Innovative Approaches to Agribusiness Development in Sub-Saharan Africa

149 Pages·1998·0.5 MB·English

SD Publication Series
Office of Sustainable Development
Bureau for Africa
Innovative Approaches to
Agribusiness Development in
Sub-Saharan Africa
Volume 2: Secondary Research
Findings
Final Report
Jim Maxwell
John Holtzman
Abt Associates
Technical Paper No. 79
December 1997

Productive Sector Growth and Environment Division
Office of Sustainable Development
Bureau for Africa
U.S. Agency for International Development
Innovative Approaches to Agribusiness
Development in Sub-Saharan Africa
Volume 2: Secondary Research Findings
Final Report
John S. Holtzman
Richard D. Abbott
Daniel C. Shaffer
Richard Koskella
Abt Associates
Technical Paper No. 79
December 1997
Publication services provided by AMEX International, Inc.
pursuant to the following USAID contract:
Project Title: Policy, Analysis, Research, and Technical
Support Project
Project Number: 698-0478
Contract Number: AOT-C-96-90066-00
ii
Contents
Foreword v
Acknowledgements vii
Executive Summary ix
Glossary of Acronyms and Abbreviations xv
1. Introduction 1
2. Innovative Approaches to Agribusiness Development 3
2.1 Brief Summary of the Projects Examined 3
2.2 Lessons Learned: Association Development 3
2.3 Lessons Learned: Non-Traditional Agricultural Export Development 5
3. SSA Horticultural Exports to the EU:
Constraints, Findings, Competitiveness, and Opportunities for Improvement 9
3.1 Constraints Affecting African Horticultural Exports to the EU 9
3.1.1 High Transaction Costs 9
3.1.2 Costly Access to Market and Technical Information 9
3.1.3 Inadequate Infrastructure 9
3.1.4 Limited Access to Credit 10
3.1.5 Lack of Interest by Foreign Investors 10
3.1.6 Raw Material Procurement Problems 10
3.1.7 Risk Aversion of Small African Entrepreneurs 10
3.1.8 Limited Management Skills and Capacity 10
3.2 Selected Findings from the Literature Review 11
3.2.1 EU Market Trends 11
3.2.2 Changing Organization of the EU Food System 11
3.2.3 EU Marketing Opportunities and the Competitiveness of SSA Exports 11
3.2.4 EU Market Channel Dynamics 12
3.2.5 Exporters’ Management of Market Channels 12
3.3 Competitive Strategies to Acquire Market Share 14
3.3.1 Size and Vertical Integration 14
3.3.2 Establishing Trading Networks 14
3.3.3 Contract Farming/Outgrowers 14
3.3.4 Adding Value 15
3.3.5 Niche Markets 15
3.4 USAID Information Needs and Action Agenda 15
iii
4. Food and Agribusiness Development Centers 17
4.1 Key Features of Business Incubators 17
4.2 Opportunities and Constraints Facing Business Incubator Start-Ups in Developing Countries 18
4.3 Business Incubators and Enterprise Development Experience in Africa 19
4.4 Food and Agribusiness Enterprise Development Centers:
Success Stories and Lessons Learned 20
4.5 Key Factors Contributing to the Success of Agribusiness
Enterprise Development Programs, with Particular Attention to FADCs 22
4.6 FADCs and Incubators: Advantages, Disadvantages, Applications 24
5. Gaps in the Secondary Literature and Knowledge Base, and Implications for USAID 27
5.1 Agribusiness Development in LAC and Asia 27
5.2 SSA Horticultural Exports to the EU 28
5.3 Agribusiness Development Centers 29
5.4 Proposed Applied Research to Support Agribusiness Development 30
6. Implications for USAID 33
6.1 Non-Traditional Agricultural Export Promotion Projects 33
6.2 Association Development 33
6.3 Horticultural Exports to the EU 34
6.4 Food and Agribusiness Development Centers 34
7. Closing Note 37
Appendixes
Appendix A - Secondary Review of Innovative Approaches to Agribusiness
Development in LAC and Asia 39
Appendix B - Sub-Saharan African Exports of Horticultural Products
to the European Union: Consolidation and Synthesis of Studies 71
Appendix C - Secondary Review of Agribusiness Development Centers 103
Notes 127
Selected References 129
iv
Foreword
The creation of the Development Funds for Africa (b) improvements in marketing efficiency require a
(DFA), and, more recently, funding constraints, have good understanding of the structural arrange-
challenged the U.S. Agency for International Devel- ments, organization and operating strategies avail-
opment (USAID) to scrutinize vigorously the effec- able to those entrepreneurs who constitute the
tiveness and impact of its development assistance majority of the business entities;
programs in Africa and to make adjustments needed
(c) such improvements could have a significant ben-
to improve on the record of the past. Structural
eficial impact on incomes, foreign exchange earn-
Adjustment programs have been adopted by many
ings, domestic consumption and food security.
sub-Saharan African countries, albeit reluctantly, and
some significant economic development progress has To enhance the analytical guidance and technical
been made. As donor agencies face severe cutbacks support that the African Bureau provides to the field,
and restructuring of their own and as less assistance SD/PSGE initiated a series of assessment of donor
become available to developing countries, in sub- agencies’ innovative agribusiness projects in a num-
Saharan Africa and elsewhere, new ways must be ber of sub-Saharan Africa countries to develop case
found to channel the declining resources to their most studies of agribusiness firms targeted by or benefit-
effective and productive uses. Donor agencies like ting from these projects. The objective of the assess-
USAID, therefore, are increasingly looking at the ments was to provide the Africa Bureau and Field
private sector for new and innovative ways of im- Missions with an understanding of the role and sig-
proving competitiveness, and often to agriculture as nificance of new, innovative agricultural marketing
the potential catalyst for generating broad based, and agribusiness programs being implemented, and to
sustainable economic growth. In the light of the DFA synthesize a cogent set of lessons learned and their
and sub-Saharan African countries’ recent develop- implications for USAID agribusiness project design
ment experiences under Structural Adjustment Pro- and implementation.
gram, the USAID Africa Bureau’s Office of Sustain-
This document is Volume 2 of a five-volume set
able Development, Division of Productive Sector
presenting the Secondary Research Findings which
Growth and Environment (formerly ARTS/FARA),
summarizes the results of the literature review. It
has been examining the Agency’s approach to the
distills, from three separate reviews (Innovative Ap-
agricultural sector.
proaches to Agribusiness Development in LAC and
In January 1991, the Africa Bureau adopted “A Asia, sub-Saharan African Exports of Horticultural
Strategic Framework for Promoting Agricultural Products to the European Union, and Secondary Re-
Marketing and Agribusiness Development in sub- view of Agribusiness Development Centers), signifi-
Saharan Africa” to provide analytical guidance to cant lessons learned and implications for USAID.
USAID/W, REDSOs, and field missions. The frame-
Abt Associates, under the Global Bureau’s AMIS II
work suggested that:
project, conducted the field research and report prepa-
(a) while technical and environmental problems must ration. The USAID field mission in each country
continue to be addressed, a major cause of poor collaborated with PSGE/PSD and Abt Associates, the
performance of the agricultural sector has been contractor, and was particularly helpful in providing
the inefficiency of the market structures and counsel and direction of the field research and re-
strategies; viewing of the field draft report.
v
SD/PSGE believes that the findings and recom-
mendations of this report will help the Africa Bureau,
field missions, host country governments, and pri-
vate sector groups make more informed decisions on
future project design, implementation, monitoring,
and evaluation.
David Atwood
Chief, Productive Sector Growth
and Environment Division
Office of Sustainable Development
Africa Bureau
USAID
vi
Acknowledgements
Abt Associates, the AMIS II team, and the authors the activity, especially fieldwork, analysis, and draft
wish to thank the many individuals who contributed enhancement.
their time and experience to this study.
John Holtzman of Abt Associates consolidated the
Rick Koskella is with IMCC. Richard Abbott is a individual secondary research reports into a unified
consultant for Abt Associates Inc., Mary Mugisa was document. The overall Innovative Approaches activ-
a USAID summer intern working at Abt, and Ousmane ity is managed by Jim Maxwell of AMIS II/Cargill
Adoum is a research assistant at Abt. Dan Shaffer is Technical Services. Jim directed the secondary study
with Arizona State University (ASU). IMCC and ASU and enhanced the individual and consolidated report
are partners on the AMIS II project. with his numerous technical reviews. Jack Hopper
did the final edit. Otilia Santos of Abt Associates
Dr. Charles Whyte of AFR/SD/PSGE is the Inno-
spent many long hours formatting and finalizing the
vative Approaches activity manager and a substantial
final report.
and ongoing contributor to all phases and aspects of
vii
viii