Powering Agro based industrial Value Chains in sub-Saharan Africa
Agriculture, the predominant economic activity in sub-Saharan Africa, is becoming increasingly unsustainable due to increased population, changing access to resources and evolving markets. This is being exacerbated by climate change, which has contributed to a series of droughts culminating in the current devastating period of 2016 – 18 that caused widespread impact across the region. For instance, livestock deaths of up to 60% of herds, low market prices and closure of critical export markets due to disease outbreaks have led to severe food insecurity, increased household indebtedness, internal and external migration. Economic growth for most countries in the region has been negatively impacted by escalating fuel prices leading to increased food prices, soaring towards 20% per annum in 2018. With increased cost of energy access and unreliable supply of fuel, private sector driven businesses – more so – processing facilities continue to scale down their operations leading to loss of employment and livelihoods. Markets for farm produce have become unreliable leading to unstable prices leading, loss of income hence increased vulnerability of rural farmers.
Africa can feed Africa, industrialize and provide employment opportunities through agribusiness and renewable energy value chains. It is well endowed and has the markets, but needs more than good technology policies. Scaling up productivity means tapping water resources for irrigation, providing reliable energy for productive use, providing incentives for financial institutions to invest in renewable energy for commercial farming, to boost profitable and competitive agribusiness sector through increased access to low cost renewable energy.
In sub-Saharan Africa, the agriculture sectors face massive power challenges. Smallholder farmers and processors in Zimbabwe are faced with high cost of energy and unreliable supply. On average, agribusinesses spend up to 30% of their revenue on energy. These limit their ability to adopt modern agricultural practices, increase food production, improve efficiency of their operations and benefit from broad-based, low-carbon economic growth. For instance; i) cold storage facilities cannot operate optimal due to power outages; ii) trading in perishable produce is not commercially viable due massive post-harvest losses.
Agri-processors scale down their operations due to lack of power leading to job losses resulting to unsustainable livelihoods. To ensure sustainable supply of energy for agro value chains, there is need to support the development and deployment of clean energy innovations that increase agriculture productivity to help end extreme poverty, unemployment and extreme hunger.
AECF invests in private sector to deliver innovative solutions for low income people in the fields of agriculture and renewable energy. Supporting rural communities to participate in various agro business value chains and increasing access to renewable energy products and services, for both domestic and productive use. This has led to development of a substantial investment portfolio of over 250 companies impacting over 16 million rural households in 2017 alone.
In East Africa, AECF through Renewable Energy and Adaptation to Climate Technologies (REACT) invested in Future Pump to manufacture and distribute solar powered irrigation pumps at affordable costs. In Kenya and Uganda, the pumps have assisted smallholder farmers triple their incomes. In the past 2 years, the company has expanded its distribution network to Zambia, Ethiopia and Senegal through rural based financial institutions, non-governmental organisations (NGOs), water service providers, agricultural producers and marketing groups. While this can be replicated in Zimbabwe, we challenge the country’s private sector to provide alternative products/ solutions which will eventually crowd in the market and create competition.
Renewable Energy and Adaptation to Climate Technologies sub-Sahara Africa (REACT SSA) program will continue to catalyse resources and focus attention in working with the private sector to provide market based solutions which address lack of access to reliable, affordable and clean energy services and rebuild the country’s economic system – more so in the rural markets. Amongst other business models, the program will finance established and start up rural – based agro value chains/ companies with affordable working capital to access renewable energy and enable them scale production, engage out-grower farming systems / networks, provide markets to rural farmers and create additional employment opportunities.
The time is now to rebuild Zimbabwe.
Businesses in Zimbabwe looking for funding in the renewable energy sector can apply for the REACT SSA competition