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IMF Executive Board Concludes 2012 Article IV Consultation with Nigeria

Posted on 29 March 2013 by Africa Business

ABUJA, Nigeria, March 29, 2013/African Press Organization (APO)/ On February 6, 2013, the Executive Board of the International Monetary Fund (IMF) concluded the 2012 Article IV consultation with Nigeria.1

Background

Macroeconomic performance has been broadly positive over the past year. Real gross domestic product (GDP) growth is projected to have decelerated slightly to 6.3 percent, reflecting the effects of the nationwide strike in early 2012, floods in the fourth quarter of 2012, and continued security problems in the north. Annual inflation increased from 10.3 percent (end-of-period) in 2011 to 12.3 percent in 2012, owing mainly to the adjustment of administrative prices of fuel and electricity; large increases in import tariffs on rice and wheat; and the impact of floods in Q3. The external position has strengthened and international reserves rose from US$32.6 billion at end-2011 to US$44 billion at end-2012 (5½ months of prospective imports), driven by sustained high oil prices, stricter administration of the gasoline subsidy regime, and strong portfolio inflows.

The fiscal policy stance was tightened in 2012 and fiscal buffers are being rebuilt. The non-oil primary deficit of the consolidated government is estimated to have narrowed from about 36 percent of non-oil GDP in 2011 to 30.5 percent in 2012, mainly due to expenditure restraint. Monetary policy remained tight in 2012 in response to inflationary pressures. The central bank kept its policy rate unchanged during the year but raised the cash reserve requirement for banks from 8 percent to 12 percent and lowered allowable open foreign exchange position for banks. Financial soundness indicators point to continued improvements in the health of the banking system.

In 2013, growth is expected to recover to above 7 percent. Inflation is projected to decline below 10 percent, supported by the tight monetary policy stance and ongoing fiscal consolidation. The key downside risks are a large drop in world oil prices; and slow progress in building consensus around key fiscal reforms.

Executive Board Assessment

Executive Directors commended the authorities for prudent macroeconomic policies that have underpinned a strong economic performance in recent years. Looking ahead, Directors agreed that widespread unemployment and poverty remain key challenges for policymakers, and called for renewed efforts to make economic growth more broad-based and inclusive.

Directors supported the authorities’ strategy of consolidating the fiscal position while opening up policy space for needed investment in infrastructure and human capital. To this end, they underscored the need to improve tax administration, better prioritize public expenditure, strengthen public financial management, and improve the fiscal framework. In particular, they encouraged the authorities to reduce poorly-targeted fuel subsidies, adopt a rule to set the reference oil price in the budget, and fully operationalize the Sovereign Wealth Fund as soon as possible. Efforts to mobilize public support for these reforms should be intensified.

Directors considered the current tight monetary stance to be consistent with the authorities’ objective of reducing inflation to single digits. They also took note of the staff’s assessment that the exchange rate in real effective terms is broadly in line with fundamentals.

Directors commended the authorities’ success in restoring financial stability after the 2009 banking crisis. In light of this achievement, they recommended winding down the operations of the asset management company to curb moral hazard and fiscal risks. Directors welcomed the central bank’s commitment to address supervisory and regulatory gaps identified in the Financial Stability Assessment Update, particularly the need to strengthen cross-border supervision and the regime against money laundering and terrorism financing.

Directors concurred that wide-ranging reforms are key to make growth more inclusive. They agreed on the importance of supporting sectors with high employment potential, not through protectionist measures or tax incentives but rather with initiatives to improve governance, the investment climate, and competiveness. Directors welcomed reforms underway in the energy sector, and looked forward to an early passage of the Petroleum Industry Bill which would boost investment, government revenue, and fiscal transparency. They also encouraged the authorities to promote market-based access to credit for small- and medium-sized enterprises.

 

Nigeria: Selected Economic and Financial Indicators, 2009–2013

 

2009    2010    2011    2012    2013

Act.    Act.    Act.    Act.    Proj.

 

National income and prices

(Annual percentage change,

Unless otherwise specified)

Real GDP (at 1990 factor cost)

7.0    8.0    7.4    6.3    7.2

Oil and Gas GDP

0.5    5.2    -0.6    1.8    4.9

Non-oil GDP

8.3    8.5    8.9    7.1    7.5

Production of crude oil (million barrels per day)

2.2    2.5    2.4    2.4    2.5

Nominal GDP at market prices (trillions of naira)

25.1    34.4    37.8    43.1    48.1

Nominal non-oil GDP at factor cost (trillions of naira)

17.7    19.9    22.5    26.9    31.1

Nominal GDP per capita (US$)

1,110    1,465    1,522    1,637    1,686

Consumer price index (end of period)

12.5    13.7    10.8    12.7    8.2

Current account balance (percent of GDP) 1

8.3    5.9    3.6    4.7    4.0

Consolidated government operations

(Percent of GDP)

Total revenues and grants

17.8    20.0    29.9    28.1    26.7

Of which: oil and gas revenue

10.6    14.0    23.4    21.5    19.9

Total expenditure and net lending

27.3    26.9    29.4    27.1    26.7

Overall balance

-9.5    -6.9    0.5    0.9    0.0

Non-oil primary balance (percent of non-oil GDP)

-26.8    -34.3    -36.0    -30.4    -28.3

Excess Crude Account / SWF (US$ billions) 2

7.1    2.7    4.6    9.7    18.1

Money and credit

(Change in percent of broad money at the beginning of the period, unless otherwise specified)

Broad money

17.1    6.9    15.4    10.0    18.1

Net foreign assets

-10.9    -10.3    5.5    13.9    12.4

Net domestic assets

28.0    17.2    9.9    -3.9    5.7

Treasury bill rate (percent; end of period)

4.0    7.5    14.3    …    …

External sector

(Annual percentage change,

unless otherwise specified)

Exports of goods and services

-33.4    36.5    20.1    6.5    0.7

Imports of goods and services

-22.6    36.6    27.2    4.2    3.5

Terms of trade

-16.3    10.0    9.1    1.0    -2.1

Price of Nigerian oil (US$ per barrel)

61.8    79.0    109.0    110.1    104.4

Nominal effective exchange rate (end of period)

82.2    83.6    82.2    …    …

Real effective exchange rate (end of period)

110.0    120.7    119.4    …    …

Gross international reserves (US$ billions)

42.4    32.3    32.6    45.9    53.4

(Equivalent months of imports of goods and services)

7.4    4.5    4.3    5.9    6.4

 

Sources: Nigerian authorities; and IMF staff estimates and projections.

1Large errors and omissions in the balance of payments suggest that the current account surplus is overestimated by a significant (but unknown) amount.

2Consistent with federal, state, and local governments.

1 Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.

 

SOURCE

International Monetary Fund (IMF)

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Madagascar needs more than $41 million to end locust plague / Half of the country infested by locusts – food production seriously at risk

Posted on 26 March 2013 by Africa Business

ROME, Italy, March 26, 2013/African Press Organization (APO)/ Madagascar needs more than $22 million of emergency funding by June to start fighting a severe locust plague that threatens the country’s next cropping seasons and the food security of more than half the country’s population, FAO said today. The agency underlined, however, that a three-year strategy is needed – requiring an additional $19 million.

 

Currently, about half the country is infested by hoppers and flying swarms – each swarm made up of billions of plant-devouring insects. FAO estimates that about two-thirds of the island country will be affected by the locust plague by September 2013 if no action is taken.

 

In view of the deteriorating situation, the Ministry of Agriculture of Madagascar declared a national disaster on 27 November 2012. In December, the Ministry of Agriculture requested technical and financial assistance from FAO to address the current locust plague, ensure the mobilization of funds as well as the coordination and implementation of an emergency response.

 

The emergency funding that has to arrive by June will allow FAO, together with the Ministry of Agriculture, to launch a full-scale spraying campaign for the first year.

 

Nearly 60 percent of the island’s more than 22 million people could be threatened by a significant worsening of hunger in a country that already has extremely high rates of food insecurity and malnutrition. In the poorest southern regions, where the plague started, around 70 percent of households are food insecure.

 

The plague now threatens 60 percent of the country’s rice production. Rice is the main staple in Madagascar, where 80 percent of the population lives on less than a dollar per day.

 

The locust swarms would also consume most green vegetation that might normally serve as pasture for livestock.

 

From start to finish

 

“We know from experience that this plague will require three years of anti-locust campaigns. We need funds now to procure supplies and to timely set-up the aerial survey and control operations,” said Annie Monard, FAO Senior Officer and Coordinator of the FAO locust response.

 

“Failure to respond now will lead to massive food aid requirements later on,” said Dominique Burgeon, Director of the FAO Emergency and Rehabilitation Division.

 

“Campaigns in past years were underfunded, and unfortunately it means that not all locust infestations were controlled,” said Monard. She compared it to not uprooting the roots of a weed, in which case even more weeds come back.

 

Current national efforts

 

The national Locust Control Centre has thus far treated 30 000 hectares of farmland since the six-month rainy season began in October 2012, but some 100 000 hectares that need to be treated haven’t been, due to the government’s limited capacity.

 

In late February, the situation was made even worse by Cyclone Haruna, which not only damaged crops and homes but also provided optimal conditions for one more generation of locusts to breed.

 

The first year of the FAO strategy to control locusts would rely on large-scale aerial operations. Some 1.5 million hectares will be treated in 2013-14, which declines to 500 000 hectares in the second year and 150 000 hectares in the third and last year of the strategy. All the operations will be implemented in respect of human health and the environment.

 

The strategy also includes:

•    establishment and training of a Locust Watch Unit inside the Plant Protection Directorate, for monitoring and analysis of the locust situation over the whole invasion area;

•    aerial and ground survey operations;

•    monitoring and mitigation of locust control operations to preserve human health and protect the environment;

•    training in pesticide and spraying operations management.

 

An impact assessment of the locust crisis on crops and pasture will be conducted each year to determine the type of support needed by farming households whose livelihoods have been affected.training in pesticide and spraying operations management.

 

SOURCE

Food and Agriculture Organization of the United Nations (FAO)

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AfricaRice: Average rice yield in SSA has jumped 30% after rice crisis

Posted on 16 March 2013 by Africa Business

COTONOU, Benin, March, 2013/African Press Organization (APO)/ An analysis by the Africa Rice Center (AfricaRice) has revealed that the paddy rice production growth rate in sub-Saharan Africa (SSA) shot up from 3.2% per year before the rice crisis (2000–2007) to 8.4% per year after the rice crisis (2007–2012).

The analysis also showed that average rice yield in SSA jumped by about 30% from 2007 to 2012 and that it is increasing at a faster rate than the global average.

“This is very encouraging news,” said AfricaRice Director General Dr Papa Seck. “The surge in SSA’s rice production and yield is a result of key investments made by farmers, governments, the private sector, the research community and donors to develop Africa’s rice sector.”

Dr Seck underlined that it is crucial to maintain this trend, because rice consumption continues to increase in SSA at an annual rate of 5%.

High rice prices in late 2007 and 2008 had sparked food riots in several African cities. As a result of this “rice crisis,” African governments, assisted by the international donor community, embarked on ambitious programs to boost their rice production capacity.

To find out the domestic production responses to these measures, AfricaRice analyzed trends in rice production across the African continent, placing particular emphasis on the periods before and after the 2007/2008 rice crisis. All data were retrieved from the United States Department of Agriculture (USDA) (www.fas.usda.gov/psdonline/psdQuery.aspx, accessed 7 February 2013).

“We were pleased to learn that paddy rice production in SSA increased by 2.8 million tonnes from 2000 to 2007, and then accelerated, increasing by 4.7 million tonnes in the period 2007–2012,” said AfricaRice Deputy Director General Dr Marco Wopereis.

“But what’s more important, the analysis revealed that average rice yield in SSA increased by about 11 kg per ha per year from 1961 to 2007 and by a spectacular 108 kg per ha per year from 2007 to 2012, despite drought and floods in several African countries in 2011 and 2012.”

He explained that such growth rates are comparable with cereal yield growth rates after the Second World War in the UK and the USA. Rice yield worldwide – driven by the Green Revolution in Asia – increased by 52 kg per ha per year over the period 1960–2010.

“Currently, 71% of the increase in paddy rice production in SSA can be explained by yield increase and 29% by area expansion, whereas before the rice crisis, only 24% of production increase could be attributed to increases in yield and 76% to increases in harvested area,” Dr Wopereis added.

“This is evidence of increased use of technological innovation, such as improved varieties and improved crop management in general.”

More information on this analysis is provided in Dr Wopereis’ blog piece. A forthcoming AfricaRice publication, to be published by CABI, entitled Realizing Africa’s Rice Promisewill present a detailed analysis.

The results of this study will also be discussed at the Third Africa Rice Congress, which is planned to be organized by AfricaRice and the Government of Cameroun in Yaoundé, Cameroun, 21–24 October 2013.

 

SOURCE

Africa Rice Centre (WARDA)

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AfricaRice : le rendement moyen du riz en Afrique subsaharienne a augmenté de 30 % après la crise rizicole

Posted on 16 March 2013 by Africa Business

COTONOU, Benin, 14 mars 2013/African Press Organization (APO)/ Une analyse effectuée par le Centre du riz en Afrique (AfricaRice) a révélé que le taux de croissance de la production de paddy en Afrique subsaharienne (ASS) est passé de 3,2 % par an avant la crise rizicole (2000–2007) à 8,4 % par an après la crise rizicole (2007–2012).

L’analyse a également montré que le rendement moyen du riz en ASS a augmenté d’environ 30 % entre 2007 et 2012 et qu’il augmente à un rythme plus rapide que la moyenne mondiale.

« Il s’agit là d’une nouvelle très encourageante, » a déclaré le Directeur général d’AfricaRice, Dr Papa Seck, « l’augmentation de la production rizicole résulte des investissements conséquents faits par les producteurs, les gouvernements, le secteur privé, la communauté scientifique et les donateurs pour développer le secteur rizicole en Afrique. »

Dr Seck a souligné qu’il sera capital de maintenir cette tendance parce que la consommation de riz ne cesse d’augmenter en Afrique subsaharienne à un taux de 5 % par an.

Des prix élevés du riz à la fin de 2007 et 2008 avaient provoqué des émeutes de la faim dans plusieurs villes africaines. En conséquence de cette “crise rizicole”, les gouvernements africains, aidés par la communauté internationale des donateurs, ont lancé des programmes ambitieux pour accroître leur capacité de production de riz.

Pour connaître les réponses de la production locale à ces mesures incitatives, AfricaRice a analysé les tendances de la production de riz sur l’ensemble du continent africain, en mettant un accent particulier sur ce qui s’est passé avant et après la crise rizicole de 2007– 2008. Toutes les données analysées ont été récupérées auprès du Département américain de l’agriculture (USDA) (www.fas.usda.gov/psdonline/psdQuery.aspx, le 7 février 2013).

« Nous avons été heureux d’apprendre que la production de paddy en ASS a augmenté de 2,8 millions de tonnes (Mt) de 2000 à 2007, et ensuite s’est accélérée, augmentant de 4,7 Mt pendant la période 2007–2012, » a déclaré le Directeur général adjoint d’AfricaRice,Dr Marco Wopereis.

« Mais ce qui est plus important, nos analyses font ressortir que le rendement moyen du riz en ASS a augmenté d’environ 11 kg par ha par an de 1961 à 2007 et de 108 kg par ha par an de 2007 à 2012, malgré deux années relativement mauvaises (2011 et 2012) frappées par la sécheresse et les inondations.»

Il a expliqué que ces taux de croissance sont comparables à ceux des rendements des céréales après la Seconde Guerre mondiale au Royaume-Uni et aux États-Unis d’Amérique. Le rendement du riz dans le monde entier, sous l’impulsion de la révolution verte en Asie, a augmenté de 52 kg par ha par an pendant la période 1960–2010.

« Actuellement, 71 % de l’augmentation de la production de paddy peut s’expliquer par l’augmentation du rendement et 29 % par l’expansion des superficies emblavées. En revanche, avant la crise rizicole 24 % de la hausse de la production pouvaient être attribués aux augmentations du rendement et 76 % aux augmentations de la superficie emblavée, » a déclaré Dr Wopereis.

« Cela montre une utilisation accrue de l’innovation technologique telle que les variétés améliorées et la gestion améliorée des cultures en général. »

Plus d’information sur cette analyse sont données dans le blog de Dr Wopereis. Une analyse détaillée sera présentée dans une publication d’AfricaRice intitulée ‘Realizing Africa’s Rice Promise’, qui devra être publiée par CABI.

Les résultats de cette étude seront aussi discutés lors du troisième Congrès du riz en Afrique, actuellement en préparation par AfricaRice et le gouvernement du Cameroun, et qui aura lieu du 21 au 24 octobre 2013 à Yaoundé, Cameroun.

 

SOURCE

Africa Rice Centre (WARDA)

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Africa’s Agriculture and Agribusiness Markets Set to Top US$ One Trillion in 2030

Posted on 06 March 2013 by Africa Business

STORY HIGHLIGHTS
  • Africa has the potential to create a trillion-dollar food market
  • But farmers need better access to help them grow and trade their products
  • A new report outlines challenges and solutions to Africa’s Agriculture and Agribusiness sectors

WASHINGTON –A new World Bank report “Growing Africa: Unlocking the Potential of Agribusiness,” says that Africa’s farmers and agribusinesses could create a trillion-dollar food market by 2030 if they can expand their access to more capital, electricity, better technology and irrigated land to grow high-value nutritious foods.  The report calls on governments to work side-by-side with agribusinesses, to link farmers with consumers in an increasingly urbanized Africa.

“The time has come for making African agriculture and agribusiness a catalyst for ending poverty,” says Makhtar Diop, World Bank Vice President for Africa Region. “We cannot overstate the importance of agriculture to Africa’s determination to maintain and boost its high growth rates, create more jobs, significantly reduce poverty, and grow enough cheap, nutritious food to feed its families, export its surplus crops, while safeguarding the continent’s environment.”

New Findings

Good prospects: Africa’s food and beverage markets are projected to reach $1 trillion by 2030. By way of comparison, the current size of the market is $313 billion, offering the prospect of a three-fold increase, bringing more jobs, greater prosperity, less hunger, and significantly more opportunity enabling African farmers to compete globally.

Performance boost needed: Africa’s agriculture and agribusinesses are underperforming.  Many developing countries such as Brazil, Indonesia, and Thailand now export more food products than all of Sub-Saharan Africa combined.  Even as export shares are falling, import of food products is rising.  The report argues that these adverse trends can be reversed through good policies, sustained public-private investment, and strong public-private partnerships backed by open, transparent procedures and processes along the entire value chain.

Untapped land and water: Africa has more than half of the world’s fertile yet unused land.  Africa uses only two percent of its renewable water resources compared to the global average of five percent.  Post-harvest losses run 15 to 20 percent for cereals and are higher for perishable products due to poor storage and other farm infrastructure.

While pointing to the need for significant investment in infrastructure the report carries an unequivocal warning: in the rush to allocate land for agribusiness, care needs to be taken so that acquisitions do not threaten people’s livelihoods and land purchases or leases are conducted according to ethical and socially responsible standards, including recognizing local users’ rights, holding consultations with local communities, and paying fair market-rate compensation for land acquired.

Adding Value

The report took an in-depth look at entire value chains – the process for taking products from farms to markets – for five commodities, rice, maize, cocoa, dairy and green beans.  Africa is the world’s leading importer and consumer of rice, paying US$3.5 billion for import bills. By increasing rice production, Senegal can help meet local demand but more capital is needed together with greater investment in irrigation and easing restrictions on access to land. Ghana, another top importer, produces more varieties of rice but at significantly higher cost.

“Improving Africa’s agriculture and agribusiness sectors means higher incomes and more jobs. It also allows Africa to compete globally. Today, Brazil, Indonesia and Thailand each export more food products than all of sub-Saharan Africa combined.  This must change,” says Jamal Saghir, World Bank Director for Sustainable Development in the Africa Region.

Success Story

Although much of Eastern and Southern Africa is well suited to dairy production, only Kenya has established a competitive dairy industry. Kenya’s industry is based partly on a formal sector for processed milk and other dairy products, but its dynamic informal sector (based mostly on raw milk) is even more important, supplying over 80 percent of the market. Kenya’s success largely comes from the entrepreneurship of smallholders’ who choose high milk-yielding cross-bred cattle, improved feeds and paid better attention to animal health.  Also, Kenya success points to the importance of improving linkages to the formal sector through cooperative milk collection and milk cooling centers. Even though challenges remain government policy, especially flexibility in setting quality and safety standards for the informal chain were vital.

Looking Ahead

The report says agriculture and agribusiness should be at the top of the development and business agenda in Sub-Saharan Africa. Strong leadership and commitment from both public and private sectors is needed.  For success, engaging with strategic “good practice” investors is critical, as is the need for strengthening of safeguards, land administration systems, and screening investments for sustainable growth.  Concluding on an upbeat note, the report says Africa can draw on many local successes to guide governments and investors toward positive economic, social and environmental outcomes.

“African farmers and businesses must be empowered through good policies, increased public and private investments and strong public-private partnerships,” says Gaiv Tata, World Bank Director for Financial and Private Sector Development in Africa.  “A strong agribusiness sector is vital for Africa’s economic future.”

 

Source: WorldBank.org

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Africa’s Food Markets Could Create One Trillion Dollar Opportunity by 2030

Posted on 06 March 2013 by Africa Business

WASHINGTON, March, 2013 – Africa’s farmers and agribusinesses could create a trillion-dollar food market by 2030 if they can expand their access to more capital, electricity, better technology and irrigated land to grow high-value nutritious foods, and if African governments can work more closely with agribusinesses to feed the region’s fast-growing urban population, according to a new World Bank report launched today.

According to the Growing Africa: Unlocking the Potential of Agribusiness report, Africa’s food systems, currently valued at US$313 billion a year from agriculture, could triple if governments and business leaders radically rethink their policies and support to agriculture, farmers, and agribusinesses, which together account for nearly 50 percent of Africa’s economic activity.

The time has come for making African agriculture and agribusiness a catalyst for ending poverty,” says Makhtar Diop, World Bank Vice President for Africa Region. “We cannot overstate the importance of agriculture to Africa’s determination to maintain and boost its high growth rates, create more jobs, significantly reduce poverty, and grow enough cheap, nutritious food to feed its families, export its surplus crops, while safeguarding the continent’s environment.”

Agribusiness: strong growth opportunities

Due to a combination of population growth, rising incomes and urbanization, strong demand is driving global food and agricultural prices higher.  Supply issues – slowing yield growth of major food crops, slowdown in research spending, land degradation and water scarcity issues, and a changing climate all mean that prices will remain high.  In this new market climate, Africa has great potential for expanding its food and agricultural exports.

Africa holds almost 50 percent of the world’s uncultivated land which is suited for growing food crops, comprising as many as 450 million hectares that are not forested, protected, or densely populated. Africa uses less than 2 percent of its renewable water sources, compared to a world average of five percent. Its harvests routinely yield far less than their potential and, for mainstay food crops such as maize the yield gap is as wide as 60 to 80 percent. Post-harvest losses run 15 to 20 percent for cereals and are higher for perishable products due to poor storage and other farm infrastructure.

African countries can tap into booming markets in rice, maize, soybeans, sugar, palm oil, biofuel and feedstock and emerge as major exporters of these commodities on world markets similar to the successes scored by Latin America and Southeast Asia.  For Sub-Saharan Africa, the most dynamic sectors are likely to be rice, feed grains, poultry, dairy, vegetable oils, horticulture and processed foods to supply domestic markets.

The report cautions that even as land will be needed for some agribusiness investments, such acquisitions can threaten people’s livelihoods and create local opposition unless land purchases or leases are conducted according to ethical and socially responsible standards, including recognizing local users’ rights, thorough consultations with local communities, and fair market-rate compensation for land acquired.

Improving Africa’s agriculture and agribusiness sectors means higher incomes and more jobs. It also allows Africa to compete globally. Today, Brazil, Indonesia and Thailand each export more food products than all of sub-Saharan Africa combined.  This must change,” says Jamal Saghir, World Bank Director for Sustainable Development in the Africa Region.

Value Chains are essential

Rice: Africa has become a major consumer and importer of rice, and Africans import half the rice they eat and pay top dollar for it, $3.5 billion per year and more.  Ghana and Senegal are significant importers.  Senegal is competitive among its neighbors, but it is held back by the difficulty farmers have in accessing land, capital, finance for irrigation expansion and appropriate crop varieties.  Ghana produces fewer varieties of rice than Senegal, but at significantly higher cost, and levies 40 percent tariffs and other charges on imports. Poor grain quality, cleanliness and packaging are major deterrents for consumers constraining the sector’s performance.

Maize: A food staple for many Africans, maize is grown on 25 million hectares or 14 percent of cropped land. In Zambia where people eat on average 133 kilograms of cereals a year, maize provides half the calories in their diets.  Zambia is competitive when importing maize but fails on exports.  High transport costs, higher labor costs and lower yields combine to increase costs by one-third compared to Thailand, a major international producer of rain-fed maize.  The report argues that Zambia’s future competitiveness depends on raising yields, reducing costs, and removing disincentives for the private sector in markets and trade.

In addition, the study reviewed value chains for cocoa in Ghana and dairy and green beans in Kenya.

African farmers and businesses must be empowered through good policies, increased public and private investments and strong public-private partnerships,” says Gaiv Tata, World Bank Director for Financial and Private Sector Development in Africa.  “A strong agribusiness sector is vital for Africa’s economic future.”

Solutions

Agriculture and agribusiness should be at the top of the development and business agenda in Sub-Saharan Africa. The report calls for strong leadership and commitment for both public and private sectors.  As comparators, the report cites case studies from Uruguay, Indonesia and Malaysia. For success, engaging with strategic “good practice” investors is critical, as is the strengthening of safeguards, land administration systems, and screening investments for sustainable growth.

The report notes that Africa can also draw on many local successes to guide governments and investors toward positive economic, social and environmental outcomes.

 

Source: WorldBank.org

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Africa’s Food Markets Could Create One Trillion Dollar Opportunity by 2030

Posted on 04 March 2013 by Africa Business

WASHINGTON, March 4, 2013/African Press Organization (APO)/ — Africa’s farmers and agribusinesses could create a trillion-dollar food market by 2030 if they can expand their access to more capital, electricity, better technology and irrigated land to grow high-value nutritious foods, and if African governments can work more closely with agribusinesses to feed the region’s fast-growing urban population, according to a new World Bank report launched today.

 

According to the Growing Africa: Unlocking the Potential of Agribusinessreport, Africa’s food systems, currently valued at US$313 billion a year from agriculture, could triple if governments and business leaders radically rethink their policies and support to agriculture, farmers, and agribusinesses, which together account for nearly 50 percent of Africa’s economic activity.

 

“The time has come for making African agriculture and agribusiness a catalyst for ending poverty,” says Makhtar Diop, World Bank Vice President for Africa Region. “We cannot overstate the importance of agriculture to Africa’s determination to maintain and boost its high growth rates, create more jobs, significantly reduce poverty, and grow enough cheap, nutritious food to feed its families, export its surplus crops, while safeguarding the continent’s environment.”

 

Agribusiness: strong growth opportunities

 

Due to a combination of population growth, rising incomes and urbanization, strong demand is driving global food and agricultural prices higher. Supply issues – slowing yield growth of major food crops, slowdown in research spending, land degradation and water scarcity issues, and a changing climate all mean that prices will remain high. In this new market climate, Africa has great potential for expanding its food and agricultural exports.

 

Africa holds almost 50 percent of the world’s uncultivated land which is suited for growing food crops, comprising as many as 450 million hectares that are not forested, protected, or densely populated. Africa uses less than 2 percent of its renewable water sources, compared to a world average of five percent. Its harvests routinely yield far less than their potential and, for mainstay food crops such as maize the yield gap is as wide as 60 to 80 percent. Post-harvest losses run 15 to 20 percent for cereals and are higher for perishable products due to poor storage and other farm infrastructure.

 

African countries can tap into booming markets in rice, maize, soybeans, sugar, palm oil, biofuel and feedstock and emerge as major exporters of these commodities on world markets similar to the successes scored by Latin America and Southeast Asia. For Sub-Saharan Africa, the most dynamic sectors are likely to be rice, feed grains, poultry, dairy, vegetable oils, horticulture and processed foods to supply domestic markets.

 

The report cautions that even as land will be needed for some agribusiness investments, such acquisitions can threaten people’s livelihoods and create local opposition unless land purchases or leases are conducted according to ethical and socially responsible standards, including recognizing local users’ rights, thorough consultations with local communities, and fair market-rate compensation for land acquired.

 

“Improving Africa’s agriculture and agribusiness sectors means higher incomes and more jobs. It also allows Africa to compete globally. Today, Brazil, Indonesia and Thailand each export more food products than all of sub-Saharan Africa combined. This must change,” says Jamal Saghir, World Bank Director for Sustainable Development in the Africa Region.

 

Value Chains are essential

 

Rice: Africa has become a major consumer and importer of rice, and Africans import half the rice they eat and pay top dollar for it, $3.5 billion per year and more. Ghana and Senegal are significant importers. Senegal is competitive among its neighbors, but it is held back by the difficulty farmers have in accessing land, capital, finance for irrigation expansion and appropriate crop varieties. Ghana produces fewer varieties of rice than Senegal, but at significantly higher cost, and levies 40 percent tariffs and other charges on imports. Poor grain quality, cleanliness and packaging are major deterrents for consumers constraining the sector’s performance.

 

Maize: A food staple for many Africans, maize is grown on 25 million hectares or 14 percent of cropped land. In Zambia where people eat on average 133 kilograms of cereals a year, maize provides half the calories in their diets. Zambia is competitive when importing maize but fails on exports. High transport costs, higher labor costs and lower yields combine to increase costs by one-third compared to Thailand, a major international producer of rain-fed maize. The report argues that Zambia’s future competitiveness depends on raising yields, reducing costs, and removing disincentives for the private sector in markets and trade.

 

In addition, the study reviewed value chains for cocoa in Ghana and dairy and green beans in Kenya.

 

“African farmers and businesses must be empowered through good policies, increased public and private investments and strong public-private partnerships,” says Gaiv Tata, World Bank Director for Financial and Private Sector Development in Africa. “A strong agribusiness sector is vital for Africa’s economic future.”

 

Solutions

 

Agriculture and agribusiness should be at the top of the development and business agenda in Sub-Saharan Africa. The report calls for strong leadership and commitment for both public and private sectors. As comparators, the report cites case studies from Uruguay, Indonesia and Malaysia. For success, engaging with strategic “good practice” investors is critical, as is the strengthening of safeguards, land administration systems, and screening investments for sustainable growth.

 

The report notes that Africa can also draw on many local successes to guide governments and investors toward positive economic, social and environmental outcomes.

 

SOURCE

The World Bank

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Agricultural investment opportunities, best practices & innovations define CMT’s 3rd Commercial Farm Africa Summit

Posted on 19 February 2013 by Africa Business

Centre for Management Technology today launches the 3rd Commercial Farm Africa Summit to take place on March 19-20 in Accra, Ghana. Endorsed by Ghanaian Ministry of Food & Agriculture (MOFA) and supported by Private Enterprise Foundation, the 2-day summit addresses rising agricultural investment opportunities in the region, spotlighting on funding, best practices, infrastructure and innovations challenges.

ACCRA, Ghana –Co-sponsored by SGS South Africa (Corporate) and Swiss Re Corporate Solutions (Afternoon Reception), the 3rd Commercial Farm Africa Summit will open with a keynote speech by a top level official from the Ministry of Food and Agriculture,addressing “Agricultural Investment Opportunities in Ghana”, and public-private partnership in agribusiness development.

Among the speakers at this Africa summit are Mr. Stephen Kumadoh, Principal Valuer of Land Commission who will elaborate on land banks and availability for agricultural investment opportunities, Ms. Sarah Marchand (Holmes) Senior Advisor of Technical Assistance Facility for the African Agriculture Fund sharing on smallholder outgrower schemes and experiences across various countries and sectors, plus Mr. Cobus Burger, Managing Director from SGS South Africa presenting a paper on sustainability in crop production.

Additionally Ms. Christina Ulardic, Head of Market Development Africa, Swiss Re will be examining agricultural project risk management while valuable case studies on agricultural projects in commercial farm in Ethopia and rice project in Africa will be presented by Mr. Vijay Kumar Jain, Director of Ruchi Soya and Mr. Mick Bartlett, Chief Operating Officer of Vita Rice respectively. Praire Volta & Kwanim G.D.K farm, both operating in Ghana, will share their experiences and challenges of investing and operating in Ghana

Tackling sessions on infrastructure and logistics are Mr. Jules Gogoua, Head of Transport Division in ECOWAS Commission, who will focus on development plans in West Africa, and Mr. Nana Osei-Bonsu, Director General of Private Enterprise Foundation, zooming into warehouse receipt system. IFC & Phatisa – Manager of African Agriculture Fund will provide insights on funding of agricultural projects.

Experts from companies including SABMiller Africa and S.A. Sopex N.V will shed light on prospective crops and farming segments such as cassava, corn, livestock and poultry, while Syngenta Foundation for Sustainable Agriculture and Netafim will look at technology and innovations.

 

Contacts

  • Centre for Management Technology
    Ms. Angelia, +65 6345 5701

angelia@cmtsp.com.sg

 

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“The Ethical Water Exchange is THE platform to transform wastewater into a clean tradable resource: treated wastewater.”

Posted on 11 February 2013 by Africa Business

Exclusive interview with Valérie Issumo, Founder, Prana Sustainable Water, Switzerland.  She will address the Water track at African Utility Week on: “Ethical water exchange – the monetary value of recycled wastewater”.

1) You have created an Ethical Water Exchange which is a trading platform to buy or sell commoditized treated wastewater.  Kindly can you give us some background and facts and figures on the current situation in untreated wastewater in Africa?

The 3 most critical global challenges to be solved urgently are:

–      water pollution endangering our health, planet and growth: how to cope technically with complex chemical wastes (nano pollutants, radioactive)

–      water infrastructures finance

–      river bassin management prioritizing human rights (2500 liters/capita/day including water footprint for 2’000 calories/day) and ecosystems services without geopardizing current small sources of revenues

 

Africa has unfortunately the biggest share in the lack of access to water and sanitation and the official numbers are not reflecting the reality if we add the volumes of intreated wastewater du to bad working status.  These problems of lack of access to sanitation and untreated wastewater endangering our health, our environment and our economy could be solved by matching part of the water footprints of commodities with the supplies of treated wastewater for part of the water input of those commodities. Productions of future crops or extractions can happen and be financed thanks to the matching of purchases & sales commitments via futures contracts which are traded on commodities exchanges or futures markets.

Commodities like gold, coffee, soya, copper, nickel…. traded on futures markets sometimes up to 5 years before their production is a good opportunity to correlate the commitments for those commodities with the water procurement security for those commodities and/or to internalize the externalities for those commodities in order to link the credit lines for those commodities with decentralized wastewater infrastructures.

 

Collection and treating in priority floods, domestic and organic wastewater means that related wastewater become a valuable resource when treated and consequently leads to the development of sanitation. For example, approx. 1’500 liters of water must be used to get one kg of refined cane sugar. If supplementary irrigation is necessary like in Swaziland or in Australia, part of the water footprint can come DIRECTLY from treated wastewater from the communities or activities near the sugarcane fields.

Water depletion or water resources contamination is not yet considered in GDP évaluation (or not enoughly). There is not a sigle product or service that hasn’t got water as input or as water footprint so the water interdependencies are on productions, on health, on social, environmental and economic fields.

Water contamination does not recognize any borders, neither do the international trade.  This makes the challenges global.  Nevertheless water problems or opportunities must be tackled locally.

 

The Ethical Water Exchange is the platform to transform wastewater into a clean tradable resource: treated wastewater. This will help to link & correlate partial water footprints of some commodities traded on futures markets with potential supplies of standard treated wastewater.

To match sanitation with the visibility of committed offers & demands of some commodities with huge water footprints and sometimes traded 4 to 5 years before their productions is a way to leapfrog the urgent & massive needs to reduce bad consequences of untreated wastewater.

 

2) What would the Ethical Water Exchange mean for the African market, for  example the cotton industry?

 

Cotton water footprint is approximately 10’000 liters/kg of cotton a cotton t-shirt has an average water footprint of 2’700 liters of water.  Now guess what happens if noxious wastewater reaches the cotton cultures? Yields and pollination drop, cotton growers must use more fertilizers and – as you can see on this graph – cotton prices become very volatile.

 

Trends of energy that must come from renewable energy is a good opportunity for Positive Energy Wastewater facilities that produce more energy than they consume.

> a wastewater treatment line that links systems based e.g. on activated sludge with increased biogas production via anaerobic digestion

 

On a global level if only 10% of the cotton water footprint for the yearly cotton production of 25 mln tons comes from treated wastewater, access to sanitation for about 3’424’657 persons (generating 20l wastewater/capita/day) can be provided.

 

Pls see case study enclosed case study.

 

3) How big a threat is this to the economies on the continent?  How are the different sectors affected by each other?

 

Many serious reports and analysis state that by 2030, projected global water demand could exceed 40% of the current water supply.  (http://www.grida.no/graphicslib/detail/water-availability-in-africa_3368)

 

The goal is to trade ONLY treated wastewater. Wastewater that otherwise would be dumped as toxic waste with huge negative impacts on people & environment.

 

4) On a practical level, how do you see it operating?

We are awaiting the ISO standards for Treated wastewater re-use for irrigation (http://www.iso.org/iso/iso_technical_committee?commid=616869) in order to complete the specifications of the futures contracts for ethical treated wastewater.

1. A trader can cover the market and sourcing risks for future cotton crops via partial water procurement security by buying futures contracts of treated wastewater.

2A. A water management company using clean technologies generating sludge energy will get a solvent water market by selling futures contracts of treated wastewater. Collection, treatment and supplies must be smart metered.

2B. The combinations of offers/demands for commoditized treated wastewater at listed places allows the financing of decentralized sanitation and COMPETITIVE supplies of treated wastewater for cotton productions. The money goes directly for the right purpose.

3. The ethical or philanthropic part goes for treated waster water into reservoirs to be used in priority for insurance or basic human needs or climate changes needs. The transparent pricing of futures contracts for treated wastewater is calculated according to local constraints SUCH AS THE TREATED WASTEWATER THAT NEEDS TO GO BACK TO NATURE.

 

 

To execute quickly the Ethical Water Exchange solution, we don’t need thousands of actors.

 

Traders and financial institutions active on these futures markets can be the responsible catalysts for the urgent water governance.

A trader prefers to see for example Africa as a market of 1bn consumers rather than a place with 1bn survivors. This trader will ALSO be able reduce the risks of defaults for its sourcing.

 

Any financial institution can condition its credit lines to the use of futures contracts of treated wastewater to reduce the water risk exposures & to get its loans paid back.

 

Investors will choose to finance water footprints where it makes sense & where there is untreated wastewater.  This is for the good sake of efficient water use and consequently reduces the production costs.

 

If we do the same for other commodities traded on futures markets such as gold, wheat or soybean… >>> the Ethical Water Exchange can solve rapidly the vital and economic problems of water contamination or fresh water over-use.

 

Increased sanitation will accelerate the eradication of the first cause of deaths and lost of human energy and consequently help poverty alleviation.

 

If you fear BAD speculation for this new commodity, please note prices will be fixed according to the global offer/demands and final uses with progressive prices according to basic human needs like food security. For example, we all need approximately 2’000 calories a day. It is assumed that to produce 1 calorie of food, about 1 liter water is needed but it would be wrong to give priority to rice if there is for example demand for treated wastewater for copper in the same region because the copper might be used e.g. for tractors for agriculture or for houses which are also basic human needs. If the copper industry has proved that they use water more efficiently than the rice grower according to the water footprint methodologies; it is not difficult to prioritize treated wastewater for the more efficient water user (+ of course for non criminal or drugs purposes).

 

The Ethical Water Exchange is our life, DIGNITY and business INSURANCE.

 

 

5) What will be your message at African Utility Week in May?

Health is Wealth.

We also must think of the water infrastructures in terms of service hierarchy:

– safety

– availability

– affordability

Africa can save the old industrialised countries’ mistakes that have led to the financial and environmental crisis.  The conditions are to better value the African resources and not to bargain the related social and environmental costs.

6) Anything you would like to add?

African leaders should not be shy to follow the European model mainly based on state interventions.

 

 

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Trending: Smallholders and investors to work together for better technologies and best practices

Posted on 30 January 2013 by Africa Business

 

“Smallholders are a vast and under-utilized resource;
these are the people we work with – whether smallholders, pastoralists or herders – not just to increase productivity, but to nurture the land, to improve their businesses and strengthen market access.”
– Mr. Kanayo F. Nwanze, President of the International Fund for Agricultural Development

Amidst the growing global demand for staples, Africa is advocating public-private partnership to boost agribusiness as well as moving towards the upgrading of smallholders to strengthen the market and make significant contribution to global food security.

Having investors working with smallholders is like blending new technologies with best local farming practices to create a win-win situation for all. By fusing the two, higher productivity can be achieved to cater to the demand from both foreign and emerging markets in developing countries.

CMT’s 3rd Commercial Farm Africa Summit, endorsed by the Ghanaian’s Ministry of Food and Agriculture to be held in Accra, Ghana, on 19-20 March 2013, presents the latest updates on the agriculture market, investment opportunities, development and funding details as well as zooms into the various food staples including sugar, soya, corn, rice and cassava. Potential of energy crops investment will also be explored.

On top of that, it offers vital information on how to manage and work with smallholders – the opportunities, best practices as well as challenges – from these experts:

  • SMALLHOLDER OUTGROWER SCHEMES – LEARNINGS FROM ACROSS THE CONTINENT
    – Key success factors & best practices in contracting smallholder out-growers
    – Comparing and contrasting experiences across different countries/sectors
    – Thoughts on selecting the appropriate model for a given context
    Sarah Marchand (Holmes), Senior Advisor
    Technical Assistance Facility for the African Agriculture Fund
  • CONNECTING FARMERS TO AGRICULTURAL VALUE CHAINS IN AFRICA: CASSAVA, AFRICA’S BEST KEPT SECRET
    – Utilizing local content to produce beer for the local markets
    – Supply chain management from farm to factory
    – Local sourcing challenges & working with smallholders farm
    – Brewery expansion plans across Africa
    Gerry J van den Houten, Director – Enterprise Development
    SABMiller Africa

Click here to view the brief program agenda.

Register today and confirm your attendance via credit card payment to enjoy a USD 100 discount!

For more information on attending the summit as a delegate, speaker, exhibitor or sponsor, just email me at angelia@cmtsp.com.sg or call me at Tel. +65 6345 5701.

ACT Now To Avoid Disappointment

For a copy of the agenda click here

For info on
Sponsorship Opportunities
Email: nisha@cmtsp.com.sg

To Register:

Contact: Angelia
T: +65 6345 5701
Email: angelia@cmtsp.com.sg

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