Priority Industry Sector
Agribusiness
Agribusiness
Agribusiness
The patterns of global trade in food are changing fast. In recent years even China, long admired for its determined pursuit of self-sufficiency in food, has become a net importer of maize.
For better and for worse, globalized commercial agriculture is coming to Africa. The reflex response has often been to bemoan the ‘land grab’ by multinational food groups and investors from Asian and Arab states, when a more practical reaction would be to devise strategies for more African participation in a burgeoning international food trade.
External demand brings the prospect of economic growth and improved rural incomes. Agriculture must be Africa’s answer to globalization – for large industrial farms and smallholders alike.
Whether or not this can be achieved is, above all, a matter of making the right decisions in government and for business.
First, policymakers must separate agricultural ambitions and investment – cleanly and unambiguously – from other measures to reduce poverty among rural populations in Africa. Both are absolutely necessary, but the rhetoric of agricultural self-sufficiency is a recipe for confusion.
Food security is not the same as self-sufficiency among smallholders. These are distinct ideas, but routinely conflated. For example, although Dubai is a desert, its wealth ensures a stable supply of imported food. In Africa, food security is contingent on greater economic efficiency, especially in agriculture.
Africa needs food security, not self-sufficiency in food. Global demand for food is a strategic opportunity to re-balance the iniquities of world trade in Africa’s favor. While policymakers are surely correct to expect that rural populations should benefit from agricultural growth, the pursuit of self-sufficiency is not an effective tool to reduce poverty. Until agriculture is commercially viable, there will always be hunger in Africa.
The global trade in agriculture is both an opportunity and a threat. For Africa to maximize the benefits and minimize the risks, the overriding priority is to improve skills and know-how. The prospects for African agriculture hinge on producing crops which others want to buy. The most productive investment will be in locations where farmers, large and small, are able to integrate their systems in response to market demand. Where the efficiency and low costs of smallholders can be combined with the market access and quality controls of large holders and exporters, Africa’s farmers can create a dynamic and market-led industry. For policymakers, the key working principle is to remember that the root of poverty is lack of money– not a lack of food.
Chemical Industry
Chemical Industry
Chemical Industry
Africa’s chemical industry is undergoing dynamic change, with a range of external factors presenting industry executives with vastly divergent challenges. As such, running a global chemical company has never presented so many opportunities and challenges. The following are 5 strategic platforms for development:
- Capture growth from emerging markets – increase the pace of developing emerging market footprints to capture long-term growth and the emerging customer base. There is a need to be creative and look beyond China. A portfolio approach to capture the benefits and offset the risks inherent in different markets comes from balancing geographic expansion.
- Optimize the portfolio – take a more disciplined approach to identifying business units and segments which will not be competitive in the long-term; or which do not fit with the wider business strategy. In particular, remove the history and sentiment attached to legacy businesses, which often results in chemical companies holding onto areas which are no longer optimal in terms of maximizing shareholder value or no longer fit the strategy.
- Build financial strength – many of the good things the industry was doing in 2008 onwards have stopped. Supply chains have become bloated, buffers have been built in inventory and discipline around receivables collection has weakened.
- Reduce business model complexity – build leaner, more efficient business models which are more readily able to adapt to change. The chemical industry has become proficient at building structure and process and heavily integrating these structures resulting in reduced flexibility – adding layers of costs and functions which confuse the picture of underlying business performance, making it difficult for management to make optimal decisions and subsequently, make it difficult to deliver change.
- Focus innovation to drive price and margin – among the wider manufacturing industry, the chemical industry is a clear leader when it comes to customer centric innovation and new product development. For established market companies, we don’t intend to offer anything new here – just a reminder to continue to focus on this as a core competency for long-term success. For emerging market companies, the pace of development of specialty chemical business units has been slow, such that many are now no closer to the heralded move downstream than they were five years ago, while opportunities continue to pass them by. Basic chemistry is much maligned but as part of a fundamental GDP building block it offers a platform to foster development.