New impact report advocates enhanced support for agribusinesses to navigate the ‘triple crisis’

AGRA has released the third edition of the “From Crisis to Opportunity: 2023 African Agribusiness Outlook”, which sheds light on the impact of the ‘triple crisis’ – COVID-19 pandemic, climate change and the Russia–Ukraine conflict – on small and medium-sized agribusinesses in Nigeria, Zambia and Tanzania. The report, which is jointly produced by AGRA and IPSOS, surveyed 1 623 SME agribusinesses in the rice, maize and tomato value chains in Nigeria, Zambia and Tanzania, and the soybean, maize and tomato value chains in Zambia.

The study examined the impact of various measures taken to support SMEs’ performance during the triple crisis, revealing that a substantial proportion of agribusinesses have experienced severe declines in revenue during this period, with only some managing to recover.

The report states: “Agribusinesses in agricultural value chains in Nigeria, Tanzania and Zambia have been hard hit by the ‘triple crisis’ of COVID-19, climate change and the Russia–Ukraine conflict. Although the larger businesses were hardest hit in Nigeria and Zambia in 2020, these businesses appear to have been better able to recover as at 2023.”

While supply, demand and operational costs were significant challenges during the peak of the COVID-19 pandemic, the report reveals that businesses continue to grapple with soaring operational expenses in the wake of climate-related impacts and the ongoing conflict in Ukraine. The report discloses that 58% of SMEs surveyed have experienced substantial revenue declines of 20% or more throughout the triple crisis period.

Furthermore, the report reveals some of the strategies employed by businesses to stay afloat during these challenging times included injecting additional capital, cost reduction measures and streamlining their product lines.

Dr Agnes Kalibata, president of AGRA (pictured), noted that agribusinesses have exhibited remarkable adaptability, innovation and determination on the one hand, but continue to struggle amid business disruptions through lockdowns, supply chain disruptions, productivity decreases and reduced consumer demand.

She remarked, “We are all aware of the challenges they are facing; however, not much has been done to look at the cumulative impact of the triple crisis and the specifics of severity that the agribusinesses are grappling with. As we reflect on the impact of the triple crisis on agribusinesses in Africa, we must also recognise the incredible potential these enterprises possess.”

She noted that as drivers of farmer resilience, job creation, economic development and poverty alleviation, African agribusinesses hold the promise of fostering greater social inclusion and reducing inequality across the continent. “There is an urgent need for measures to effectively address and alleviate the impacts of these crisis on the sector that serves as the primary employer, engaging over 70% of Africa’s population in economic activities and contributing more than 30% to the continent’s economies,” Dr Kalibata emphasised.

The report calls for more collaboration between policymakers, financial institutions and development organisations to provide supportive ecosystems that empower the agribusinesses and respond to their three top asks: access to affordable finance; fostering a business-enabling environment, particularly with stable and predictable policies; and supporting an effective regional trade system.

It recommends more focused, tailored and concerted investment and support to improve quality and quantity of produce at the farmer level. It also recommends the adoption of policies that encourage the development of financial products specifically tailored to the agricultural sector, and improving financial policies to enhance access to affordable credit.

To optimise the efficiency of SMEs and reduce transaction costs, there is a call for improved market information. Enhancing information services related to supply and demand is vital, as it can facilitate better decision-making for agribusinesses. A well-informed market, the report notes, will lead to improved supply efficiency. The report calls upon governments to reduce fuel costs, mitigate currency fluctuations, ensure timely fertiliser subsidies, streamline business registration processes, and efficiently manage storage facilities.