ARTICLE
28 September 2021

Africa's Agribusiness Sector Is Poised For Growth

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Against the backdrop of the recent ratification of the African Continental Free Trade Area which potentially makes Africa the largest free trade area in the world, the continent's agribusiness sector has caught the attention of global investors.
South Africa Corporate/Commercial Law
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Against the backdrop of the recent ratification of the African Continental Free Trade Area (AfCTA) which potentially makes Africa the largest free trade area in the world, the continent's agribusiness sector has caught the attention of global investors. It produces a variety of globally in-demand products, including cocoa from Côte d'Ivoire and Ghana, tea from Kenya, maize and rice from Nigeria, vanilla from Madagascar, and fruit from South Africa - to name just a few.

The numbers on the continent make it easy to see why: the sector is expected to reach US$1 trillion by 2030, and the continent is home to 60 percent of the world's uncultivated arable land - and yet, its productivity accounts for only around 10 percent of the world's agricultural output.

Add in the sustained GDP growth in several countries and a middle class that's expected to grow to 1.1 billion by 2060, along with the growth of megacities like Cairo, Lagos and Kinshasa, and it's clear to see why policymakers are creating enabling environments to attract investors.

With around three quarters of Africans relying on agriculture for their livelihoods, more than 30 percent of the continent's national incomes, as well as significant amounts of export revenues and employment, derive from agribusiness and agro-industries. Scaling these businesses for growth could not only boost revenues for countries, but it could also lift many rural citizens out of poverty while creating jobs across the continent. This is vital, as it's anticipated that Africa's youth will make up a quarter of the world's labour force by 2050.

The shift needs to move beyond just farming the land, and towards the production of consumable products. For example, 90 percent of the total income from Africa's coffee goes to the countries in which it is consumed - not in the countries where it's grown.

While many of these trends and insights are common across the whole continent, each country has its own legal frameworks, its own ways of doing business, and its own cultural environments that influence the progress and success of investment projects.

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