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Wednesday, 01 December 2010 09:14

Nurturing the Tilling Fields of Africa

Dr. Suresh Kumar

Africa Quarterly, Vol. 48, No.3, Aug-Oct. 2008

Introduction

India’s on the eve of independence, found difficulty providing food to its people. The 85 percent of total population represented agrarian community but dependent on basic food items such as wheat, rice, barley, oil, pulses, fruit and so on. By 1970s Green Revolution declared India’s self reliant in food production, agro-industry an other with the proper use of scientific better seed, pesticides and fertilizers. Today, Green India secures 1st in milk production, 2nd in wheat and rice, 3rd in cotton, groundnut and fruits production and 4th in sugarcane and potato in the world. The Government of India encourages private industry investing in agro processing industries, agriculture research and development (R&D) and connecting farmer’s land directly to retailed markets selling the vegetables, fruits and cereals.
Today, national development issues incorporate agriculture sector as prerequisite to country’s progress and prosperity in Africa. Indo-Africa is pursuing mutual cooperation under the theme of ‘Today’s Investment-Tomorrow’s Prosperity. The development and mutual partnership covers self-reliance schemes avoiding huge debt as a result of this brotherhood. Indo-Africa partnership policy persuades African willingness and mutual benefit to implement the common development partnership programmes in different parts of continent. African government’s national development Programme cannot function in isolation. Africa needs a mutual cooperation and development programme from outside world and Indian mutual economic brotherhood and political understanding kick out all western propaganda about India’s policy of New Colonialism in Africa. The idea of today’s investment will nourish a debt free Africa and strengthen economic development as tomorrow’s prosperity. African politics cannot ignore international relations to build up national development and this partnership is a way towards Today’s investment, Tomorrow’s Prosperity.
Africa national development goals explains the social dimensions and working with the programmes like poverty eradication, agriculture sector development, education, health, infrastructure and others. Agriculture sector in Africa needs to develop through better seed technology, irrigation, scientific techniques and instruments to get more output supporting poverty alleviation programmes. This sector needs better infrastructure for its development such as roads connectivity from villages to city,
tele-communication, better transport facility, etc.  The trade and investment in agriculture and infrastructure sector are inter-linked and need mutual support for each other, which persuaded one to share Indian experience in this sector. Finally, the suggestions are made to Indian investors and African governments to understand the importance of development Programme in tackling various problems on the one hand and mutual benefits to both the continent on the other hand.
“CII is strongly committed to build and boost India-Africa Trade. CII has Institutional Agreements with 32 counterpart organizations in 18 African Countries with the objective to facilitate exchange of information and promote business interests of Indian and African Industry.
CII has developed an integrated strategy for promoting Indian Exports into Africa, to supplement "Focus Africa" programme of Ministry of Commerce. The especial emphasize is given on project partnership.
CII Africa Committee focus is to develop strategies to enhance Economic, Industrial & Trade relations, to identify areas of Mutual Corporation and issues of concern and evolve guidelines for different forms of corporation. CII's work with Africa is growing. A strong structure that supports a continuing dialogue, transparent access to opportunities, interaction with the government and the African Heads of Missions has now been institutionalized in the form of the CII Conclave on India Africa Project Partnership. A visible change in perception with access to greater knowledge of the region has helped in promoting economic relations between the Indian industry members and the African countries. Our effort is to develop a long term sustainable relationship with the private sector in the African countries.”1
Table-1 illustrates the Indo-Africa trade in the year 2006 gives a positive impact of the relations.
Investment in Agriculture Sector in Africa
It is a common opinion and believes that there has been fair distribution for equal development and prosperity as per the need in different parts of country. One may argue that fiscal equalization in different districts/villages is confronted with political obstacles because equity is normative in character and thus embodies political judgment. That’s why; the important function of a central government in Africa is to strike a balance in terms of development between different parts of country, which will strengthen distribution of power between them in practice.
The investment (as per the physical condition of the region) in this sector offers:
•      Commercial farming of fruits and vegetables
•      Processing of fruits and vegetables.
•      Production and export of de-hydrated fruits.
•      Investment in cold storage facilities at collecting points.
•      Organic farming of fruits and vegetables.
•      Packaging for fruits and vegetables.
•      Opportunity for local manufacturing of attractive packaging for fruits and vegetable.
•      Irrigation schemes for commercial farm to ensure harvests throughout the year.
Agriculture Engineering
•      Industrial units for manufacturing tractors.
•      Industrial units for manufacturing pump-sets for irrigation.
•      Industrial units for the manufacturing of agro-food products.
•      Small Industrial units for Agro-chemicals (fertilizers and pesticides).
•      Industrial units for manufacture of textile (Cotton fabrics, garment manufacturing, yarn).
Fish and Fish Farming Industry
Investment and business linkages opportunities are possible fish and fish farming industry such as:
•      Manufacture of value added fish products: such as canned fish, fish sausages, fish soups, and fish fingers.
•      Low cost species such as tilapia and Happochromis (Uganda), King and Queen fish (Eritrea), etc. for the local and regional market.
•      Premium fishes such ad Nile Perch (Uganda), Tuna fish (Kenya, Djibouti and Eritrea), etc. could be processed for premium export markets.
•      Aquaculture development of stock fish, farming of premium species such as eel and cage fish farming are potentially profitable ventures.
•       Frozen and chilled Fillet Processing in Africa.
•      Dry/Smoked fish: mainly for the domestic market but also for export into the regional market.
•      Leather Processing for export.
•      Local and regional cold distribution chain to minimize post-harvest loss and deterioration.
Livestock Industry
The livestock development (Cow, Goat, Sheep, Chicken, Ducks, Pig, etc) strategy focuses on establishing an efficient livestock disease control system based an cost recovery; achieving self-reliant in meat, milk, poultry and other livestock products. It promotes and develops industrial linkages for livestock products including dairy, leather and meat processing, encouraging the export of livestock and love stock products, and strengthening research in livestock breeding in order to upgrade the quality and productivity of the present livestock breeds. The business opportunities include:
•      Local commercial dairy breeding and production of semen to reduce on the importation of heifers.
•      Vaccine development and forge production.
•      Animal feeds production and processing.
•      Integrated beef production and feedlot finishing.
•      Small ruminant production.
•      Game ranching.
•      Leather processing.
•      Animal breeding and establishment of modern abattoirs.
Food and Beverages Sector
•      Value addition to a variety of agricultural produce locally available.
•      Planting and processing of coffee, production in instant coffee particularly in Uganda, Kenya and Ethiopia.
•       Extraction of vegetable and essential oil.
•      Packaging of vegetables and fruits for exports.
•      Breweries and distilleries of alcoholic beverages.
•      Soft drink and packed fruit drinks manufacture.
•      Commercial farming and processing of sugar, corn flakes, gram flakes, etc.
•      Establishment of fast food restaurants of international chains/brands.
Dairy and dairy Product Sector
This sector develops, promote and control of production, processing and marketing of milk and dairy products as well as the general facilitation and development of the Dairy industry. The investment opportunity in this sector is:
•      Establishment of reliable collection centers in the major producing areas and transportation of milk to the processing plants.
•      Establishment of more processing plants to cater for the excess production.
•      Production of powdered milk for use in ice-cream manufacturing confectioneries and homes.
•      Production of long life (UHT) milk.
•      Processing of butter, cheese, butter oil, ice-cream and yogurt.
•      Local commercial dairy breeding and production of Semen reduce in the importation of heifers.
Development Projects Implementation in Africa
Table-2 highlights the active participation of Indian investors in Africa in agriculture sector (Annexure-1). ‘Overseas Infrastructure Alliance (I) Pvt. Ltd. is currently executing supply of 132 kv Power transmission Line, Substation & Distribution Equipment Project worth app. US $ 78.0 million to Electric Power Corporation (EEPCO), setting up 26000 tons per day green field sugar project in Tendaho, worth US $ 345.00 million and installing new power plant of US $ 142.00 million in Finchaa Sugar Factory in Ethiopia. The rural electrification in Gaza province of Mozambique worth US $ 20 million carries forward through this company.’2 ‘International Tractors Limited (ITL) is one off the top five tractor selling companies in India and exports tractors to South Africa, Zimbabwe, Algeria, Zambia, Senegal and Ghana. ITL has a marketing arrangement with TATA INTERNATIONAL got development of selected African market’3. Today, Sonalika Agro is supporting the farmers with world class farming equipment for Green Revolution-II in India and easing process of making the Green Revolution in world including Africa.
Kamani Engineering Corporation (KEC) International is working for power transmitting over minefields in Africa from scorching deserts of North-west Africa, Egypt, rural electrification across Ethiopia working on attitude 0f 2100 m above sea level and politically sensitive Somalia-Ethiopia border ad other parts of Africa continent.
Angelique International Limited is working for rural electrification, agro-processing plants and Sprinkler/drip Irrigation in Botswana.
1. Investment in Uganda
The infrastructure in Uganda such as roads, railway, etc. want a more efficient railway to the see though Kenya, Tanzania, Rwanda, Burkina Faso and Southern Sudan. That is a very important area of investment. The railway is the systems that can withstand Uganda local weather, because it got lot of rains, which are quite a problem for the roads. That is an area India look at- the railway. Indian workers are the ones who helped to build the east African railway, earlier. Finally, the rate of return in Africa and Uganda is very high, about 30% as compare to India, European Union, China and Latin America.
Uganda is mainly an agricultural country with over 80% of the population relying on agriculture for its livelihood. The linkage potential in the plantation and agro-industry includes:
•      “Outsourcing the field operations including seed-bed preparation.
•      Supply of produce to processors.
•      Maintenance of machinery.”
Uganda is east Africa’s food basket. Possible investment opportunities are in production of instant coffee, extraction of vegetable and essential oils, packaging of beans, alcoholic beverages, soft drink manufacture, processing of sugar and fast food restaurants. Uganda needs US $ 15-30 million investment requirement to expand rose industry depending on wooden or metallic infrastructure. All the roses’ projects send soil samples to Holland for analysis. The cost of the services (US $ 200-600/ha) justifies the establishment of a soil analysis laboratory and services in Uganda. Greenhouse plastics constitute 6% of the investment requirement and need to be replaced every 2-3 years, providing commercial opportunities for local manufacturers. Fertilizers, herbicides, pesticides currently imported.
Ugandan flowers have managed to mark their presence in the world for a, claiming a fifth position in Africa’s largest exporter of cut flowers. Indian investor may look forward for mutual trade.
The most important market for Uganda’s fruits and vegetables is European Union. In 2005, EU imports of fresh vegetables amounted to Euro 9.8 billion and 10.5 million tones. Uganda is capable of producing most of the tropical and sub-tropical, or even temperate fruits and possible investment and business linkage opportunities. Uganda livestock production contributes 17% and 9% to agriculture sector.
“Several firms in Uganda are involved in production of fish fillets for export, the annual quota of 60,000 metric tons o processed fish, has never been met. In addition, the local market is expanding. Entry into this sub-sector is viable and there are possibilities of joint ventures with existing fish processing firms. Dry/smoked fish is mainly for the domestic market but also for exports into the regional market.”
2. Investment in Botswana
India and Botswana agriculture, livestock and human resources development cooperation started in 1999. Indian seeds (Maize and Paddy rice) have been sent to this country for experimentation. A project for import of Indian Buffalos to this country has been set up. The farmer’s project has been finalized and since 29th October 1999 six farmers form Punjab have landed to this country in view of realizing this project. “The tender for the purchase of Indian tractors at large scale in under process.” The cotton from Burkina Faso exports to India. Today, many trainees from Burkina Faso are coming to India for training in computer education, diplomacy, telecommunications, etc. Botswana is looking forward to setting up units of production of commercial farming such as fruits, vegetables, Arabic gum and cotton.
Livestock occupies an important place in the economy of Burkina Faso in West Africa. The opportunity in this sector is the setting up of:
•      Small industrial units for milk processing (dairy plants) breweries.
•      Small industrial units for production of animal feeds.
•      Small industrial units of veterinary pharmaceutical products.
•      Meat processing.
•      Small units for leather.
•      Cattle rearing-ranching and poultry.
3. Investment in Burkina Faso
It is a member of the West African Economic and Monetary Union (WAEMU) and share a common currency i.e. CFA franc and have set up a full custom union since 2000. WAEMU comprises Burkina Faso, Benin, Cote d ’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo having same custom duty tariff. The volume of Indo-Burkina Faso trade has increased by 30% in 2002-03. India imports 66% of cotton yarn produced by FILSAH, one of the major producers in the country. Burkina Faso exports cotton, animal skins, and leather and cashew nuts to India and imports Agro-machinery (tractors and farm implements), Rice, small and medium scale industries (e.g. oil processing) from India.
Burkina Faso guarantees the foreign investors such as:
•      “Right of full business awareness for foreign investors.
•      Right to acquire real estate, land, forested land, industrial areas in addition to concession from government.
•      Right to transfer capital and profits of any investor.
The advantages of investing in this country are:
•      A possibility of Joint Venture with Burkina Faso business community.
•      Low cost of labour.
•      Good infrastructure (telecommunication, roads, railways and airport) and services.
•      Strategic position in the heart of West Africa.”
Burkina Faso is second largest producer of cotton in West Africa and ranks third in entire Africa. Agriculture plays a key role in this country’s economy, it accounts for over 40% of the country’s GDP, 80% of export revenue and 85% of employment.” 11 The government gives priority in twelve fields for investment in cotton, cereals, fruits & vegetables, oil seeds, skin and leather, meat, milk, chemical products, fertilizers and pesticides. The agriculture investment exists in the following sectors:
•      Industrial units of manufacturing tractors.
•      Industrial units of manufacturing pump sets for irrigation.
•      Industrial units of manufacturing agro-food products.
•      Small Industrial units for agro-chemicals (fertilizers and pesticides).
•      Industrial units of manufacturing textiles (Cotton fabrics, garment production and yarn).
•      Setting up commercial farming units (fruit, vegetables, Arabic gum and cotton).
Live Stock Production in Burkina Faso
It is having more than 20 million livestock comprising bovines, aprons, ovins, pigs, mules and poultry. The production of fish is around 10,000 tones per year mainly for the local market.
•      Small Industrial units for milk processing (dairy plants).
•      Small Industrial units for production of animal fats.
•      Small Industrial units for veterinary pharmaceutical production.
•       Meat processing.
•      Small units for leather
•      Cattle rearing-ranching and poultry.
4. Investment in Senegal
India facilitated Senegal agriculture sector on lines of credit such as:
•      ‘15 million USD for acquisition of agricultural material and the creation of rural enterprises.
•      27 million USD for irrigation projects with a view to achieve rice self sufficiency’12
Agriculture sector comprises of 70% of Senegalese population is central to the country’s development. ‘India put at the disposal of 510 tractors, equipment for tilling, carts, drilling machines, pumps, trucks and maize processing and enriching equipment under Indo-Senegalese cooperation.’13 Senegal government and Indian Farmers Fertilizer Co-operative Limited (IFFCO) signed an agreement of about $240 million’14 There are export opportunities in the agri-business sector, with the AGOA visa in:
•      ‘Floriculture
•      Fruit Cultivation
•      Market Gardening
•      Thousands of hectares of Cashew nut plantation
•      Diversification of the industrial processing of groundnut.
•      Fish Cultivation
•      Support to the development of horticultural exports.
•      Improvement of the condition of market operation.
•      Support to agric-business producers and operators for a better adaptation of products to the market.
•      Development of private irrigation and land-related activities.’ 15
Senegal is dependent on import rice that reached 400,000 tones of CFA Francs 118 billion for 2003. As an alternative, the Senegal government offers investment opportunities in this sector particularly in Senegal River Valley region. Senegal has become a leading exporter of cherry tomatoes, fine green beans, basil, green asparagus, onions, potatoes and aborigines.
Eligible Activities in Trade & Investment in Senegal
An upper limit of CFA F 15 million is the condition of investment in this country. The Primary Sector and Connected activities such as agriculture, fishing, breeding and activities related to the storing, packaging and processing of local products of vegetable, animal or halieutic origin, food industry.
‘The upper limit of CFA F is 100 million in infrastructure (Port, airport and railway infrastructure). The port infrastructure includes installation of fixed equipment, investment aimed at importing assistance to ships during shipping and landing. The increase of the storing and conservation capacities, aimed at improving the fluidity of port traffic. The railway infrastructure needs material for the railway network, material for the transportation of people and goods, material used for operation on railways related to production or exploitation. The airport infrastructure is looking for installation of fixed equipment, ancillary equipment for assistance to plans in stop, increase of storing and conservation capacities, Technical and commercial promises designed for port-related activities.’ 16
5. Investment in Ghana
.Ghana is searching for an investment location and offer opportunities in:
•      Agriculture (Cassava, Cotton, Sugarcane, Soya Beans, Oil Palm, Pineapples, etc.)
•      Agro-processing (Cocoa, Fruits, Vegetables, etc.)
•      General Infrastructure (Agricultural and Industrial Estates, Roads, Railways and Ports).
•      Fisheries.
“The government gives incentives in tax rebates for manufacturing in certain locations, tax holders, ranging form 5 to 10 years depending on sectors, custom import duty exemption for plant machinery, equipment and parts thereof and double taxation agreements.” 17
6. Investment in Zanzibar
Zanzibar, part of United Republic of Tanzania offers investment opportunities in:
Agriculture
•      Horticulture and Floriculture.
•      Agro-processing.
•      Fruit processing and Canning.
Fisheries
There is a potential for development of various types of fish, shrimps, lobsters, seaweed and other marine resources. Investors are free to choose suitable areas for:
•      Deep sea fishing.
•      Fish Farming
•      Processing and Canning
Zanzibar is known as the Spice Islands. The investment opportunities in spices include:
•      Cloves,
•      Cinnamon, Cardamom, nutmeg, black pepper, chilies, etc.
7. Investment in Eritrea
The Government of Eritrea announced new economic investment policy that is known as Proclamation No.159/2007 regarding Foreign Financed Special Investments (FFSI) Proclamation. It applies to all FFSI of more than Twenty Million US Dollars (20,000,000 USD) or its equivalent in other convertible currency. The Eritrean government policies give priority to agriculture sector.
Article 3 (9) of FFSI mention Investors means any physical person or any juridical person registered outside Eritrea who or which, respectively, has invested foreign capital and goods and equipments in Eritrea. Along with it, Article 3 (7) of FFSI explains about, Foreign Capital means investment of foreign origin which shall include foreign convertible currency, negotiable instruments, plant machinery, equipment, buildings, spare parts, raw materials and other business assets brought into Eritrea and includes profit converted into capital. The investors spoke of the insecurity of their investments and assets in Eritrea. But this investment scheme of government gives economic incentives to business community may lead to security and confidence.
Suggestion and Conclusion
Today, India-Africa Partnership Conclave, 19 to 21 March 2008 in New Delhi, highlights the potential investment sector in Africa, which includes Agriculture, Infrastructure (Construction, Transport), Agro-processing, fisheries and other sector. Currently, table-2 highlights India’s emerging relations with Africa in trade and investment on the mutual basis.