Economy
Deal making slows across sub-Saharan Africa, but post-pandemic opportunities look interesting
Deal making activity in sub-Saharan Africa (SSA) dropped in the second half of 2020 (H2 2020), when compared to the second half of 2019 (H2 2019) and year-on-year, deals were also down in both volume and value compared to 2019. As the continent gears up for post-pandemic recovery in 2021, the opportunities presented by free trade across the continent, foreign investment opportunities due to new partnerships and trade relationships, as well as the post-pandemic focus on technology, healthcare and renewable energy, will be key factors in attracting valuable mergers and acquisition (M&A) activity to the region.
Further, South Africa’s deal volume and value both dropped in 2020, with the industrials and healthcare sector attracting the biggest investments. Ghana stood out as a country that attracted more and higher value M&A deals in 2020 than it did in 2019, with China being the primary inbound investor in the country. And Kenya recorded a good increase in deal value for 2020, although volume decreased, with the financial sector being the primary target for inbound investors.
Sub-Saharan Africa
According to Baker McKenzie’s analysis of Refinitiv data, M&A transactions dropped in SSA in H2 2020, down 4% compared to H2 2019, with 329 deals in the period. Deal value fell by 17% to USD8.9 billion in the second half of 2020, compared to the same period in 2019. For the full year 2020, transactions dropped by 8%, with 625 deals in 2020, and deal value dropped by 33%, with deals valued at USD17.4 billion in total for 2020.
Cross-border activity in SSA remained much the same in the second half of 2020, with 210 deals in H2 2020 compared to 209 in H2 2019. This was due to an uptick in outbound interregional deals, which were up 28% year-on-year. The total value of cross-border M&A deals in the second half of 2020, however, dropped by 21% to USD6.5 billion when compared to H2 2019. For the full year 2020 (FY 2020), the number of cross-border deals dropped by 8% and deal value by 27% compared to 2019. United States-based Mylan NV’s acquisition of the Aspen Pharmacare-Thrombosis business in South Africa for USD759 million was the biggest cross-border deal in the period.
Companies in the materials sector remained the top target for investors in sub-Saharan Africa, with 29 deals in H2 2020, though the biggest value deals came from the energy and power sector, with deals amounting to USD1.7 billion in H2 2020.
The United Kingdom was the most active investor in the SSA region for the second straight year, with 29 deals announced in the second half of 2020. There were also 29 deals from the UK for the full year 2020.
For outbound transactions from SSA, the primary target companies for African investors were in the industrial sector, which announced seven deals for H2 2020 and 17 in total for the full year. The high technology sector announced 12 deals in H2 2020, and 17 deals altogether in FY 2020. Further, India was the primary target for African outbound investors in the region, with 11 deals in H2 2020 and 20 for the full year 2020.
Analysis
Wildu du Plessis, Head of Africa for Baker McKenzie, noted, “While deal making has slowed across Africa, all is not lost and there are still plenty of opportunities to benefit from good deals on the continent. For the next while, we believe that deal activity across Africa in general will mostly be in the form of take-private transactions, distressed M&A opportunities, restructurings, disposals; and corporates looking for investment opportunities in offshore markets.
“Usually viable businesses are experiencing continued challenges due to the pandemic, leading them to turn to M&A as a way to raise funds. However, the lack of available capital and acquisition finance, as well as the difficulty in pricing deals in an uncertain market, are proving to be big issues for investors and this is slowing down the pace of deal making. For those who have capital, there are plenty of bargains to be had in Africa in the next few years, particularly in those sectors that have been badly affected by the pandemic, as well as in those industries where demand has dramatically increased,” he notes.
“Sectors in SSA that have clearly flourished during the pandemic include healthcare, technology media and telecommunications (TMT) and renewable energy, with the materials and the financial sectors also attracting interest. Industries such as aviation, retail, oil and gas, and tourism/hospitality will take longer to recover and are more likely to result in distressed M&A activity,” du Plessis says.
Du Plessis says that the good news is that the start of trading for numerous member states of the African Continental Free Trade Area (AfCFTA) is expected to provide a huge boost in investment in post-pandemic Africa. The AfCFTA has done a great deal to bolster investor interest in the region and dealmakers are taking notice of the agreement’s first movers. After Brexit, big African investors in the United Kingdom and countries in the European Union will continue to target African sectors, hoping to capitalise on new economic partnership agreements, and the launch of free trade in Africa. Investors from the United States will also continue to be strong M&A players in key African countries, with a Biden administration expected to further encourage investment and trade between the US and African countries.
“We can also expect to see heightened scrutiny of environmental, social and governance issues, with companies that have sound ESG strategies leading the pack in terms of investment and growth on the continent.”
Country data
South Africa
M&A activity in South Africa decreased as a result of the COVID-19 pandemic. The number of transactions dropped by 6% to 186 deals in H2 2020, and the value of the deals shrunk by 36%, down to USD4.9 billion from H2 2019. The full year 2020 activity was down 6% to 337 deals, while deal value fell by 46% year-on-year to USD8.5 billion. Monthly figures rebounded in H2 2020 and were more comparable to those in 2019.
Cross-border transactions dropped 2% year-on-year to 164, with deal value dropping by 47% to USD4.3 billion. The industrial sector was the primary target for inbound deals with 14 transactions in 2020, up 133% year-on-year. However, these deals were small in value, yielding a total for 2020 of USD37 million. The largest inbound deal completed in 2020 was in the healthcare sector, with Aspen Pharmacare-Thrombosis acquired by Mylan NV (US) for USD759 million.
The United Kingdom remained one of the primary investors for South African companies, with 25 deals, up 25% year-on-year. However, the biggest deals were brought in by US investors, with total deal value amounting to USD871 million. This was largely driven by the Aspen Pharmacare-Thrombosis acquisition.
Analysis
Morne van der Merwe, Managing Partner and Head of the Corporate M&A Practice at Baker McKenzie, says, “The pandemic has clearly affected both the volume and value of deals announced in the country in 2020. However, South Africa remains attractive to foreign investors who have long considered the country a key gateway into Africa, even more so now that AfCFTA trading has begun, and the country has been singled out as one of the early beneficiaries of intra-African free trade.
“South Africa’s infrastructure, automotive, healthcare and renewable energy sectors have seen large investments in recent years, and this looks set to continue, despite short-term pandemic lows. Government policy has focused on boosting investor interest in these sectors and the country’s special economic zones (SEZs) have been successful in facilitating foreign investment inflows. SEZs are areas in the country that are set aside for specific economic activities. For example the Tshwane Automotive SEZ was launched to attract automotive component manufacturing companies and related services, boost investment in the sector and support black economic empowerment initiatives.
“However, the uncertainty in the country with regards to onerous policy and legislation, junk status announcements by rating agencies, currency volatility, social unrest, electricity and water challenges, skills shortages, the performance of state-owned enterprises, the security of property rights, and serious governance issues in both the public and private sector, continues to make investors nervous.
“To address these challenges, the South African government announced its Economic Reconstruction and Recovery plan in 2020, which outlined deliverables such as energy security, job creation and a trillion rand infrastructure plan. The National Economic Development and Labour Council (Nedlac) also outlined its Plan of Action last year and provided more detail on the infrastructure and energy plan, the creation of a more enabling regulatory framework and a commitment to fighting corruption.
“Despite recent challenges, foreign investors in the UK, Europe and the US have long been valuable M&A investors in South Africa, and this is likely to be further boosted by South Africa being able to maximise the benefits of AfCFTA, due to strong connections across the continent and well-established manufacturing base,” adds van der Merwe.
Ethiopia
Ethiopia recorded eight M&A deals in 2020, totaling USD1 million. Of the eight deals in 2020, two of them happened during the second half of the year. The majority of the deals were inbound and cross-border in nature, with seven deals in total in 2020, six of which were announced during the first half of 2020. The country did not announce any outbound transactions in 2020.
The retail sector has the highest number of inbound transactions in Ethiopia, two in all. Eritrea made most investments into the country, with two transactions in 2020.Tigray Ethiopia’s acquisition by Yanchang Petroleum of Hong Kong for USD1 million was the sole transaction with a disclosed deal value.
“Deal making in Ethiopia slowed due to the pandemic in 2020, exacerbated by foreign exchange shortages, electricity supply issues and security concerns, among other things. The country’s industrial parks have attracted the interest of foreign investors and look set to assist the country in its post-pandemic recovery. The parks are providing a boost to Ethiopia’s manufacturing sector and will assist in the creation of jobs,” says du Plessis.
Ghana
Ghana exhibited a solid M&A performance, despite the slow pace of dealmaking in H1 2020. It recorded 10 deals in H2 2020, representing 100% growth from H1 2020, and 14 deals in total for the full year, reflecting a growth of 17% year-on-year. Total deal value soared by 11607% to USD818 million and 3369% to USD832 million in the second half of 2020 and the full year, respectively.
Cross-border transactions contributed a huge portion of M&A activity in Ghana, recording a total deal value of USD793 million for both H2 2020 (seven deals) and the full year 2020 (nine deals).
The materials sector was the top target for inbound and outbound deals in H2 2020 and FY 2020. China was the primary investor in the country, with two inbound deals worth USD214 million for both H2 and FY 2020. For outbound transactions, Australia was the key target with two deals totaling USD 440 million, and one transaction worth USD439 million in H2 and FY 2020, respectively.
China’s acquisition of the Bibiani Gold Mining Project via Chifeng Jilong Gold Mining Co for USD 109 million was the largest inbound deal in H2 and FY 2020. Conversely, Engineers & Planners Co Ltd’s acquisition of Cardinal Resources Ltd in Australia for USD 439 million was the top outbound transaction for H2 and FY 2020.
“Ghana, despite some ups and downs, appears to be getting it right in terms of striking the right balance between encouraging investment and protecting the rights of the country and its people. It has also been singled out as one of the countries that is ready to benefit early on from AfCFTA. This is due to existing favourable conditions in the country, such as having an open economy, good infrastructure, a supportive business environment and the ability to quickly ramp up its intracontinental exports. All this bodes well for Ghana’s future economic position in Africa,” says du Plessis.
Kenya
Deal making in Kenya dropped 28% with only 18 deals in H2 2020, but deal value increased by 224% to USD467 million. This was mainly due to Network International Holding Plc’s USD 288 million acquisition of Direct Pay Online Ltd. Activity for the full year 2020 was down 28% in volume terms, but value increased by 52% year-on-year to USD722 million. Monthly figures seem to have peaked in July with eight transactions and tailed off over the rest of the year.
France was the top M&A partner for Kenya, with five inbound deals from this country, up 25% year-on-year. Deals from France into Kenya were worth USD36 million for FY20, up 24% year-on-year. The UK had the highest deal value for inbound transactions due to the Direct Pay Online acquisition. Volume-wise, the financial sector was the primary focus, with seven inbound deals and three outbound transactions. For inbound value, deals in the financial sector increased to USD435 million, up an incredible 1697% year-on-year.
The Deal Drivers Africa Report, published by Mergermarket, ranked Kenya among Africa’s most sought-after countries for M&A transactions. Before the pandemic, M&A activity in the East Africa region had increased significantly, with Kenyan deals dominating the market. The East African regional economy (in which Kenya has the largest economy) continues to be a key driver for sub-Saharan Africa’s growth going forward.
“Kenya has long been considered East Africa’s investment hub, attracting some high-value M&A deals in the last few years. However, the country’s post-pandemic economy will take some time to reach previous levels. The country’s TMT sector, which has a well-developed market for mobile money services, and its bustling financial sector, are the ones to watch as the country gears up for its post-pandemic recovery,” says du Plessis.
Mozambique
In Mozambique, deal making grew by a few deals, although the number overall was limited. There were six reported deals in H2 2020 compared with only one in H1 2019. The full year total for 2020 was 12 compared to four deals in 2019.Transactions in Mozambique were mostly inbound cross-border deals. There were six such deals in H2 2020, and 11 for the full year.
The real estate sector was the primary target for investors into Mozambique in H2 2020, with two deals announced, though for the full year, the materials sector was the most targeted, with four deals in total. The energy sector in Mozambique was the most prolific sector in terms of deal value, with USD145 million in deals announced in H2 2020. This is mainly due to the acquisition of Cetral Termica de Ressano Garcia by the UK’s Actis LLP, for the same amount.
Mauritius and Canada were the top two investors in Mozambique, with three deals each in 2020, although Canada did not make any acquisitions during the second half of the year. Two out of the three deals from Mauritius were announced in H2 2020. Mozambique announced no outbound transactions in 2020.
“Mozambique is one of the world’s largest holders of liquified natural gas, and its energy sector has been attracting global interest for some time. We expect interest in this sector to increase in future years, and possibly act as a catalyst to boost much-needed investment in other sectors in the country going forward,” notes du Plessis.
Nigeria
M&A activity in Nigeria in H2 2020 dropped by 25% to 24 deals compared to H2 2019.Tthe size of the deals shrunk by 68% down to just USD279 million. However, full year 2020 activity was up by 4% to 52 deals compared with 2019, but deal value was 42% lower year on year at USD 716 million.
Cross-border transactions dropped 8% year on year in 2020 to 33 deals, with deal value dropping by 36% to USD552 million. Domestic deals increased in 2020 by 36%, however, the value of the deals dropped by 57. This indicates a focus on smaller deals in the country in 2020.
The financial sector remained the primary target for both for inbound and outbound deals, with five and three deals respectively in 2020. Lagos, the capital of Nigeria, was cited in May 2020 as one of four cities in Africa to be emerging as FinTech hubs by The FinTech Times. The megacity of over 20 million inhabitants is home to the nation’s largest financial institutions such as First Bank of Nigeria (FBN), Access Bank, Ecobank and First City Monument Bank (FCMB) as well as international banks such as Citibank.
South Africa served as the primary investor for Nigerian companies with six deals in 2020. Multichoice Group Ltd.’s USD 83 million acquisition of Betking was the biggest deal in the country.
Du Plessis says, “The Nigerian economy was already impacted quite severely by the disruption in oil markets in recent years, and COVID-19 added extensive damage to the economy. The fintech and renewable energy sectors, however, look set to provide much needed investment impetus for economic recovery and the country has also stated it plans to boost its manufacturing capacity, which will enable it to take further advantage of free trade under AfCFTA.”
G7 Members (Photo: European Union)
In late June 2022, it was announced at the G7 Summit in Germany that a USD 600 billion lending initiative, the Partnership for Global Infrastructure Initiative (PGII), would be launched to fund infrastructure projects in the developing world, with a particular focus on Africa. The G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom (UK) and the United States (US) – explained the PGII would help address the infrastructure gap in developing countries.
The US
The US has recently renewed its focus on impact-building and financing strategic, long-term infrastructure projects in Africa, with the Export-Import Bank of the United States (EXIM) supporting infrastructure development on the continent. According to a 2020 report by McKinsey and Company – Solving Africa’s infrastructure paradox – the US accounts for 38% of global investors who have an appetite for African investment, by far the most of any country. In 2021, the US launched a refreshed “Prosper Africa initiative”, focusing on improving reciprocal trade and investments that create jobs and build infrastructure between the two regions. In 2022, the US announced it would mobilise USD 200 billion over the next five years as part of the PGII, in the form of grants, financing and private sector investments. Some deals have already been announced, including, for example, a USD 2 billion solar energy project in Angola, and the building of multiple hospitals in Côte d’Ivoire.
The EU
In February 2022, the European Commission announced investment funding for Africa worth EUR 150 billion. The funding package is part of the EU Global Gateway Investment Scheme and is said to be in the form of EU combined member funds, member state investments and capital from investment banks.
In early 2020, the European Commission published its Comprehensive Strategy with Africa, outlining the region’s plans for its new, stronger relationship with the continent. The strategy document laid out five top priorities for the EU in Africa: the green transition and improving access to energy; digital transformation; sustainable growth and jobs; peace and governance; and migration and mobility.
The UK
The UK is also making a strong play for influence, investment and trade with Africa, post-Brexit. Further to key summits in 2020 and 2021, finance is being redirected into Africa from the UK. In 2022, UK development finance institution (DFI), British International Investment (formerly CDC Group), announced it had exceeded its pledge to invest GBP 2 billion in Africa over the last two years. The UK’s Global Infrastructure Programme helps partner countries (including in the African continent) to build capacity to develop major infrastructure projects, setting up infrastructure projects for success and paving the way for UK companies to support these projects.
Further, in November 2021, it was announced that the governments of South Africa, France, Germany, the United Kingdom and the United States of America, along with the European Union, were in negotiations to form a long-term Just Energy Transition Partnership. The partnership focuses on boosting the decarbonisation of the South African economy, with a commitment of USD 8.5 billion for first round financing. It is expected that 1-1.5 gigatonnes of emissions will be prevented over the next 20 years, assisting South Africa to accelerate its just transition. Discussions are also currently taking place to establish a similar partnership in Senegal.
African solutions
The African Development Bank noted in early 2022 that Africa’s infrastructure investment gap is estimated at more than USD 100 billion per year.
DFIs are increasingly anchoring the infrastructure ecosystem in Africa – serving a critical function for project finance as investment facilitator and a check on capital. DFIs can shoulder political risk and access government protections in a way that others cannot, enter markets others cannot and are uniquely capable of facilitating long-term lending. The large amount of capital needed to fill the infrastructure gap, however, means that DFIs cannot bridge it alone. Private equity, local and regional banks, debt finance and specialist infrastructure funds are primed to enter the market, and multi-finance and blended solutions are expected to grow in popularity as a way to de-risk deals.
The African Union’s 55 member states have stated that their primary funding needs include support in terms of safety and security on the continent, as well help in implementing the African Continental Free Trade Agreement (AfCFTA) and the massive infrastructure investment it needs to be successful. The development of supporting infrastructure is key to boosting AfCFTA’s free trade potential, especially in terms of transportation, energy provision, internet access and data services, education and healthcare infrastructure projects.
Infrastructure projects in Africa now also have a heightened focus on improving Africa’s capacity for green, low-carbon and sustainable development, via, for example, clean energy, community healthcare and support, green transport, sustainable water, wildlife protection and low-carbon development projects. Funding such projects comes with responsibility – projects must not only be bankable and yield attractive returns, but must also be sustainable and provide tangible benefits to local economies and communities. All of Africa’s major partners have noted they will prioritise projects that commit to Environmental, Social and Governance principles, and access to capital for large infrastructure projects is likely to contain sustainability requirements.
That the focus of the PGII is on the sustainability and the social impact of these projects in Africa is further evidenced in the White House briefing room statement issued at the launch in June 2022, where it was stated that the PGII will “mobilize hundreds of billions of dollars and deliver quality, sustainable infrastructure that makes a difference in people’s lives around the world…”
By: Michael Foundethakis, Baker McKenzie’s Global Head of Projects and Trade & Export Finance, and Africa Steering Committee Chair
Economy
Shelter Afrique: Rising cost of land, materials, could adversely affect provision of affordable housing
Shelter Afrique Ag. CEO & Chief Finance Officer Mr. Kingsley Muwowo (right) explaining engaging with delegates at the 11th World Urban Forum held in the Polish city of Katowice. (Image: Shelter Afrique)
The high cost of land and the rising cost of building materials could derail efforts to speed up the development of affordable housing across the globe, pan African housing development financier, shelter Afrique has warned.
Speaking on Delivering Affordable Housing Across Continents at a special session of the 11th World Urban Forum held between June 26-30 in the Polish city of Katowice, Shelter Afrique’s Ag. Managing Director and Chief Finance Officer Mr. Kingsley Muwowo said there was an urgent need by governments to address the issues of rising costs of land and construction materials, which were hindering efforts to fast-track the provision of affordable housing globally.
“From market studies the cost of land should constitute between 10% and 15% of the total cost of a housing unit for it to be affordable, but this isn’t the case in many countries,” Mr. Muwowo said.
“In Kenya, for instance, the cost of land makes up between 40% and 60% of the total cost of a housing unit, like the case with Nairobi which is the most expensive in the entire continent of Africa. How do you deliver affordable housing when you’ve got the most expensive land? So if we don’t address the issues around land we will not be able to effectively tackle the issue of affordable housing.”
Soaring prices
Mr. Muwowo also decried the rising construction cost – which he blamed on old building codes, punitive tax regimes, and high cost of financing such projects in various countries. He added that the Russian – Ukraine war had also resulted in the sharp increase in prices of critical construction materials. Russia is considered the fourth-largest steel exporter globally, serving over 150 countries and territories.
“In the built environment, the conflict has exacerbated and exposed the dangers of overreliance on importing building materials. Prices of building materials have increased and continue to do so, a burden that the homeowners will ultimately share,” Mr. Muwowo said.
The price of steel in Kenya, for instance, has significantly shot up over the past few months. The prices of steel bars and nails have risen by between 80 per cent to 90 per cent and 13 per cent to 43 per cent, respectively, in the past few months in the country. Additionally, the conflict has resulted in shortage of coal, which is a crucial source of energy in cement production through clinker manufacturing resulting in price hikes.
Speaking at the same event, European Investment Bank Vice President Prof. Teresa Czerwińska said the rising cost of housing in many cities across the world was a major concern for the Bank.
“We have managed to make education and healthcare relatively cheap and accessible by putting in place proper policy interventions. Housing is a fundamental human right and we can apply a similar framework in ensuring housing remains affordable and available,” Prof. Czerwińska said.
The World Urban Forum (WUF) is a global event on sustainable urbanization convened every two years by the United Nations Human Settlement Programme (UN-Habitat). It was established in 2001 by the United Nations to examine rapid urbanization and its impact on communities, cities, economies, climate change and policies. The first WUF was held in Nairobi, Kenya in 2002 and has been held around the world ever since.
This year’s event was convened under the theme: “Transforming our cities for a better urban future”.
Economy
Africa’s youth unemployment challenge needs a revolution in order to sustain global development
Opinion By Dr Dennis Rangi, Director General, Development at CABI based at its regional centre for Africa in Nairobi, Kenya. (Africa’s youth Image credit: CABI).
It’s a startling statistic but by 2050 Africa’s population is expected to double to around 2.6 billion. This creates greater pressure to feed so many mouths amid the challenges of economic, political and societal instability let alone the impacts of climate change.
When one considers that almost 60% of Africa’s population in 2019 was under the age of 25, making Africa the world’s youngest continent, it’s clear that Africa’s youth holds the key to the continent’s very survival and the burden to sustain wider global development
In 2019, more than a third of the population was aged between 15-34. By 2100, Africa’s youth population could be equivalent to twice Europe’s entire population.
According to the UN, the median age in Africa is 19.8 in 2020. On the continent, Mauritius is expected to have the highest median age, 37.4, and Niger is expected to have the lowest, 15.1.
However, in youthful Africa, just 56% of the population is of working age, which translates to about 1.3 people of working age supporting every dependent (mostly youth) – versus a global average of two workers to every dependent. This in essence is the ‘youth bulge’, and addressing it has never been more of an urgent task.
According to the World Bank, in 2020, 14.5% of 15 to 24-year olds in Sub-Saharan Africa were unemployed. This is among the lowest rates globally among young people in this age bracket. But the International Labor Organization says most of them work informally, are underemployed or stay in poverty because of low wages.
Quite simply, the growing youth unemployment and underemployment – especially in developing countries – is one of the greatest challenges of the 21st century.
Agriculture has long been the dominant sector in much of Africa in terms of output, employment and export earnings. Indeed, agriculture is arguably the most important business opportunity for our young people to embrace. As such, any meaningful change in the continent’s future must involve agriculture.
A ‘revolution’ in agribusiness involving Africa’s youth is therefore required so they can capitalise on the sector’s contribution to around 25% of the continent’s Gross Domestic Product (GDP) and 70% of its employment. They, with our support, need to meet these challenges head on so they can leave a lasting and sustainable legacy for their own children and their futures.
This is especially true when thinking of young people’s roles in agricultural value chains. We need to take a ‘two-pronged’ approach to enhancing their skills not only in producing safer foods free from crop pests and diseases but also in helping to involve them as village-based advisors – giving crucial information to help increase yields.
It may also be that they can combine both roles as part of a dual approach to the ever-increasing food crisis.
The time is ripe for Africa’s youth to lead the technological realisation of digital agriculture – recognising this a key driver for economic development within the agricultural sector.
This is particularly so in Kenya where digital innovations have eased trading barriers in certain value chains by providing trade platforms that directly connect farmers to traders enabling them to get competitive returns on their yields.
The African Centre for Women, Information and Communications Technology (ACWICT)-led Maudhui Digiti (Digital Content) project, for example, recently assessed the access and use of digital content.
This included evaluating opportunities for women and young people’s employment in the digital sphere for farmers, particularly the underserved agricultural communities and organizations in Laikipia County.
Youth play a pivotal role in agriculture and rural transformation. One of the findings in a book recently published by CABI titled ‘Youth and the Rural Economy in Africa,’ recommends a targeted technology promotion aimed at young people, most of whom are ‘digital natives’.
These youth can catalyse the realisation of digital agriculture in Sub-Saharan Africa due to their innovativeness and fast adoption of new technologies.
One example where CABI has extensively supported agricultural production, especially amongst smallholder farmers including the youth in Africa and beyond, is the Good Seed Initiative.
This ran in East Africa from 2013 to 2016 and sought to promote good production of quality African Indigenous Vegetable (AIVs) seeds and vegetables so as to improve the income of seed producers.
It also aimed to contribute to food and nutritional security of smallholder farmers and other actors in the seed and vegetable value chains of seeds.
The project enabled women and youth in Uganda and Tanzania to engage in market-driven profitable value chains that required minimum capital, capital and other factors of production.
This was achieved by empowering women and youth with requisite skills for seed entrepreneurship of indigenous vegetables which continued to be in high demand.
In research conducted by CABI – which focussed on Zambia and Vietnam – we sought to understand the nature of youth participation and identify barriers and opportunities for youth engagement in agriculture and agribusiness in Lusaka, Zambia and Vinh Phuc, Hung Yen, Dak Lak and Tien Giang in Vietnam.
We found that while a majority of youth were engaged in agriculture – primarily production – few were involved in input supply, trading, transportation and the provision of advisory services.
For instance, the study in Zambia found that almost all the youth (99%) were engaged in farm production, producing crops and animals for home consumption and local markets – yet hardly any were involved in valuable extension services.
This is where initiatives such as the CABI-led PlantwisePlus global programme can engage youth in non-formal extension services and help fill in the missing linkages within the agricultural value chain.
CABI in partnership has trained – through the preceding Plantwise programme – millions of professionals in 34 countries over 10 years. This includes extension staff, agro-dealers, quarantine officers to provide improved quality services to farmers.
In Uganda, where 70% of those unemployed are youths, CABI partnered with Zirobwe Agaliawamu Agri-business Training Association (ZAABTA) in Luwero district. This was to skill youth to enable them to provide various services in major agricultural and profitable value chains in the country.
Implemented under PlantwisePlus, the training sought to increase the supply of safer food through enterprises driven by women and youth to meet the growing demand by consumers in rural, urban and peri-urban markets.
We believe helping to enable youth to provide services as ‘village-based advisers’ in this way will be an attractive option to our youth and call for it wholeheartedly – even if they wish to engage in this activity alongside regular farming activities.
We simply cannot rely upon young people to be only producers of food. They may also need to be involved in the safe production of it in the first place and be part of a ‘knowledge exchange.’
In terms of open access learning, CABI’s ‘plant doctor’ training modules have been adopted by various academic institutions across the world. Plant doctors work at ‘plant clinics’ held in communities to help farmers diagnose their plant health problems and suggest remedies so their crops can grow more successfully.
In Uganda, for example, CABI’s practical hands-on course on field diagnostics and plant clinic operation is giving good recommendations to farmers to students at various years of study.
The course was first introduced in Makerere University in 2013 and is now offered by Uganda Christian University, Bukalasa Agricultural College, Busitema University and Gulu University.
We need to build our capacities and strengths in partnership to help address the ‘youth bulge’, and also the growing demand for youth and their role in agriculture to feed the rising population.
