Report:MSMEs is the Force in Building Africa’s Food Systems

MSMEs Highlighted as a Force in Building Africa’s Food Systems in the Latest Leading Agriculture Report

AGRA has launched its 2024 Africa Agriculture Status Report, titled “Harnessing the Private Sector for Food Systems Transformation in Africa.”

The report provides an in-depth analysis of the significant role that micro, small, and medium-sized enterprises (MSMEs) play in transforming food systems across Africa.

Developed through extensive collaboration with a diverse group of stakeholders, it explores the vital contributions of MSMEs to agricultural and economic transformation on the continent.

Dr. Agnes Kalibata, President of AGRA, stated, “The Africa Agriculture Status Report 2024 highlights the transformative role of MSMEs in shaping Africa’s agrifood landscape.By harnessing the power of the private sector, we can drive meaningful food systems transformation and achieve sustainable growth.

This report provides actionable insights on supporting MSMEs to enhance their impact on food security and economic development.”

Dr. Kalibata further emphasized, “This report marks a significant milestone in understanding the private sector’s influence on Africa’s agrifood systems. It showcases the crucial impact of MSMEs in driving agricultural productivity and economic development.

Our goal is to illustrate how these enterprises are vital drivers of growth and innovation.We urge increased support and collaboration between governments and the private sector to address challenges and unlock new opportunities for sustainable development.”

The report highlights a significant shift towards more inclusive agribusiness investments by medium and large scale agribusinesses. Recent trends reveal a growing focus on integrating smallholder farmers and enhancing rural livelihoods.

The growing recognition of smallholders’ critical role in agricultural productivity and food security is driving this trend. Programs providing improved seeds, modern farming techniques, and financial services are boosting smallholders’ yields and income.Additionally, rural infrastructure initiatives—such as roads, storage facilities, and market access—are vital for linking small farmers to larger value chains and markets.

Case studies featured in the report demonstrate how investments in cash crops, infrastructure and digital technologies are driving diversification and boosting export growth.

In Malawi, substantial investments in groundnut production, supported by new seed varieties and enhanced processing capabilities, have not only bolstered local agriculture but also expanded the country’s export markets.

Nigeria has revitalized its cocoa sector through strategic investments in modern farming techniques and processing infrastructure and in Ghana, mobile platforms like AgroCenta have revolutionized agriculture by providing farmers with crucial market information, access to credit, and improved input distribution.

Similarly, Kenya’s investment in macadamia nuts, alongside the adoption of digital platforms for farm management and market access, has positioned the country as a leading exporter despite regulatory and market challenges.

Digital technology is transforming agricultural value chains by improving access to inputs, credit, and market information. Platforms like M-Kulima and M-Pesa in East Africa are streamlining transactions and enhancing input distribution efficiency.

Additionally, digital tractor leasing services such as Hello Tractor are increasing mechanization accessibility for smallholder farmers, thereby boosting productivity and reducing costs.

Tanzania’s agro-industrial parks have significantly advanced food processing and value addition. These parks offer essential infrastructure and support services, integrating smallholder farmers into larger value chains and fostering job creation and food security.

Zambia’s investments in veterinary services, feed production, and market access have driven growth in its livestock sector. Enhanced meat and dairy production have improved animal health and expanded export opportunities, contributing to national economic development.

The report ultimately urges governments, development partners, and private sector stakeholders to collaborate in addressing the challenges and seizing growth opportunities identified.

By investing in infrastructure, supporting MSMEs, and implementing effective policies, stakeholders can advance Africa’s agrifood systems toward greater sustainability and resilience.

Summary of Report Findings and Insights

1. Private Sector’s Transformative Impact:The report reveals that the private sector drives approximately 80% of Africa’s food economy, with MSMEs playing a dominant role in managing around 85% of the agrifood value chains. This underscores the critical importance of supporting these enterprises to enhance food security and stimulate economic growth.
2. Growth Drivers and Opportunities: Key factors driving MSME growth include urbanization, rising food consumption, and shifts in dietary patterns.Urban areas, in particular, present significant market opportunities for agrifood enterprises due to increased demand for diverse food products. Urban markets represent a major opportunity, with cities accounting for over 50% of food purchases in many African countries. Additionally, rural markets are expanding as food purchases and market access improve.
3. Challenges Faced by MSMEs:The report highlights several challenges confronting MSMEs, including inadequate infrastructure, limited access to finance, and regulatory barriers. Specific issues include poor road networks, insufficient wholesale markets, and unreliable electricity. These constraints hinder MSME growth and productivity.
4. Policy Recommendations: To address these challenges, the report recommends targeted investments in infrastructure, enhanced financial access, and streamlined regulatory processes. It emphasizes the need for a coordinated agro-industrial policy strategy to support MSMEs and improve their operational environment.
5. Role of Agro-Industrial Parks and Clusters: The report underscores the importance of agro-industrial parks and clusters as tools for addressing infrastructure deficits and providing support services. These focused investments can significantly enhance the efficiency and effectiveness of agrifood systems.
6. Impact on Job Creation and Food Security:MSMEs are major employers in the agrifood sector, providing up to 60% of employment in some regions. They also play a crucial role in ensuring food availability and security by facilitating access to improved technologies and nutritious food products.