in and under the soils of Africa. Its tens of thousands of coastline represents a virtually untapped market for tourism. Its tragically diminishing wildlife draws millions of people seeking to reconnect with the natural world which still remains as a point of renewal and the merging of the spirit of man and nature. It all meets in Africa. The continent from whence we all come now calls us back to the same soil from which we sprung.

[See a collection of political cartoons on the economy.]

Whether we like to admit it or not, the race to develop Africa is on, just as the race to exploit Africa was on 130 years ago. Equally obvious is that there are significant differences between the race for a continent then and today. Perhaps the most important difference is that today Africa has a voice in its own future. Ironically, some of these differences and challenges are a direct result of the decisions made in Berlin in 1884 by those who saw themselves as the "masters of the universe," just as I have heard some of those attending the annual pilgrimages to Davos refer to themselves…indeed the new masters of the universe. We can only hope that the latter are more salient than the former, and, as I said, we should be grateful that Africa does have a voice in its own future.

Just as there is little permanent except change, neither can we escape the history that has created the present moment, for the past is indeed prologue to all that we encounter, and many of the challenges we face in working in and with Africa now have been created by the decisions of our past. We cannot change the past, but we do still have the opportunity to create a far better future for all in partnership with Africa.

There is no sector now more important to Africa, and I would argue to the world, than agriculture and agribusiness. Agriculture is the art of growing food, and agribusiness is the art of creating sustainability as a vital part of economic life of a nation and a planet. To me, no one sector of the global economy should be more excited about its future and its place in the world than those working in agribusiness. It is the sector that will or will not succeed in ending global hunger, and it is a sector that will be vital to securing global peace and security.

[Read the U.S. News Debate: Should Congress Pass the Farm Bill?]

The world that has evolved is one of increasing complexity. Agribusiness cannot succeed without an interaction and understanding of many other sectors and processes. One cannot simply buy some land, grow the food and get to the market. There are now many more challenges to being successful in agribusiness. Indeed, how do we make business work and fit for Africa? Let us look at some of the key issues and challenges affecting agribusiness in Africa.

The Berlin Conference of 1884 created a myriad of colonies and territories that evolved into separate nations, with separate laws, customs, and ways of seeing the world, and in each nation developed separate infrastructures, currencies, political relationships, and alliances, and many more differences, all of which we must now deal with if we are to do business successfully.

Now we find ourselves urging a move away from the nation-states we were responsible for creating, and towards regionalization of economies, as to reduce waste and inefficiencies, harmonize customs and duties, merge infrastructure systems, and develop a more uniform and comprehensible set of laws and codes of business conduct. However, regionalization will not be effective until those who rule nations see it in their own best interests to empower regions beyond the boundaries they rule so that they effectively implement decisions affecting the economies of these very same regions. One of the priorities of the private sector should be to act as educators as to why regional markets are essential to their interests and investments, and why this will help the individual nations within those regions.

[See a collection of political cartoons on Afghanistan.]

Another issue that will determine the effectiveness of agribusiness is the issue of land ownership. Here the desire of the colonialists and the traditions of tribes throughout Africa coalesced. The land belonged either to no one or was generally communal. There colonial powers were not eager to see the indigenous population actually "own" land, so land ownership and documentation was never encouraged. As it relates to the ability to cultivate large tracts of land the processes to secure land are difficult, cumbersome, inconsistent, and unreliable in many countries throughout Africa. At the same time, there are too many stories, often accurate, of companies obtaining exceptionally large tracts of land at the expense of people living on that land. These stories and incidents have added to the challenges to develop agribusiness in Africa.

Yet another major challenge in making business work and fit in Africa is the need for financing. Quite simply, successful agribusiness will require larger areas of land, not one acre plots that drive Africa agriculture now, and larger tracts of land require greater financing, not only for the purchase of the land, but for the purchase of everything connected to the land…the supplies, the irrigation equipment, the seeds, the fertilizer, the transportation, and the development of the roads and ports necessary to move the produce and getting the crops to market. There are currently few banks or financial institutions willing to be financiers, and the times in which we now find ourselves have not made securing financing any easier. In the United States, we find access to financing for investments in Africa, especially among those entering the African marketplace, an especially difficult and sometimes onerous challenge.

[Read the U.S. News Debate: Given The Current Deficit Crisis, Should Foreign Aid Be Cut?]

There are also questions of how agribusiness will affect the heritages of Africa…the wildlife, especially migratory animals and habitats. The more diverse an environment the healthier we will all be. Agribusiness must be done in a way that strengthens, not weakens biosystems. The decisions made will have important economic and social consequences. Does the drive to modernization, and especially agribusiness foretell the extinction of species and the end of what makes Africa so unique? It need not nor should not be so.

Another key challenge will be capacity building and training of the work force. There is and will continue to be the need to train the work force and provide jobs for the indigenous population. In addition to the natural resources of Africa is the greatest resource of all, its nearly one billion people, most full of hope and expectations for a better life. The consequences, should governments and the private sector fail to meet those expectations can be and probably will be quite severe, as we are already seeing in parts of the continent and other regions of the world.

For this reason, investors and private sector companies engaged in and with Africa should expect to work closely with governments if they are to enter many marketplaces on the continent. The demand for public-private sector cooperation has never been greater and will only become more important to investments in Africa. African governments are under great pressure to provide jobs for a restless and growing population.

[See a collection of political cartoons on the European debt crisis.]

For every project to be done, most companies and investors will be required to have local partners. In fact, most investors would be ill-advised not to have reliable local partners who know how to navigate the culture in which one invests. How will you find those partners?  There is so much more to be done, but it is a first, and to me, a necessary step of we are to get U.S. companies much more invested in Africa.

Yet with all these challenges, Africa represents the future as much as it does the past. It is an emerging market of almost unimaginable potential and it is a land mass populated by people full of hope and excitement. To me, Africa represents the best hope of mankind, for if we can succeed in creating a more prosperous continent and meet the aspirations of its people, then perhaps we can leave the world a better place than when we entered. To do so will not be easy, but it can be done. It begins with agribusiness.

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