Sunibel Corporate Services

Food security: a growing and positive reality in Africa

What is Food security vs Food insecurity?

Food security, as defined by the United Nations’ Committee on World Food Security, means that all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food that meets their food preferences and dietary needs for an active and healthy life. Health is wealth and wealth afford health (organic and most healthy food at the highest top of the food chain) – this is a fact and to ignore it, is like an ostrich with its head in the sand.

Before we address what is food insecurity. It is important to analyse it in its simplest form in the basic agricultural food chain. It must be added that shelter forms an integral part of the problem/solution, plus:

  • Extreme poverty, subsistence farming (tribal villages & consumption and malnutrition);
  • Self-sustainable and can also produce for the formal and informal market;
  • The rich, lifestyle farming (nice to have); and
  • Mega farmers’ high production and productive producers, the wealth creators.

The need for Food Security

The need for food security in Africa is real and vital due to the growing population, political instability, unfavourable market conditions, global warming and inflation among others.

This is why adaption strategies and inherent impact investments are critical. The influence of private investors, institutional investors, Development Finance Institutions, foundations, NGOs, governmental bodies and other investors have contributed a lot in combating food poverty in Africa.

 

Why is Food Security of the essence?

A highly growing unemployed urbanisation dwellers and settlements is a main contributor to malnutrition and living below the poverty line. We have witnessed, over the last decade, that effective development in the agricultural sector is a proven reality to significantly reduce poverty. The real cause for food insecurity is deep-rooted in poverty in all its terms. Such situation obviously provokes considerable cuts in a country’s ability to improve the agricultural sector and the economy at large. However, if the government’s grants are a bigger incentive to stay at home than to go to work, productive poverty counter measures will remain a latent problem ignoring human nature for feed security production.

Food insecurity refers to a lack of access to enough good, healthy, and culturally appropriate food. Everyone needs to eat, and we all need to eat a certain amount to stay healthy, active, and happy. Food insecurity – often rooted in poverty – decreases the ability of countries to develop their agricultural markets and economies.

The question is more on filling an empty stomach rather than focusing on eating healthy, which comes into play at a later stage. Therefore, proper access to quality and healthy food is essential to human existence. The benefits to suitable food channels result in wide ranging positive impacts, including:

  • Poverty reduction;
  • Economic growth and job creation;
  • Improved health and healthcare; and
  • Trade opportunities.
  • Increased global security and stability

Studies in 2019 have revealed that 1 in 3 Africans, that is 422 million people, live below the line of poverty. It represents more than 70% of the world’s poorest people.

According to a forecast performed by the World Data Lab, Africa is fighting poverty with the aid of various stakeholders and donors. The Africans are on the right track to escaping extreme poverty. Even though the pace of poverty reduction is very small (only 367 people per day), it clearly demonstrates that impact returns are being encountered and greater amount of efforts need to be injected again and again over the forthcoming years. It is also projected that by mid-2020, there will be a 1 million-person reduction in total African poverty.

 

Impact investors integration

With the financial aid and technical assistance of impact investors at large, the progress made in terms of food security has been noticeable:

  • Improved agricultural markets and increased food production;
  • Funding research to heighten disease resistance in beans and increase crop production;
  • Global initiatives intended to break the cycle of hunger and poverty;
  • New food products have been developed, designed and tested to improve the nutritional value of the food aid that is delivered overseas; and
  • Strengthening developing countries’ extension systems.

As part of their Feed Africa strategy, the African Development Bank has invested a lot over the years. The bank will also invest USD 24 billion over the next ten years to support the transformation of African agriculture. The following areas will be central:

  • Waste reduction and improving distribution channels;
  • Funding incentives to increase production of produce such as millet, sorghum, coffee and cashews;
  • Infrastructure at large (for e.g. roads and energy);
  • Working towards a common regulatory environment across the continent;
  • Kick-start transformation plans; and
  • Ensuring that transformation delivers inclusivity, sustainability and food security.

 

Challenges

There are many challenges impeding food security over Africa. There are many micro and macro factors which stakeholders need to mitigate and address in order to fight against malnutrition.

Egos and personal interests must be put aside in order to lower the following factors:

  • Political instability and intern crisis;
  • Civil conflicts;
  • Never-ending corruption;
  • Unfavourable economic conditions, thus discouraging impact investors;
  • Fade and fake leaderships; and
  • Lack of incentives.

 

Mitigating COVID-19 Plaque/Invincible/Unforeseen affects

The emergence of COVID-19 is disrupting the whole world at all levels. People are struggling to eat healthy in order to bolster the immune system against the virus. Imagine the impact of food insecurity on the most vulnerable people.

All conditions exist to permit such outbreak to deter food security in the world, especially in Africa. Many countries are deploying special efforts to keep agriculture safely running as an essential business, markets well supplied with affordable and nutritious food, and consumers still able to access and purchase food despite movement restrictions and income losses.

In addition to the COVID-19 repercussions (lockdown measures, disrupted distribution channels and inadequate healthcare facilities), huge locust swarms have also devastated crops in Eastern Africa. The continent is more dependent on external aid than ever.

However, the positive out during this crisis is that the World Bank Group is working with governments and international partners to closely monitor domestic food and agricultural supply chains, and how the loss of employment and income is affecting people’s ability to buy food.

In Angola for example, the World Bank financed an agricultural project to help farmer cooperatives and other agricultural enterprises expand (small/mid-sized). The project has helped these players to meet the needs of local communities during the pandemic.

 

Interview with Dr Johan Badenhorst: Real Cases of Food Security Initiatives

On this subject, we are happy to share the thoughts of Dr. Johan Badenhorst. He is the founder of BIQ X, a GBC registered under the laws of Mauritius. Being a seasoned business analyst, strategist and innovator in the field of optimisation of financial structures, Dr Johan Badenhorst has emphasised on the following aspects:

Tribal Authorities

Large portion of South Africa and Africa is rural areas mostly located under control of Tribal Chiefs. The primary survival mode is subsistence farming. Many NGO’s with limited resources try to reduce malnutrition with more quality and organised farming methods. However, it remains subsistence farming.

NGOs

The role of NGOs are in many cases an uphill battle. Due to the huge subsistence farming and education, the biggest limitation is funding. Another part of the problem is that so many NGOs are established because of the enormous challenges. However, due to the extraordinary growth in NGOs, the number of competitors begging the limited and underfunded public institutions increase, and so does the pressure from private sector to balance the demand for investor returns and social malnutrition.

Capital misemployed

There is a saying “follow the money”. Over the years, I have seen that a minimum of 90% goes into the system, and less than 10% to where the real need is. BIQ X developed a system of “give us ZAR 1 and we will return benefit to the value of ZAR 10”. The banks say we will give you ZAR 1 and you will pay back ZAR 10.

Market Power

In many instances, the micro food small street units, as controlled by a syndicate and the street vendors, are at the mercy of funding to buy food to sell. What I have experienced over the years is that informal micro food stands follow the market, typical entrepreneurial expertise. If this street corner does not work, they will pop up and migrate to where the buyers are more active.

Cost of Capital

Subsistence capital cost, especially in urban micro food stores can be as high as 50% plus per day. Informal capital provider lend you i.e. ZAR 10 to buy stock, the vendor sell for ZAR 20 and repay ZAR 15, making ZAR 5. Then borrow ZAR 20, and so the cycle continues.

This is the best area for social impact bonds, as long as the money is not controlled by public and private institutions, community beneficiary trust, and employed by NGOs.

 

References:

International Food Policy Research Institute – https://www.ifpri.org/

Food and Agriculture Organisation of the United Nations – http://www.fao.org/

National Institute of food and Agriculture- https://nifa.usda.gov/

Brookings – https://www.brookings.edu

AGRA – https://agra.org/

World Bank – https://www.worldbank.org

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