AGRA has today released the 3rd edition of the ‘African Agribusiness Outlook Report’ which sheds light on the impact of the “Triple Crisis” – Covid-19 pandemic, climate change, and the Russia-Ukraine conflict – on small and medium-sized agribusinesses in Nigeria, Zambia, and Tanzania.
The report, which is jointly produced by AGRA and IPSOS, Surveyed 1,623 small and agribusinesses in the rice, maize and tomato value chains in Nigeria, Zambia and Tanzania, and the soybean, maize and tomato value chains in Zambia.
The studyexamined the impact of various measures taken to support SMEs’ performance during the triple crisis, revealing that a substantial proportion of agribusinesses have experienced severe declines in revenue during this period, with only some managing to recover.
The report states: “Agribusinesses in agricultural value chains in Nigeria, Tanzania and Zambia, have been hard hit by the “triple crisis” of Covid-19, climate change and the Russia-Ukraine conflict. Although the larger businesses were hardest hit in Nigeria and Zambia in 2020, these businesses appear to have been better able to recover as at 2023.
While supply, demand, and operational costs were significant challenges during the peak of the Covid-19 pandemic, the report reveals that businesses continue to grapple with soaring operational expenses in the wake of climate-related impacts and the ongoing conflict in Ukraine. The report discloses that 58% of SMEs surveyed have experienced substantial revenue declines of 20% percent or morethroughout the “triple crisis” period.
Furthermore, the report reveals some of the strategies employed by businesses to stay afloat during these challenging times includinginjecting additional capital, cost reduction measures, and streamlining their product lines.
Dr. Agnes Kalibata, President of AGRA, noted that Agribusinesses have exhibited remarkable adaptability, innovation, and determination, on the one hand, but continue to struggle amidst business disruptions through lockdowns, supply chain disruptions, productivity decreases and reduced consumer demand.
Dr. Kalibata remarked, “We are all aware of the challenges they are facing, however not much has been done to look at the cumulative impact of the triple crisis and the specifics of severity that the agribusinesses are grappling with. As we reflect on the impact of the triple crisis on Agribusinesses in Africa, we must also recognize the incredible potential these enterprises possess.”
She noted that as drivers of farmer resilience, job creation, economic development, and poverty alleviation, African Agribusinesses hold the promise of fostering greater social inclusion and reducing inequality across the continent.
“There is an urgent need for measures to effectively address and alleviate the impacts of these crisis on the sector that serves as the primary employer, engaging over 70percent of Africa’s population in economic activities and contributing more than 30percent to the continent’s economies,” Dr Kalibataemphasized.
The report calls for more collaborationbetween policymakers, financial institutions, and development organizations to provide supportive ecosystems that empower the Agribusinesses and respond to their three top asks: access to affordable finance, fostering a business-enabling environment, particularly with stable and predictable policies and supporting an effective regional trade system.
The report recommends more focused, tailored, and concerted investment and support to improve quality and quantity of produce at the farmer level.
This report recommends the adoption of policies that encourage the development of financial products specifically tailored to the agricultural sector and improving financial policies to enhance access to affordable credit.
To optimize the efficiency of SMEs and reduce transaction costs, there is a call for improved market information. Enhancing information services related to supply and demand is vital, as it can facilitate better decision-making for agribusinesses. A well-informed market, it noteswill lead to improved supply efficiency. The report calls upon governments to reduce fuel costs, mitigate currency fluctuations, ensure timely fertilizer subsidies, streamline business registration processes, and efficiently manage storage facilities.
