This is the second edition of Business for Development, one of three principal thematic areas of the Development Centre’s 2007-2008 Programme of Work. While the 2007 volume, Fostering The Private Sector, presented a wide-ranging review of the role of the private sector in economic development and poverty reduction and how it can best be encouraged, the 2008 volume, Promoting Commercial Agriculture in Africa, looks at African agriculture from a business perspective; it highlights the current status of agriculture and agribusiness as well as the emerging opportunities for developing the sector further in both domestic and export markets.

This chapter presents an overview of the evolution of world agricultural trade since the mid- 1980s with a focus on four major product groups of the agro-food sector: bulk commodities, horticulture, semi-processed and processed products. It then turns attention to the export performance of African agriculture on the basis of the mirror trade data (i.e. world agricultural imports from all partner countries). This is followed by brief discussions on recent developments in OECD agricultural policies and their implications for Africa. Among the four agricultural sub-sectors, the dynamics of world agricultural trade are chiefly about trade in processed products whose export growth has been comparable to the growth of non-agricultural products. In contrast, trade in bulk commodities has been the least dynamic and its relative share in total agricultural exports has declined substantially. Such broad patterns in the evolution of world agricultural trade during the past two decades (1985-2005) suggest that much of the global agro-food trade has become less dependent on purely natural resource endowment and has moved up along the value chains. In Africa, on the other hand, the agro-food sector has remained largely dependent on land and climatic conditions, though the continent’s agricultural exports have diversified away from bulk commodities to horticulture. Export subsidies, domestic supports and tariffs continue to influence the changing landscape of world agricultural trade. Africa’s export opportunities would further increase if both developed and more advanced developing countries were to take joint actions to improve market access to African products under the current World Trade Organisation (WTO) negotiations. How developing countries will be affected following a successful conclusion of the Doha Development Agenda obviously depends on how ambitious the final agreement will be, but also on the particularities of individual countries. African countries will also be impacted differently depending on their net agricultural trading positions.

The global agro-food supply chain is controlled by a small number of large enterprises, fewer than half of which have activities on site in Africa. Within the continent, a greater number of local enterprises shape the agro-food sector. Based on corporate rankings provided by Fortune Global 500 and Jeune Afrique Les 500 published in 2007, this chapter draws a map of the corporate landscape of the major agro-food-related enterprises in Africa, both foreign and domestic, and discusses broad trends. The corporate behaviour of these large players varies across regions. The majority of firms tend to concentrate their activities in the Northern and Southern regions of the continent. However, several individual countries in other regions also show significant potential in the agro-food sector. Countries attracting the biggest number of companies include South Africa, Morocco and Nigeria. The size of target economies matters. In some sub-sectors, the integration of African agro-food enterprises into the global supply chain has begun its timid climb. Initial stages of collaboration between foreign and local firms are notable in the beverage and tobacco industries. In other sectors, African enterprises have started to seek opportunities beyond their domestic frontiers and even outside the continent. This chapter attempts to fill the gap in empirical work on agro-food enterprises in Africa and to provide a picture of the continent’s corporate map.

In October 2006 the General Council of the World Trade Organisation (WTO) endorsed the recommendations of the Aid for Trade Task Force which was established at the WTO Hong Kong Ministerial Conference in 2005. One of the Task Force recommendations was to set up a monitoring and evaluation function in the WTO. In line with the Aid for Trade Roadmap in 2007, the WTO has recently hosted the first Global Aid for Trade Review. Its report analyses the self-assessments of Aid for Trade activities based on submissions from bilateral donors, international agencies and recipient countries. Global monitoring of Aid for Trade activities and in-country assessments are complementary and must go hand in hand with the greater participation of individual African countries. Against this backdrop, this chapter first presents a snapshot of Aid for Trade activities in Africa. Based on the OECD aid activity database, it highlights “who is doing what and how” in terms of institutions involved, volumes committed and instruments used to provide trade-related assistance in Africa. Second, this chapter takes a close look at the recent experience of donor support for productive capacity in African agriculture. Despite the fall of donor support during the 1980s and 1990s, aid to agriculture has remained among the top priority areas of assistance to building productive capacity in Africa; the agricultural sector, as broadly defined, attracted about $2 billion per annum during the period 2002-05.

This chapter summarises the major lessons learned from five country case studies (Ghana, Mali, Senegal, Tanzania and Zambia), which the OECD Development Centre conducted during 2006 and 2007. The aim of the country studies was to examine donor and government efforts to promote agro-based private sector development. In the five countries, the transformation of agriculture and the development of agro-based industries have yet to materialise. The agricultural potential of the five countries is largely untapped and the sector is characterised by a dualistic structure, with few commercial farmers and a large majority of smallholders, the latter mostly engaged in subsistence agriculture. Yields for cereals, roots and tubers have actually stagnated, mirroring similar trends in other African countries. However, while food crop productivity has been stagnating, horticultural exports have emerged as a new driver of agricultural growth. Donors have played an important role in the promotion of the horticultural sector, especially in Senegal and more recently in Ghana. Contract farming (e.g. outgrower schemes) has proved to be an effective mechanism for involving smallholder farmers in export crop production and achieving economies of scale. Also donors are increasingly adopting a value chain approach and trying to tackle various bottlenecks at once. Yet, harmonisation and alignment is less advanced in the agricultural sector than in the social sectors. The predominance of stand-alone projects and the involvement of several line ministries (e.g. agriculture, infrastructure, land, trade) dealing with agriculture make progress difficult. Furthermore, the market potential of staple foods should not be overlooked. Traditional food crops are often better adapted to local agro-ecological conditions, and rising local and regional demand presents an opportunity to expand production and develop food-processing industries. Currently donors and governments tend to put too strong a focus on export crops and too little on staple foods.