AfCFTA’s Best Agribusiness Ideas for Young Africans
January 1st, 2021 is a historical date for Africa. It is the start date for trading under the African Continental Free Trade Area (AfCFTA) agreement.
Its Overall aim is to create a common market for 1.2 billion people across all 55 member states of the African Union. Today, it is signed by 54 and ratified by 34 of them. This new market will be the world’s largest free trade area with a combined gross domestic product (GDP) of more than $2.5 trillion. The continental market will allow for free movement of goods, services, businesses, persons and capital.
How can you benefit from this integrated market?
The AfCFTA will boost trade, manufacturing and job creation. Besides, it will create new value chains across the 55 states. As an investor, this is your chance to supply quality services and goods profitably.
According to the Afreximbank 2020 trade report, Agriculture goods account for 51% of cross border informal trade. The sector is chief ti make food and industrial raw materials. However, it faces many challenges like climate change, pests and low access to funding and information. Luckily, these will allow you to serve millions of farmers in the region. This post explores the best agribusiness ideas you can invest in 2021.
The expanded market is your chance to farm and sell farm produce beyond your national borders. To succeed, you need to practise large-scale commercial farming. It will involve you to produce quality food consistently. To do this, lower your costs of production and increase your returns. To do it, mass-produce and invest in modern farming practises like soil testing, irrigation and greenhouses.
Handle your farm products using good agricultural practises (GAPs.) It will set your brand separate from your competitors. You will benefit as consumers and traders value a farmer who banks on food safety and people’s health.
The continent’s urbanization has been growing at a very high rate. Studies project that around 60% of her population will be urban dwellers by 2050. This trend will lead to a larger middle class that demands ample supply of meat, eggs and vegetables.
As a smart agriprenuer, invest in farming within city or town boundaries near your consumers. The ideas in urban-farming are many. For instance, you can raise plants and animals, or buy and sell food in estates. As the number of people in towns increases, your income will grow.
The literacy levels across the continent are improving. It has led to the people to demand safe foods for their health. Preference is on white meat and organic vegetables and fruits.
You can focus on this profitable niche. You will need to use natural farm inputs for safe products. For more sales, brand and sell your farm products as organic.
Supply Farm Inputs
Lacking access to quality farm inputs leads to low yields. Access to materials like seeds and animal feeds can increase farmers’ income. You can make money supplying inputs to local and foreign farmers. You can either become a trader or a supplier.
To trade, you need to buy inputs at lower prices and sell at higher one for profits. Besides, you can reach more markets by shipping imports and exports from and to foreign markets. You can rake in more income through online shops and drop shipping models by buying and selling products without physically handling them.
To produce inputs, you can grow animal feeds, breed chicks or make organic manure. You will need to maintain outstanding quality for market dominance across the free trade area.
Provide Extension Service
Access to timely information can help farmers to make more money. As an investor, collect and disseminate the information that applies to them. It can be on farm inputs like the best seeds, rainfall patterns or farming loans. Other information would be on access to insurance and prevailing market prices.
The region enjoys faster penetration on the internet and mobile phones use. You can therefore use mobile apps, blogs and podcasts for your extension services. This idea will appeal to youth farmers and women investors.
Another idea is agro-tourism. Your farm visitors will learn all the lessons needed to make quality food for pay.
Agro and food processing
Selling raw farm commodities is a leading reason for low incomes in the continent. Besides, it is a chief cause of post-harvest food losses. There are low investments in infrastructure like cold rooms, chilled transport, warehouses and processing plants. You can fill this gap by investing in modern agro and food processing plants. Processed products like packaged fruit juices, jams and jellies have longer shelf life during transit from coast to coast and fetch more returns for you.
Equipment manufacturing and distribution
The levels of automation in the sector are low in the region. It makes it hard for farmers to irrigate, plough or harvest large tracts of land within a short time and efficiently. You can tap into this opportunity by fabricating and selling the essential farm equipment like tractors and water pumps.
Where farmers cannot afford to buy them, consider renting them. They will borrow machines from you for use for a specified time.
Food shipping business
Exporting farm products is a multi-billion sector. The intra-Africa trade will grow under the agreement. Food shipping business into a country which is a net importer of food is a high potential. To run a successful business, invest in cheap warehouses, logistics and market linkage services.
The free trade area market will lead to new value chains across the continent. There is also a need for new policies and regulations as the members move from a free trade area to a common market. It is a chance for agribusiness consultants and think-tanks. They will make money researching on behalf of government, NGOs and donors. The other business idea is lobbying services to the policymakers.