Food supply chains in Africa | How the pandemic has impacted
The COVID-19 pandemic has seen crises of scarcity the world over, and resources of all kinds having to be spread ever-more thinly. Job losses and wage cuts around the world have had drastic effects on consumer spending and GDPs.
Jul 28, 2020
Ashley Connick (Hogan Lovells) and Theodosia A. Tandoh (Bentsi-Enchill, Letsa & Ankomah)
The economic impact on food production and distribution is of critical importance, for obvious reasons. More than ever, people need access to food at reasonable prices, and food producers need to be able to get their products to market and to receive payment for those products. Across the continent of Africa, where food insecurity was already a feature of life for so many, the impact has been, and is likely to continue to be, significant. It is hoped, however, that seeing issues with the food supply chain in Africa illustrated so starkly will prompt innovation and investment which will benefit millions of people in years to come. We'll be looking at this issue both continent-wide and also with a more specific focus on Ghana.
Food security in Africa has long been an area of concern, and is an issue with a complex web of interconnected roots. Climate and agricultural elements in some parts of the continent pose significant problems, while uncertain access to high-quality input materials such as seeds and fertiliser have also been cited as contributory factors. The continent as a whole is a net importer – the African Development Bank estimates that Africa's import bill was as high as US$50bn for the year 2019 – despite the wealth of natural resources on the continent, and despite the UN's Food and Agriculture Organisation ("UNFAO") estimating that up to 80% of Sub-Saharan Africa's food supply comes from smallholder farms in Africa. The Ghanaian food production sector, for instance, is dominated by smallholder farmers whose cropping practices are characterised by inadequate use of productivity-enhancing technologies, low use of quality seeds and fertiliser, as well as weak market linkages. Statistics from the Ghanaian Ministry of Food and Agriculture (“MoFA”) indicate that 1.2 million people in Ghana, representing 5% of the population, are food insecure. An additional two million people are vulnerable to food insecurity in Ghana, and that situation will deteriorate in the event of any pandemic that distorts the food production system.
The UNFAO attributes the substantial reliance on food from elsewhere to poor transcontinental infrastructure, declining agricultural productivity, and the weakness of governmental and non-governmental institutions. Further, it talks of a dichotomy between richer nations with high import costs (an average of US$185 per capita per annum between 2000 and 2005) but also diversified economies with which to pay those bills, and lower-income countries, largely in Sub-Saharan Africa, which have lower import bills (an average of US$17 per capita per annum between 2000 and 2005) but whose ability to meet those dues is restricted by their low export revenues. The continent's overall deficit has grown significantly in recent years, with a real-terms rise in net imports between 1980 and 2007 of 3.4% per year, largely fuelled by population growth of 2.6% per year.
Some governments have attempted to combat these issues in recent years. The Ghanaian MoFA launched the Planting for Food and Jobs (“PFJ”) programme in 2017 to promote food security and provide employment opportunities in agriculture and agri-business as a means of alleviating poverty. MoFA distributed subsidised agricultural inputs (fertilisers, grain and seeds) and provided agricultural extension services to farmers under this programme, and also provided smallholder farmers with 520 multi-purpose mini tractors. Despite MOFA's best intentions, a study conducted by the Northern Ghana Governance Activity in partnership with the United States Agency for International Development identified some challenges with the implementation of the PFJ programme, including late distribution of seeds and fertilisers in some districts, poor quality of seeds and fertilisers, and political interference.
The issues with infrastructure can be separated into transportation and ongoing operations categories. The distances between African commercial hubs can be far greater than in other parts of the world, making distribution models developed and perfected elsewhere difficult to transpose on the continent, even with the right will and funding. Transcontinental roads of a high-enough quality to facilitate swift and efficient distribution networks are rare, and international rail networks are slow, where such services exist. Roads and rails can also be closed by heavy rain, sometimes for days at a time. In Ghana, there is an urgent need to improve road and rail connectivity and reduce travel time between rural farming areas and the food markets; large amounts of produce waste away as a result of the current inadequacy of rural road networks, including across the Northern regions of Ghana and to and from the farming villages in the Ashanti, Brong Ahofo and Bono East regions. In 2018, the Ministry of Roads and Highways reported that about 41% of roads in Ghana were in good condition, 33% of the roads were fairly motorable, and the remaining 26% were in very poor condition.According to Ghana’s Ministry of Transport (“MoT”), over 80% of the government’s annual budget for the transport sector is channelled into road infrastructure projects; the MoT reports that there has been some progress in modernising the domestic road and rail network, but there is still considerable work to be done to improve routes linking agricultural commodities to their respective markets. The Ghanaian government has shown interest in Public-Private Partnership (PPP) options in the port, railway and road sub-sectors. The World Bank is supporting Ghana to improve the transport infrastructure in Northern Ghana, and is also supporting several Feasibility Studies under an ongoing PPP-Project, most notably, the expansion of the Accra-Tema-motorway, the Accra-Takoradi Road, the Eastern Railway Line and Boankra Inland Port. Similar schemes need to be accelerated and replicated across the continent, in order to minimise the wastage of produce and land, and maximise revenues for governments and farmers.
In production centres themselves, there can be problems with unreliable electricity supplies, requiring investment in generators to keep power supplied to machinery and storage facilities. These are significant front-loaded costs which local farmers or would-be entrepreneurs may not be able to meet, particularly given up to 70% of Africa's workforce is employed in the informal sector, a figure which is higher among women and youth. A substantial proportion of everyday trade – up to 96% in certain emerging economies, according to a 2018 study by the Brookings Institution – across Sub-Saharan Africa occurs in small and medium-enterprise shops, including roadside stalls and establishments, which makes large-scale distribution networks more challenging, and means that opportunities to take advantage of economies of scale are limited. This contributes to international retailers' products being more cost-effective than local products for local consumers and businesses.
An already-straining infrastructure system, the result of years of systemic failure to invest in high-quality solutions, has been further burdened by the impact of COVID-19. The UNFAO's Chief Economist, Maximo Torero, said that the primary global issue was not a shortage of food or produce, but bottlenecks at borders and in logistics chains meaning that products couldn't get to consumers. With food from overseas unable to enter or significantly delayed from doing so, the domestic suppliers have struggled to meet the demands of the continental population. Governmental stockpiles of staples such as maize and wheat, established to deal with the impacts of droughts and other fluctuations in food production, are dwindling rapidly as the consequences of restrictions on movement, work, and schooling come into play. According to the World Health Organisation, around 65 million Africa-based children who would usually be fed at school now have to be provided with food elsewhere in challenging circumstances.
African COVID-19 infections remain lower than in many other parts of the world, in part as a result of the swift and aggressive response of some governments. Lockdowns and travel bans may have stopped the transmission of the virus, but they also impacted on the distribution of food and other necessities; shipment clearance times at ports in Nigeria and Kenya were said to have increased from days to weeks. Delays at border crossings are merely problematic for humans or non-food products; for food, often with a limited shelf-life and being transported in conditions which are not suitable for longer-term storage, it can be the difference between a shipment being saleable and being dangerous for human consumption. The COVID-19 pandemic saw and continues to see restrictions placed on exports from some of the hardest-hit countries in Asia and Europe, which also happen to be places which supply significant proportions of produce such as rice and poultry. These imported goods, typically significantly cheaper than their domestically-produced equivalents – sometimes by up to half the price – became more scarce and harder to come by overnight thanks to restrictions and currency fluctuations. This inability to access cheaper produce has placed an additional burden on people, many of whom are seeing their earning potential reduce simultaneously.
In Ghana, despite the hope that the PFJ programme might help cushion the blow, the COVID-19 pandemic has significantly affected Ghana’s food market, through the closure of borders and restrictions on the import and export of food across various parts of the world. Ghana imports a large proportion of its food from countries such as China, Vietnam, Thailand, Brazil, and the United States of America; rice and poultry, which are among the most common food staples in Ghana, are largely imported goods, and so have been particularly badly affected. The Rice Importers and Exporters Association in Ghana have noted that the cost of imports has soared since the COVID-19 pandemic, as a result of the temporary ban on the export of rice by some Asian countries, and the sudden panic-buying witnessed in the Ghanaian market after the President imposed temporary lockdown orders in some parts of Ghana. High prices and supply issues mean that food insecurity implications could be severe if adequate measures are not put in place to boost domestic production.
The African Development Bank, having learned from past crises, has sought to combat the increase in the already-prevalent feeling of insecurity around food and nutrition on the continent, particularly in landlocked countries, by co-ordinating the Feed Africa Response to COVID-19 (FAREC). FAREC has provided investment to governments, farmers, and private sector enterprises to mitigate the negative consequences of the pandemic, including by working with governments to facilitate food delivery to rural and vulnerable areas.
Individual national governments have been proactive as well. In Ghana, MoFA is in the process of developing a post-COVID-19 strategy, in alignment with the government’s COVID-19 response programme. The strategy will propose interventions to improve the food supply chain in the short-term (June 2020–December 2021), such as a focus on strengthening food production programmes; and enhancing access to agricultural inputs and finance for crop and livestock producers and processors, in the medium to long-term (2022–2024). The Minister of Environment, Science and Technology and Innovationannounced that as part of the mitigation measures the government intends to strengthen the Ghanaian food chain by improving the processing of food within Ghana through the use of technology, while MoFA also announced that the National Food Buffer Stock Company has been mandated to mop up strategic stocks for food security, re-establish early warning systems to provide a regular update on the food supply situation in Ghana and establish a COVID-19 Fund for Agriculture and Food Security. The Ghanaian government has also introduced a GH¢600 million COVID-19 stimulus package to support micro, small and medium enterprises from the negative impact of the pandemic.
As the world begins to stabilise and adjust to new realities, African consumers, businesses and investors will have to look differently at their lines of supply, and plan for a future in which transcontinental infrastructure is improved to the point where African capabilities for food production are translated into sales. Technological infrastructure would also greatly benefit many countries and regions, facilitating e-commerce solutions, such as methods of payment and ordering. Doing this may further encourage international greater investment as the ability to increase African access to world markets, and vice versa, grows.
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