Experts speaking at the Africa Food Systems Forum (AGRF) in Dar es Salaam, Tanzania, urged African governments to formulate new policies and reevaluate the ones they already have to safeguard the local processing and agro-industrialization of agricultural goods produced on the continent.
Mohammed Dewji, President of the MeTL Group of Companies in Tanzania, made this observation during the introduction of the Deal Room. He stated that agriculture would be useless if it were not for agri-processing. Farmers in Kenya’s drylands are embracing regenerative farming to combat the region’s harsh climate, as reported at https://www.ipsnews.net/2021/05/kenyas-dryland-farmers-embrace-regenerative-farming/.
Cotton is grown in Tanzania, which may be the world’s third-largest producer. Why is it that there are only three textile enterprises in the area? We cultivate the cotton, have it ginned, and then ship it to China, where it is processed, colored, and printed before being delivered back to the United States. We cannot compete on a local level due to the taxes involved in the production process,” he stated.
“Unless we put in place correct policies that will favor local manufacturing, we will continue talking about cocoa from Ghana and chocolate from Switzerland,” he warned the delegates in the Deal Room. “Unless we put in place correct policies that will favor local manufacturing.”
The Deal Room is a matchmaking platform for the AGRF sponsors to drive new business deals and commitments. It is where businesses in the agriculture and agribusiness sectors may have access to financing, mentorship, and market entrance solutions to support their growth ambitions.
Even when farmers in those nations enjoy abundant harvests of the same crop, many African governments have regulations that favor importation, according to Wanjohi Ndagu, the Partner and Investment Director of Pearl Capital Partners Ltd. located in Uganda. Pearl Capital Partners Ltd. is situated in Uganda.
According to what he said, “we require policies that are capable of protecting farmers and local production.”
Countries such as Ivory Coast and Nigeria are net exporters of natural rubber, which is then processed and delivered back to them as car tires, footwear, and other rubber-based industrial items. Ghana is known for its cocoa, whereas Switzerland is known for its chocolate.
Ivory Coast, Tanzania, and Mozambique are all net exporters of cashew nuts. Still, they are all net importers of cashew nuts that have been roasted and processed, cashew butter, and other value-added cashew goods.
Kenya is actively exploring the possibility of exporting avocados in their raw form; nonetheless, the country has traditionally imported avocado goods, particularly those used in the cosmetics industry.
But there is still hope for the situation. Rwanda was highlighted as one of the success stories in Africa because the government has established favorable policies that have created an environment suitable for attracting investment into the agro-processing sector.
“Our country’s Strategic Plan for Agriculture Transformation has enabled us to move the sector from a subsistence level to a knowledge-based, value-creating sector,” said Nelly Mukazayire, the Deputy CEO of the Rwanda Development Board (RDB).
Investors in any given sector, including agro-processing, are given services starting from the search for a business name, business registration, generation of unique identification of the registered business, the opening of the business bank account, and the issuance of relevant permits and licenses, and the entire process takes a maximum of eight hours for the business to become operational. This was done to make work more accessible and attractive to investors.
According to the delegates who attended the AGRF, such processes might take more than four months and, in some circumstances, an entire year for a business to receive legal registration is one of the factors that slows down the rate of investment in other African countries.
“Investors in the agriculture sector in Rwanda also have the opportunity to get up to seven years of tax holiday and reduced corporate income taxes on exports,” said Mukazayire.
Following the COVID-19 epidemic, the country initiated the Manufacture and Built to Recover Programme (MBRP) program. This program’s primary objective was facilitating the nation’s economic recovery by providing targeted financial benefits to the construction, agro-processing, manufacturing, and real estate development industries.
Through the Manufacturing Business Readiness Program (MBRP), manufacturers with one million dollars or more capital are exempt from paying import duty and Value-Added Tax (VAT) on imported construction materials unavailable in East Africa. They are also exempt from paying VAT on machinery and raw materials that are sourced domestically, as well as on construction materials that are sourced domestically.
However, to encourage the expansion of the agro-processing industry, the maximum amount of capital was set at 100,000 USD.
Brent Malahay, the Chief Strategy Officer at the Equity Group, called on investors to take advantage of the bank’s ‘Africa recovery and resilience plan’ during the AGRF Deal Room event. The plan aims to capacitate, finance, and connect East African Community value chains to global supply chains. Malahay made his appeal during the event that was held in the AGRF Deal Room.
According to Malahay, “through this plan, Equity Group will leverage off of a region that gives access to critical raw materials, supports industrial capacity needs and an entrepreneurial and innovative local workforce,” as well as “the one that provides a sizeable market that is increasingly becoming more integrated.”
Isobel Coleman, Deputy Administrator of the United States Agency for International Development (USAID), announced that her agency would be investing $4 million in VALUE4HER, the Deal Room product offered by AGRA. VALUE4HER is a continental initiative to strengthen women’s agribusiness enterprises and enhance voice and advocacy across Africa.