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July 16, 2024
Agribusiness Markets

Why Covid-19 is likely to wreak havoc on African agriculture

frican countries have, so far, been mostly spared from large outbreaks of Covid-19, but many are bracing for potentially deadly impacts on their food supplies due to the global disruptions caused by the pandemic. They also face the prospect of seeing produce being left to rot as unemployment levels shoot up. 

East Africa, already reeling from the ill effects of locusts and droughts, is in particular danger, according to data analysis by NS Media Group. 

The Agribusiness Vulnerability Index analysed 92 of the top 100 countries for foreign direct investment according to the United Nations Conference on Trade and Development. Eight were excluded due to lack of sufficient data across the main sources used (the World Trade Organisation, the World Bank and the International Monetary Fund).

Agribusiness Vulnerabilty Index

35Dominican Republic

Among the 40 countries most exposed to a downturn in the agribusiness sector due to the pandemic, 15 were located in Africa, 11 in Asia and three in southern and eastern Europe. The six countries with a highest exposure to the sector were all in eastern and south-eastern Africa. 

“The thing about Covid-19 is that it is an unprecedented crisis because it’s not just one country or one region, like Ebola was in west Africa in 2014 to 2015. It’s global. It’s also not just a supply-side problem, as is the case with the droughts or locusts we have in this region, or a demand-side issue, [such as] the recession [it will bring],” explains Peter Smerdon, senior regional spokesperson for the United Nations’ World Food Programme in eastern Africa, who is based in Kenya. 

“It is all at the same time and on a global scale, so that helps describe its complexity, and especially in east Africa,” 

Food insecurity

The World Food Programme estimates that about 20 million people in east Africa are food insecure, with Covid-19 threatening to increase this figure to between 34 million and 43 million in the next three months.

Ethiopia was at the top of the Agribusiness Vulnerability Index, with agricultural product exports making up 75.5 per cent of the country’s merchandise exports. The agricultural sector represents almost one third of the GDP of the country, though this percentage has decreased over the past ten years; in 2010 it stood at 41.5 per cent. 

Neighbouring Kenya came in second in the index. However, unlike Ethiopia, the value added for the sector as a percentage of the country’s GDP has been rising in the past ten years. 

Uganda’s agribusiness sector makes up 24.2 per cent of its GDP and agricultural exports comprised 59.2 per cent of the country’s total merchandise exports in 2018, meaning it placed third in the index. 

The tourism threat

Ethiopia, Kenya and Uganda are facing a double economic threat, with Covid-19 damaging another of their revenue streams: tourism. This will also have a knock-on effect on agricultural exports, as they rely on passenger aircraft to ship produce.

Smerdon says that while these countries are losing out on tourism revenues, “they’ve also lost their export markets for products such as flowers and vegetables that used to go by air to Europe from Kenya”.

He adds that another complication has emerged in the past few weeks as Kenya, Uganda, Rwanda and South Sudan have imposed restrictions on trucks crossing their borders because they fear drivers may be infected with Covid-19.

“This has impacted a very important supply chain of humanitarian assistance and commercial cargo coming through Mombasa [on the coast of Kenya] and that is then sent across the region. However, the leaders of Kenya, Uganda and Rwanda promised to work together [in early May] ago to minimise the delay at borders, because at one stage there were 35 kilometre-long queues of trucks waiting on the Kenyan side of the border where drivers were required to have a Covid-19 test, and then they’d get to the Ugandan side where they would be required to have another one,” says Smerdon.

“So there’s a lot that they could do to make the flow better. They are saying they will [improve the flow, so] it’s just a matter of seeing what is actually implemented.”

A matter of access

A report by the Food and Agriculture Organisation (FAO) of the United Nations comparing the Covid-19 crisis to the 2009 recession states that the world is in a better position to avoid an “all out” food crisis, given the availability of food and the diversification of the trade within the agribusiness sector on a global scale. 

However, the report highlights that in countries where the agriculture sector and the associated supply chains are not sufficiently mechanised – such as the case of east Africa – the effect of lockdown measures is taking a hit in the sector. 

How the impact of Covid-19-related struggles in Africa will be felt on a global scale is still unknown. Maximo Torero, the chief economist of the FAO, believes that the International Monetary Fund’s prediction of a 3 per cent reduction in global GDP growth is a very optimistic scenario, as it still assumes that countries in Africa and in Asia will be growing. 

Torero explains that this outlook seems unlikely, as the full impact of Covid-19 is still unclear and the crisis is only now unfolding in Africa. The problem does not have to do with the availability of food, but with food access, he adds. 

Employment worries

At the end of March this year, ILOstat was predicting a year-on-year rise in employment within the agribusiness sector in Ethiopia of 2.6 percentage points in 2020, while in Kenya the increase was expected to be of a similar 2.4 percentage points. 

Covid-19 looks set to wipe out this growth predictions, as people are losing what were already precarious jobs, which in turn affects purchasing power and thus pushes food prices down in places such as Kenya, as people have less money to pay for food.

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