Imagine an Africa where farmers can detect parasites in their livestock by a simple scan of a handheld machine. Where road networks allow swift transportation of produce to markets. Where farmers can access finance and be adequately insured against natural disasters by a simple click of a button.
The reality across the continent is one of underdeveloped, underserved rural areas. Women dressed in traditional garb carry buckets of water over long distances. There is no electricity or running water and very little internet access. According to World Bank statistics 56% of Africans live in rural communities. Recent trends have shown a high rural to urban migration rate. This migration has resulted in high urban densities, rising crime rates and overcrowding in the urban areas. Neither of these situations is amenable. Which brings into light the need to empower rural communities to support economic resilience in Africa.
Most African economies have been steadily growing. The World Economic Forum says growth in Sub Saharan Africa has averaged 5% over the past decades. Yet there are still glaring infrastructural deficiencies and high levels of poverty. Any initiatives to grow Africa must stem from empowering rural communities to decongest urban areas and increase the scope for growth in the countryside.
What Can Be Done To Empower Rural Communities In Africa
The majority of rural households depend on agriculture. Popularly known as the “green gold” sustainable crop production has the capacity to alleviate poverty on a large scale. Traditionally farming has been limited to small-scale subsistence activities to support households. There is a need to increase the yield of agricultural production to achieve meaningful returns on Agricultural investment. Africa currently has more than 60% of the world’s arable land. Efficient utilization of this land would steer the continent ahead.
A lot of work in the funding of agriculture is carried out under the auspices of Development Finance Institutions. However, there is space within the sector for funding of agricultural production by private oriented players. If the farming expertise in the rural areas can be harnessed and farmers linked to viable lucrative markets there is much potential of good returns in agriculture.
The potential of Agri-tech to improve process and enable efficiency is enormous within the agricultural sector. The shift from traditional methods into the digital revolution will be a game-changer for rural Africa. Already some startups are positively disrupting farming methods in some communities. For example, in Ghana, Cow Tribes connects farmers to vaccines and deliver healthcare services to livestock at the click of a button on the phone. If such innovations could be spread on a large scale, picture the transformation.
While work is being done in the area of agricultural technology. More investment in the area of innovation and groundbreaking technology is needed to boost agricultural capacity in communities.
In most rural communities in Africa, the infrastructure is at a bare minimum. Most places are largely inaccessible to road networks and no access to amenities. Within these communities exist tremendous opportunities in agriculture and mining among other commodity-driven enterprises. There is scope for infrastructural development on the continent. While there may be a negative risk perception, data suggests that African investments have lower default rates than other emerging markets. Further, most investments are US dollar-denominated which greatly reduces currency risk
By partnering with Development Finance Institutions and local partners, funders can potentially see risk perceptions improve on investment in the area of infrastructure. While there are major players such as China heavily invested in infrastructure in Africa, there is still a huge financing gap which presents an opportunity for both private equity and impact investors.
The rural communities remain largely underserved by financial services. Traditional banks usually shun rural communities due to high transaction costs, sparse populations, inadequate infrastructure and poor financial literacy among other reasons. This is despite the fact that rural communities need a wide range of services such as agricultural insurance and tools for managing surplus harvest income. Mobile money services have become the biggest enablers of financial inclusion in rural areas. However, the services on offer are usually limited.
There is a strong relationship between sound financial systems and economic potential which is why for Africa’s rural economy to prosper there is abundant need to improve financial inclusion
Increasing investment in the area of fintech is a necessity. Reduction of transaction costs, faster and less complicated means of accessing finance and wider reach without a need for physical infrastructure are all some of the disruptive benefits of fintech. According to the World Bank, 68% of the African population is unbanked. With mobile penetration expected to grow to 1 billion by 2023, there is untapped potential for fintech innovation and reach. There is scope for creating products tailor-made to serve rural communities. For example, multidimensional products that include micro-borrowing, savings clubs and farming insurance under one banner. Innovations of this nature would not only be easily adapted but will also be greatly functional if they don’t require a high level of literacy but still address the challenges.
The lack of development in rural areas had led to a mass exodus of young people in search of the proverbial greener pastures. Yet this creates a problem on two fronts. The stagnation of rural development while urban communities burst at the seams. To address this anomaly there is a need for a transformational mindset among the youth in Africa. Not only should development efforts be steered towards rural Africa but also an investment in education that focuses on skills building as opposed to employment seeking.
There is huge potential on the African continent in terms of investment. Granted, perceived continent risk in one of the major challenges that Africa faces in growing its economies. With a quarter of the world’s population expected to reside in Africa by 2050, a rising Africa will be a boost and not a liability to the world at large. This Africa we imagine is only conceivable through worthwhile investment in rural empowerment.