Poor political and economic governance are major causes of a lack of agribusiness development in Africa. General political uncertainty combined with poor infrastructure and a lack of institutional support makes the pursuit of economic growth difficult. The vast majority of African smallholders lacks education, has severely limited access to communications or physical infrastructure, may suffer from poor health and nutrition and lacks remunerative markets and access to yield-enhancing inputs. International competition from often distorted world markets is high and threatens to marginalise the majority of African smallholders.
Processors in low-margin sectors with limited skills and assets face constraints to ensure on and off-seasonal raw material suppliers. Spot market transactions on an ad-hoc basis are the norm and the provision of extension services therefore out of reach. With uncertain raw material supplies of adequate quality and quantities, and with high cost of coordination, processors find production planning a crucial constraint that also leads to marketing problems. Low market demand for value-added products increases marketing constraints. Lack of product quality, reliability and commercial orientation are the most commonly criticised features of farmers. Recommended good agricultural practices are often not applied.
However, a number of positive developments in agribusiness can be found across the region. The horticultural and dairy sectors in Kenya and Uganda have recorded upward trends while incorporating smallholders. Horticultural exports from Ghana also have increased over the past decade. The South African farming and processing sectors are undertaking actions to include previously disadvantaged farmers. Negative international price trends of traditional exports have been reverted n some cases by pursuing high quality niche markets.
