Agricultural business environment in Africa: what to remember from the latest dedicated World Bank report

Less well known than the inevitable Doing Business, the Enabling the Business of Agriculture report – also a World Bank publication – ranks each country according to the business climate in agriculture. According to the 2019 edition, published on 21 October, African governments are very willing to reform. The only downside is that the continent is starting from a very low base…

Published since 2015, this report covers eight fields of study: (1) seed supply; (2) fertilizer registration; (3) water supply; (4) machine registration; (5) responsible animal husbandry; (6) plant health preservation; (7) food trade; (8) access to finance. It shows that over the past four years, significant progress has been made in managing epidemics, access to quality seeds and obtaining credit. Forty-seven of the 101 countries surveyed have implemented 67 regulatory reforms over two years that could have a positive impact on agricultural operating conditions. In terms of the actual ranking (the overall performance of each country is assessed on a rating scale ranging from 0 to 100), seventeen of the top twenty countries are located in Europe, the « top 3 » including respectively France (93.70/100), Croatia (92.68) and the Czech Republic (92.32), which have both good regulation and effective processes in all the indicators measured. Africa’s number 1 is South Africa (68.73), followed by Kenya (64.80) and Morocco (64.02).

Reforming policies

Commenting on the results of this 2019 edition, the World Bank notes that « four sub-Saharan African countries rank among the ten countries in the world that have undertaken the most regulatory reforms that promote agricultural activity ». These are: Sierra Leone, Burundi, Mozambique and Malawi. But beyond these leaders, many other countries on the continent are working to improve the business climate for farmers. In West Africa, for example, the financial institution notes that Benin, Mali, Niger and Togo have developed national regulations that legally adopt the Economic Community of West African States (ECOWAS) fertilizer guidelines, while in Liberia, a new seed law is being finalized. In the east of the continent, Ethiopia, Uganda and Tanzania are seeking to promote access to credit through the establishment of warehouse receipt systems (stored agricultural products are used as collateral for a loan, NDLR). Kenya, for its part, promotes farmers’ access to seed varieties already registered abroad, thus avoiding duplication of procedures and unnecessary delays.

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The ten most reforming African countries in agriculture, according to the report Enabling The Business of Agriculture.
Source : World Bank
Still a long way to go

Nevertheless, compared to the rest of the world, Africa continues to occupy the depths of the ranking. While the current trend is rather positive (many reforms promoted), the overall environment remains problematic: while agriculture accounts for 60% of the continent’s jobs and contributes a quarter of its GDP, « fourteen sub-Saharan African countries are among the 20 lowest rated countries in the study, » the report notes. Despite being the first reforming country, Sierra Leone, for example, still has no regulations on the registration of fertilizers, machinery or plant health protection, according to the World Bank. However, « agricultural growth is two to three times more effective in reducing poverty than in other sectors, » says Siméon Djankov, Senior Director of the Development Economics Department (DEC) at the World Bank. For the expert, « more needs to be done to help farmers through regulatory reforms so that they can develop their activities and prosper ». A message certainly heard by African governments, although as often, the statement of a (possible) solution is easier than its effective implementation…

Attractiveness of the agricultural business environment: Africa still lagging behind….