According to the Africa Agribusiness Outlook, a new report launched by Alliance for a Green Revolution and KPMG East Africa last week, about 41 percent of interviewed CEOs for the survey indicated that they will forge ahead with their pre-Covid-19 investment plans.
The AGRA and KPMG report however said that 43 percent of the companies reviewed, the majority of them being small and medium sized enterprises, said will be scaling back their operations due to the pandemic.
For such agribusinesses, revenues fell between 50 – 80 percent as soon as lockdown procedures were implemented and identified managing cash-flow as critical to surviving the Covid-19. The report which was released in Nairobi earlier this week further highlighted that major challenges are facing the CEOs during this period but more importantly, showcases the resilience of the agribusiness sector in Africa.
The report which surveyed 182 CEOs and senior executives across 16 African countries, identified several priorities for urgent action and they include: Access to finance which emerged as the greatest priority with most of them saying the issue is not just about access to finance, but the cost of finance and availability for the agricultural sector.
Next is technology which is supposed to be a great enabler hence afforded companies to respond and adapt their operating models after lockdown measures were imposed across the continent. “Going forward, technology will be the lever that will help Africa leapfrog into the future,” the report noted.
In addition, the report stated that the future of African agribusiness must include the smallholder farmer while acknowledging that agribusinesses are incorporating more smallholder farmers into their business models which is critical for sustainability.
“We believe that there are opportunities for African agribusinesses during this period, which is unprecedented for many businesses. The collapse of global markets has led to the rise of the ‘buy local’ movement,” AGRA President, Dr Agnes Kalibata said.
Dr Kalibata pointed out that there is a chance to optimise local value chains hence helping mitigate the devastating effects of the pandemic on the economy. “But for this to happen, we need innovative financing solutions to support the agribusiness sector. Financing, specific to the agricultural sector, will help build resilience and enable them to seize the moment,” she added.
The inaugural Africa Agribusiness Outlook Report is a survey that was conducted on CEOs in the agribusiness ecosystem early to mid-2020. Conducted by KPMG East Africa on behalf of AGRA, the survey sought to gain insights into their top priorities, understand how they are addressing challenges and what they see as opportunities in these Covid-19 times.
Anis Pringle, Partner at KPMG noted that “it is about making agriculture attractive, viable and profitable rather than being looked at as a risky endeavour.”
Pringle said technology also emerged as a game-changer in this period with about 52 percent of the companies surveyed indicating that technology was crucial to achieving their business goals in this period.
“Businesses switched not only to the use of e-commerce platforms to deliver products to consumers but also to deliver services to smallholders in their supply chain,” Pringles added saying technology is expected to dominate operations, impacting costs, and business models in the near future.