_Agri-Africa Update 2020 - The entrepreneur’s view
As part of our series on investing in African agriculture, we talk to Kenyan entrepreneur and community empowerment advocate Haron Wachira who provides a frank view of the challenges faced by the sector and what can be done to overcome them
August 13, 2020
KF - Many parts of Africa have fertile soils, good climates and ample labour, but low levels of agricultural productivity. What has been holding production back, and what needs to be done to unleash the continent’s agricultural potential?
HW - It is true that many parts of Africa have fertile soils, good climate and ample labour. However, there are a number of factors limiting production that I can talk about.
The first is the curse of plenty. This is a widely referred to paradox. Countries with an abundance of natural resources, such as the DRC and Mozambique, for example, tend to have less economic growth compared to countries like Israel and Singapore that have very little in the way of natural resources.
Resources also attract war in direct forms or otherwise. Directly, we are aware of the wars that have been fought in places like Angola (which has 42 of the most precious 45 minerals and commodities), Mozambique, Congo and Sudan.
Indirectly, I like to quote the case of coffee, in which the price to the end consumer in the West changes very little, dollar-wise, while the price of inputs and inflation in the growing countries have been rising. How does this remain possible?
Next we have colonial structures through which the developing world exports products in raw form to the West.
To cite again the case of coffee, for example, it is incredibly difficult for coffee from Kenya, in roast form, to penetrate the western supermarket chains, where it can fetch a superior price. Thus the real value addition in coffee (roasting) is done in the West.
And then we have frequent market failures. These erode the confidence of farmers, leading to abandonment of erstwhile productive lands.
But our greatest failure is lack of good leadership. Singapore’s case of the power of good leadership is an excellent example.
KF - Developing opportunities along the value chain also seems to be a problem - most agricultural exports are in the form of commodities. Why is that do you think, and again what are the solutions?
HW – This can only be overcome through mutual and equitable partnerships between players in both sides: producing and buying arenas. As long as producing countries remain at the mercy of buyers (auction houses etc), no meaningful value addition is possible.
KF - The previous questions were, of course, sweepings generalisations and I know that there are many innovative agri-business projects already taking place across Africa. Could you share details about some of those you have been involved with and explain what has made them successful?
HW – A lot of my experimentation in agriculture has been at the modelling level. I can cite several cases:
I spent about two years developing a model for utilisation of “Peepoo” (www.peepoo.com), an innovative system of collecting human waste from slums and/refugee camps, and auto sanitising it using DAP fertiliser. We worked with coffee farmers in Kirinyaga, and over a two-year period realised very dramatic improvements in coffee production — from an average of 1.5 kgs per plant to over 5 kgs. This model has been improved to the extent that some of those farmers are now realising 15-20 kg/plant from their coffee trees.
We have since extended our services to coffee farmers by finding direct markets (through the second window option) in the USA that pay based on cupping grade. Thus, coffee that is cupped at >85% is able to increase the farmers’ earning by up to Kshs 50 per kg, from the average of Kshs 70 per kg for cherry to over Kshs 130.
We have a programme with the buyers to systematically transform the enlisted farms into organic coffee farming, at which point they will fetch a lot more — organic coffee fetches a premium price — and reduce their inputs (transiting from purchased fertilisers to the use of compost enriched with rocky minerals.
Another model we developed involved growing yams, by changing the way it is planted. By creating a deep planting hole, adding the number of corms per hole and using manure, our clients were able to realise a harvest of 100 kg per yam plant, a huge improvement compared to their standard harvest of about 10 kgs.
We have many such models, each of which can be a great basis for developing a full-scale agribusiness.
It might also be useful to talk about a venture that was not so successful and why that was.
I have been involved in the production of spinach for sale, in dry form, to the USA. The venture did not succeed for a number of reasons.
First, the price offered competes against Chinese imports, and China is a lot more efficient in production. Shipping from Kenya to the USA is $7,800 per 40-foot container while shipping from China is under $6,000 for the same load.
Worse, spinach does not like sudden weather changes, in particular large amounts of rainfall. Instead of harvesting for eight months therefore, the most we were able to harvest were about three harvests, then the rain fell, and each time destroyed the crop.
To mitigate this, growing in greenhouses with soil or through hydroponics is an option. But such investments are expensive and beyond the reach of the small-scale producers we were trying to support.
KF - How important has community empowerment and social entrepreneurship been?
HW - We have been part of a winning partnership between EcoAct (in France) and Kenyan smallholders involving carbon offsetting/carbon credit generation and the sale of those credits in Europe.
It has resulted in the empowerment of participating communities in a demonstrable way. Members of the community grow seedlings, which are then bought by EcoAct and planted in the communities. Members are also provided with a clean energy cooking stove that improves their health. So far, the project has enlisted almost 100,000 participants and is being scaled further.
KF - Do you see a role for overseas investment to help overcome some of the challenges that we discussed earlier?
HW - Yes, if they are open to mutually beneficial partnerships. The main challenge, both ways, is to find honest partners.
KF - If so, are there investment models that can benefits local communities and economies as well as the investors themselves?
HW - Yes. Win-win situations, where overseas partners provide capital, research and knowledge and participate in management and where locally raw materials are converted into value products for sale worldwide.
KF - What do see as the biggest opportunities for investors and could governments be doing more to attract more investment into agriculture?
HW - The problem of government in Africa is corruption. Outside of government, however, the cooperative sector, which can mobilise a lot of participants in a project, offers opportunities.
KF - As the focus on the environment and mitigating climate change increases, are there agricultural and forestry opportunities in Africa for investors looking to tap into the ESG theme?
HW - Carbon-credit linked partnerships offer a huge opportunity for establishing and maintaining forests, to generate carbon credits. Everyone along the value chain benefits; seedling producers, farms (or forests) on which the trees are planted. Investors sell credits and use them to recover their capital and, hopefully, to share some of their gains in community empowerment.