DESPERATE SITUATIONS sometimes require desperate solutions. For Africa, the COVID-19 pandemic requires quality thinking and actions beyond the ordinary, ritualistic or business-as-usual. The pattern of spread of the pandemic, the surge, the sustained presence and severity of impacts will not be exactly the same as in more developed countries. Statistics might be a major hurdle in the handling of the affliction, its effects and the aftershock. Within the context of food security, this aftershock will vary also in magnitude, distribution and duration from one country to another, depending on the strength or weaknesses of available institutional frameworks, wealth and political leadership.
Africa is at the cusp of chaos, one which it may either manage well or very poorly. The outcome of the handling of the crisis and the quality of response to the disaster will determine whether Africa will sink or soar. For a continent that is a net importer of food, the immediate concern will revolve around food in terms of sustainability of supply, prices, access, quality and affordability. To reduce the pressure on food supply, immediate and far-reaching efforts need to be in place to ensure abundant food production. These would require all-encompassing efforts that would be suitable to specific agro-ecological zones, national requirements and global realities. These will have to take into consideration the peculiarities of the continent in demography, economy and polity.
While the responses of governments in advanced economies will require interventions in commercial and mechanised operations of various sizes and operational complexities, those of Africa will require interventions mostly suited to smallholders, fewer mid-size or fairly large operations. The levels of sophistication of supply chains and value chains value chains between Africa and the industrialised countries vary widely. For Africa, therefore, the production system requiring less advanced systems will suffer some setback and encounter some difficulties in adjusting to the unexpected, namely the COVID-19 outbreak. Complicating the situation further is the lockdown order and attendance restriction to movement which did not spare the agribusiness community in many parts of Africa.
Just as various sectors of the economy will require funds to restart their businesses after the devastating impact of COVID-19, agriculture stands out as one in which a lot of financial support will be needed to help resuscitate many farming and non-farming agricultural enterprises. A major challenge in Africa is that majority of the farmers still practise small-scale subsistence farming, operate in rural countryside, are scattered all over and have the challenge of access roads. All of these affect agricultural productivity and food security in peculiar ways and have cumulative impacts on the aggregate food production at the national and continental levels. The structural and infrastructural impediments to abundant food production cannot be surmounted overnight. However, tools and mechanisms to circumvent these impediments could be provided for short-term and medium-term interventions to ensure that Africa is fed and the impact of the pandemic is minimised while the livelihoods of people are protected.
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One of the hurdles to overcome is the income inequality between the city dwellers and rural populace, between the skilled and upwardly mobile professionals and those involved in primary production such as agriculture. To keep the disadvantaged population of Africans who are involved in agriculture in business, financial inclusion is one of the ways to immediately scale up. Mobile telephony is already a commonplace within the continent. This could be deployed as a tool for financial inclusion, harnessing the strength in the informal financial systems to create access to formal financial tools for poverty reduction, investment promotion and stimulating economic growth, particularly in rural areas to the extent that it can stem rural-urban migration and even trigger reverse migration from the urban to the rural. Realising the propensity of shocks and vulnerabilities to weaken the poor even further, such intervention tools could make a positive difference by increasing the resilience of the poor to income shocks. They may also help them create wealth.
As Africa battles to recover from COVID-19 economic shock, the small scale farming community, particularly the rural-based, would require simple, affordable, portable and dependable technology solution that enables them to receive financial or material support in the course of their farming activities. Africa’s coverage in rural financial services remains very low and the substantial wage differential between urban and rural employment still remains a major hurdle while policymakers still shy away from the development of the rural economy. National governments and the African Union need to harness simple technologies that could rapidly diffuse and be within the reach of the poor, and which will bring them to the mainstream of the formal economy.
M-PESA, a technology launched in Kenya in 2007 comes handy. The payment system, which allows users to withdraw money from or deposit money into their mobile account, has contributed immensely to Kenya’s economy and has improved the financial inclusion status of the country, irrespective of comments or criticisms of some analysts. With the high penetration of mobile phones in most parts of Africa, this technology could be replicated by countries, in partnership with telecom companies and adapted to specific countries’ peculiar situations. Empirical work on M-PESA has shown that rural households utilise it for remittances, which help them meet daily consumption needs, payment of school fees, purchase of farming equipment and as insurance in emergencies. This is distinct from mobile banking, which is a bit more sophisticated and requires better education by users. Although many banks have some semblance of mobile money operations, they appear to be serving more of the urban populace than the rural. Their financial inclusion potential is still far from being optimally unlocked. Yet, this system could be adopted by governments in attempts to turn around their fortune and bail them out of the economic shocks occasioned by COVID-19.
Despite their significant contribution in the various value chains, the involvement of women in agriculture is often overlooked by decision makers in many parts of Africa. The technology for quick remittance can help greatly in mainstreaming the women in productive agribusiness, at the rural, sub-urban or urban environments. Businesses owned by women and minorities require interventions that break traditional cultural barriers. Although hunger is not gender-specific, the COVID-19 small business crisis may disproportionately impact enterprises owned by minority and women. This needs to be avoided. Problems of food loss and food waste in normal time will be exacerbated in such an abnormal circumstance. Investments in post-harvest storage, processing, packaging and transportation will need to be prominent among the areas eligible for interventions. This will be necessary to reduce the challenge to food security and sustainable supplies.
Targeting the beneficiaries will require speed and consistency as, historically, Africa’s overall food system’s productivity is greatly negatively impacted by poor yield and post-harvest food loss, which result in lower incomes for food producers and higher costs for food consumers. Much of the burden is borne by the poor at normal times. In a crisis time such as the post-COVID-19 pandemic, lowered income by consumers, transaction costs and inability to preserve the produce will create difficult situation that will aggravate food wastes. Guaranteed Minimum Prices instituted and implemented by governments, acting as buyers of the last resorts, could help cushion the effects of food waste and keep the producers in business. Through the financial technology advocated here, governments can pay suppliers and producers for food purchased, or assist them in procuring production inputs, using the style adopted in Nigeria during the Growth Enhancement Support scheme, otherwise known as e-wallet, in which a database of input suppliers resided with the government, which shared the costs of inputs with the beneficiary farmers. Despite all the complaints by some critics, the e-wallet system has proved that remote farmers can be reached with support from the government without the involvement of any intermediary.
Achieving the Sustainable Development Goals (SDGs) and the COP (Paris) climate change commitments of 2015 will be far from being accomplished without the deployment of interventions that could reduce food loss and waste on one hand and financially empower the vulnerable and the financially handicapped on the other. Achieving widespread security will be elusive too. The global food waste crisis is multi-dimensional in its causes and consequences. In the developed countries, the COVID-19 era food waste is taking place mainly at the level of distribution. This involves the perishables in particular – vegetables, milk, eggs and fruits – with official palliatives to keep the farmers producing. The story in developing countries is different. In Africa, it is the same as in other developing countries of Asia, Middle East or Latin America in which wastes occur in forms of degradation, discard, excess supply over demands, spillage or spoilage.
The small scale agricultural enterprises in Africa fall within the Micro, Small and Medium Enterprises (MSMEs). They occupy a significant economic niche. Nigeria has a conservative estimate of 37 million people engaged in MSMEs. This represents roughly 25 per cent or a quarter of Nigerian population at present. Out of these, 36.9 million are reportedly involved in micro enterprises, 68,000 in small enterprises and 4,700 in medium enterprises. This official estimate does not include a population of other informal operators that are not captured, particularly in the extractive industries in the rural areas, many of which are not accessible to official statisticians. Most of these are devoid of technologies and innovations. Much of their operations are seasonal, manual, undocumented and cash flow-based. For this reason, financial inclusion through technology applications will be most urgently needed. If the proportion of SMEs in Nigeria is representative of other countries in the continent, it may be safely inferred that 300 million Africans are in the SMEs, much of which are involved in various stages of agricultural value chains.
The SMEs and small scale agricultural businesses can become an engine of growth and economic recovery after the COVID-19 outbreak if targeted with appropriate technologies to unlock their potential and boost productivity by empowering the relevant stakeholders. Governments and corporate private investors need to rise up quickly and formulate policies for rapid intervention to restore the hope in the prospects of Africa as an emerging economic powerhouse. But this must begin with provision of food to feed the teeming population, beginning with an era that immediately follows a global pandemic which will upset global continental food trade. Africa must therefore evolve its own solution, not necessarily by embarking on grandiose measures but by scaling up simple technologies such as the financial technologies that have proved successful at country level can be modified and applied in others for a rapid economic transformation. The time to act is now.
Frontpage December 19, 2019