International Agriculture News

Senegal hopes to reap rewards of modernising agriculture

Neil Munshi There is progress but land reform and irrigation challenges remain

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As part of its plans to become a middle-income country by 2035, Senegal has vowed to modernise an agricultural industry that employs the majority of its citizens but produces far less of the food the country consumes. As it seeks to reach food self-sufficiency, Senegal faces hurdles common to many developing countries: an antiquated and informal land administration system, a decrepit and often non-existent value chain and a dearth of irrigated land, leaving farmers at the mercy of changes in climate.

The agriculture sector makes up roughly 15 per cent of gross domestic product, down from a quarter in the 1980s, yet it remains a key source of foreign exchange and employs 77 per cent of the workforce, according to the World Bank. The current administration’s reform efforts seem to be bearing fruit. According to government data, production of peanuts — the most important cash crop — rose 268 per cent in the six years to 2017, to 1.4m tons. Meanwhile, high-value farming exports such as melons and other fruits nearly doubled from 56,778 tons in 2012 to 106,200 tons in 2017, due in part to investment encouraged by reforms in the sector.

Papa Sall, Citi’s head in Senegal, says GDP growth, at 7 per cent last year, is rising on the back of increased agricultural production. “Clearly the plan is working”, he adds. “There are a lot of opportunities in agribusiness, and the government is still working and putting in place some reforms in terms of land tenure, to ensure that people have access to land and can secure their investments.” However, as a western diplomat says, “land administration is a really difficult problem”, as in many developing countries, causing uncertainty that scares off investors who cannot be sure who owns land they might wish to acquire.

“Without much exaggeration I think I can say there’s no such thing as a completely transparent real estate transaction in Senegal,” the diplomat says. “That’s a real challenge for someone coming from outside who wants to invest in something or set up a business. It’s one of the things that Senegal really needs to work on in order to attract private investment to transform the economy.

It’s a completely non-trivial problem.” The sector is very vulnerable?.?.?.?half the country is basically desert, so it’s susceptible to droughts Katrien Smuts, NKC African Economics Land administration reform is working its way through the political system but further change is likely to be delayed as the country prepares for presidential elections next year. In the meantime, Fonsis, Senegal’s recently established sovereign wealth fund, has been granted $1bn in state assets.

This includes tracts of land that can be used by agricultural companies the fund invests in, says Ibrahima Kane, chief executive at Fonsis. The government’s infrastructure investment is targeting high-profile projects such as the new international airport, but it is also meant to bolster the rural economy, with electricity and roads aimed at connecting the country’s hinterlands and improving a supply chain in need of modernisation. “The government is spending a lot of money to improve production of rice, wheat, millet, sorghum, which is good to see because it’s a very poor country — agriculture can feed the country and boost growth going forward,” says Katrien Smuts, an economist covering Senegal for South Africa-based NKC African Economics.

“The agricultural sector can be a big part of growth in the country, but it’s still very vulnerable considering half of the country is basically desert, so it is very susceptible to droughts.” One difficulty, says Ousmane Sène, head of the West Africa Research Center in Dakar, is the lack of irrigated land. “The problem with this type of agriculture is the availability of water because we are dependent on the will of the sky to pour rain or not to pour rain,” he says. “You need to renew and modernise the tools which are used for agriculture.”

A 2010-2015 project by the US-funded Millennium Challenge Corporation addressed some of those shortcomings. The MCC spent $300m in part on improving the irrigation system in the Senegal River Valley in the north, the heart of rice production, while $172m went on constructing tarmacked highways in the north and south. Rice production has soared in the north, roughly tripling between 2007 and 2017, an important development for most Senegalese given the country imports roughly 70 per cent of the daily staple.

The government’s focus on agricultural development, along with international aid such as the MCC programme, is attracting attention from investors who had previously overlooked the relatively small market. Vincent Toussaint, economic adviser for the French embassy in Dakar, points to new investments from French companies in rice, sugar, bananas, watermelons and groundnuts as evidence of a resurgence.

“The agricultural sector is a good example of new interest?.?.?.?[French companies have a] historic presence in Senegal which was maybe a bit sleepy the last decades, but we’ve had this revival these last few years,” Mr Toussaint says. “It’s really a renewal. And these companies continue to expand.”

Source Financial Times