Less Oil and More Farms Is What Africa Needs, UN Agency Says

(Bloomberg) -- African countries need to increase their focus on agriculture investment and lessen emphasis on oil and mining to improve food security for their citizens, a United Nations agency said.

Most African governments have focused on growth in extractive industries such as oil and mining, resulting in some neglect of agriculture, said Kanayo Nwanze, the president of the United Nations’ International Fund for Agricultural Development, based in Rome. That’s heightened food insecurity and crippled opportunities for the majority of the continent’s population that lives in rural areas, he said in a telephone interview from London.

"Oil hasn’t fed people," Nwanze said. "It has enriched the pockets of a few people and the majority have become poorer. A vibrant agricultural sector not only feeds your population, it creates jobs, it generates wealth and it will keep people on their land."

Countries such as Nigeria, the continent’s most-populous nation, Angola and Zambia rely on exports of commodities such as oil, natural gas and copper for revenue. Their vulnerability to price swings was laid bare last year as commodity prices collapsed, leading some nations to seek help from the International Monetary Fund. Agriculture comprised about 17 percent of sub-Saharan Africa’s gross domestic product in 2015, while industry, which includes mining and manufacturing, accounted for about 25 percent, World Bank data show.

Minimum Allocations

While each nation is different, “there is no doubt that African countries in general are not providing the minimum allocation of resources as agreed in the Maputo Declaration of 2003," Nwanze said. The agreement, signed by most African states, obliges countries to allocate 10 percent of their budget to agriculture development. There are probably eight countries that have done it consistently, according to Nwanze.

“Africa’s development is not going to be sustained or maintained by the extractive industries or non-farm sector,” Nwanze said last week. “The rural agriculture communities are the backbone of development.”

There are signs of change. Nigeria, which relies on oil for two-thirds of state revenue and 90 percent of foreign-currency earnings, is turning to farming as dwindling oil income has driven the economy to the brink of its first full-year contraction in 25 years and more people go hungry. The government plans to capitalize the state-owned Bank of Agriculture Ltd. with 1 trillion naira ($3.2 billion) so it can lend to farming projects at less than half the commercial rate.

About 45 percent of IFAD’s investments in loans and grants go to sub-Saharan Africa, which has 25 percent of the world’s arable land, but generates only 10 percent of its agricultural output, according to IFAD. The organization’s investment on the continent more than doubled to $2.7 billion in 2015 from 2009.

Nwanze was in London last week to give a speech at All-Party Parliamentary Group on Agriculture and Food for Development in the U.K.’s House of Lords. Seventy-five percent of the world’s poorest people live in rural areas and depend on agriculture and related activities.

Many southern and eastern African nations’ harvests have been hurt by an El Nino-induced drought. This includes output from South Africa, which is the continent’s biggest producer of corn and whose white variety is used to make a staple porridge eaten throughout the region.

--With assistance from Mark Bohlund To contact the reporter on this story: Agnieszka de Sousa in London at atroszkiewic@bloomberg.net. To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Ana Monteiro, Vernon Wessels