Key Sector Feature: Processing

The processing sector inevitably influences the sectors it surrounds. When agro-processing is left unaccounted for in the larger agricultural system, the result impacts post-harvest loss, job opportunities, market underdevelopment, and ultimately, the local economy. The general consensus, as shown below, is that the key to resolving many of these systemic challenges is through investment in the processing sector.

African Development Bank explains that the amount of money Africa pays annually to import food is crippling. In response, the Bank will invest in the development of staple crop processing zones (SCPZs) to produce markets where smallholder farmers can build their businesses. The Bank has already made investments in a few African countries, but “plans are also under way to reach 15 countries in the next 5 years, including Ethiopia, Democratic Republic of Congo, Zambia, Guinea, Burkina Faso, Madagascar, Cote d’Ivoire, Senegal, and Mozambique.” African Development Bank warns that if changes do not occur within the processing sector, food import cost will rise from $35 billion annually to $110 billion by 2025. In turn, the production, processing, and marketing sectors must be more cohesive within agribusiness to benefit Africa’s agricultural global competiveness. Making this shift will improve quality of life for smallholder farmers and their surrounding communities through economic development that includes agro-allied industries such as road, energy, irrigation, rail, ICT, waste management, and ports.

In a report on African economic growth, the African Center for Economic Transformation (ACET) shows that growth should be paired with DEPTH or Diversity of production, competitive Exports, increase in Productivity, and upgrade in Technology, each to improve Human well-being.

ACET emphasizes the role agro-processing holds within each of these categories to achieve economic transformation via three opportunities:

  1. Processing traditional exports such as coffee, cocoa, and cotton, where Africa has demonstrated its global competitiveness in production, adding value, and creating jobs.
  2. Scaling up promising nontraditional exports such as fruits by upgrading the supply chain—from farms to processing factories—increasing farmer incomes, and generating jobs in factories and allied agribusiness services.
  3. Substituting agricultural imports, which are growing in importance given the rapid rate of increase in agricultural imports into Sub-Saharan Africa.

These opportunities contribute to gainful employment, increased exports, and the overall value of region-specific harvests.

The processing sector adds to the local economy through job creation, moving agriculture into manufacturing. A study on economic multipliers in Tanzania proves that expanding and investing in the processing sector employs more people, leading to increases in income and more economic activity. Too be sure, Technoserve argues that food processing is the missing link in Africa’s agricultural value chain—that food processing businesses “can drive demand for the produce of the small-scale farming families that still compose two-thirds of the population; create formal jobs; and increase the availability of affordable, safe and nutritious food for the region’s consumers.” The effects are cyclical: as demand increase the need for employment, the need for employment increases community wages, and in return, those wages are returned to the local economy for the purchase of affordable food.