Will Botswana’s Agri-business get a boost from the Africa Free Trade Agreement?

11 Aug 2019

Agri-business is generally regarded as a silver bullet for the development of African economies. The sub-sector brings about value adding instead of exporting raw commodities – a phenomenon that was a norm for most African countries including Botswana.

“If well nurtured, Agri-business can lead to diversification of the country’s enterprises. Business opportunities are found throughout the Agri-Business value chain”, said Joe Mazibuko – CEO of Joburg Market ltd. Mazibuko was speaking at the annual Global Expo Botswana in 2016.

He added that that global experience shows that when a country’s agricultural sector is not competitive, there is greater reliance on imports. This trend reportedly explains and paints Botswana’s current scenario as her import bill for food remain high.

While figures point to a rapid growth in the demand for agro-processed products in both domestic and international markets, the challenge, for Botswana remains integration. As things are, for Botswana to rebound to desired levels there is need to integrate small scale farmers into markets so that they can make the agricultural sector stronger.

As it stands, there seems to be isolated efforts behind the scenes by different players to increase market access for smallholders and strengthen food value chain.

Despite all these efforts there remain one key hinderance – access to finance. For some financial institutions and prospective investors in the sector the endeavour to bolster production is often derailed by the inconsistent and often non-existent returns. But for others - those who believe that “patience can cook a stone” the emerging opportunity in the agribusiness subsector is nothing they can turn a blind eye on. They find it economic sensible to pump money into the sector.

Key players in the industry point to amongst other things the the newly launched African Continental Free Trade Area (AfCFTA) to potentially open additional avenues for local products to participate in new markets on the continent.

Earlier this year Botswana signed the African Continental Free Trade Area Agreement that aims to create a single market for goods and services, with free movement of businesspeople and investments. With about 1.2-billion people on the continent, the AfCFTA is set to create one of the largest free-trade markets in the world.

Another window of opportunity for the agribusiness sector in Botswana will be presented by the beef export liberisation. Currently only state owned – Botswana Meat Commission can export beef including processed one. However, during the just ended 11th Parliament, law makers-initiated legislation pieces that would see the BMC monopoly ending. This means that more private and public players could move into that space to make it even more competitive.

Already there are talks that some of the leading public trade unions are considering venturing into the agro business.

“Agro processing speaks directly to our members. This is an area that we could consider for investment as it beneficial in two ways. First it helps the nation to be self sufficient, secondly it has potential to bring better returns to some of the investments we can make on behalf of our members”, said one public trade union leader in Gaborone this past week.

The unionist leader could not be drawn into discussing further details except to say that they will first set up a meat processing plants to utilise the anticipated beef market liberisation.

Whilst the immediate need for Botswana agribusiness sector players, precisely the SMEs is finance, Mazibuko suggest that they also need right skills and right experience.

“The most important aspect of operating an agriculture related business in Africa is to have the right management on the ground, with the right skills and expertise to manage and execute on the proposed strategy of the business. Many agricultural projects have failed on the continent due to the lack of skills”

He also emphasized the need for collaboration amongst various players. “For example, technologically advanced suppliers, is needed to ensure access to the best possible genetics”