Africa holds great market potential for agricultural machines, according to a recent survey among 171 manufacturers of farm equipment conducted by the Agrievolution Alliance – a global network representing manufacturers of agricultural machinery – on behalf of World Bank.
Agriculture in Africa is a key contributor to overall growth, accounting for about 20 percent of GDP. According to the World Bank, by 2030, Africa will have half a billion more mouths to feed.
In 2013, the Food and Agriculture Organization of the United Nations (FAO) stated that Sub-Saharan Africa (SSA) is the only region in the world where the number of agricultural workers is very low compared to other regions. Not only that, but it also has access to very few tractors. In Central Africa, 80 percent of cultivated land is worked manually. Based on the current state of African agricultural mechanization and the amount of cereal currently being imported (30 percent), this poses great opportunity for the agricultural equipment industry.
According to the responses, 42 percent of manufacturers surveyed indicated that Africa is already a very ‘important’ or ‘absolutely essential’ market for them today. Only about 12.5 percent discarded Africa as a potential market. Looking towards the future, almost half of the manufacturers surveyed felt the African market will reach ‘great’ or ‘very strong’ potential. This number grows to 75 percent if we expand the horizon to 5 -15 years.
Today, companies are still facing strong challenges. Naturally, in order for Africa to reach its full potential and for companies to get more involved in the market, these issues must be dealt with.
From a government perspective the survey indicated a strong requirement for more political regulation, less corruption and a stronger supporting infrastructure. It was stated that the financial markets need to mature with a strong banking system providing credit to farmers. Also, farmers themselves need to be made more aware of technology and the changes in agricultural methods. Finally, the survey indicated that the ag equipment industry itself must become more serious about business in Africa and develop a strong dealership network. Companies need to get to know each other and the market through trade fairs.
Survey results stated that public-private partnerships (PPPs) are an essential element of the metamorphosis of the African ag equipment market will. These partnerships will be able to address the structural challenges holding the market down. More than half of the respondents indicated that PPPs are very important or absolutely essential for sustainable mechanization.
The survey was completed by 171 companies from 16 countries including: Austria, Brazil, Canada, China, France, Germany, Hungary, India, Italy, Japan, Korea, South Africa, Turkey, Ukraine, United Kingdom and United States.