Absa Insights is a portal where the bank’s sector experts share essential learnings and new developments with its clients and other businesses. The world is changing; so in 2019 Absa has introduced a series of discussions featuring high-level thinking around Consumer Goods and Services, Agriculture, Telecommunications, Mining and Energy and Infrastructure. Bookmark Absa Insights, where the bank shares insights from discussions designed to help you navigate the ever-shifting trends that are shaping the economy.
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Africa is the last continent on Earth that still has significant agricultural development opportunities and, with those opportunities, often come a lot of constraints.
One of the biggest constraints is infrastructure, which includes the road network.
For local farmers wanting to enter into African markets – the physical state of road infrastructure, which often is in a dangerous, poor condition in countries like Zambia, can shock South Africans who are accustomed to good South African road infrastructure.
Travelling distances between cities and ports can become a challenge. Farmers find themselves with approximately 2,000 kilometers between their farms and the nearest harbour. For this reason, farmers have now opted to move their products to be processed in Durban, incurring big cost on diesel.
Many farmers have also battled to get parts for equipment into the country. In some areas, it has become a standard requirement for farmers to own their own light aircraft to get in and out of the region.
South African farmers are comparatively fortunate with how well-established our secondary market is with regard to service delivery, storage and other services.— Ray Van Rooyen, Coverage Banker, Secondary Agriculture – Absa Corporate and Investment Banking
In rural areas with limited storage facilities for agricultural produce, farmers are still required to transport their products long distances. However, in the big centres, says Van Rooyen, there seems to be more concentration of service delivery and, as you move further away, infrastructure becomes less developed.
If the infrastructure is not there, farmers will have to solution for themselves.— Ray Van Rooyen, Coverage Banker, Secondary Agriculture – Absa Corporate and Investment Banking
Needless to say, the current situation in Africa promises potential opportunities for Absa's CIB Secondary Agri-Sector to fund, invest and get involved.
For more detail, watch the video below. Roux Wildenboer (Secondary Agriculture, Absa Corporate and Investment Banking) in discussion with Hendrik Van Der Linde and Ray Van Rooyen (Secondary Agriculture, Absa Corporate and Investment Banking) on the investment opportunities, infrastructure constraints and the potential that technology presents in the agricultural sector on the African continent.
This article first appeared on 702 : The business of farming: Here's what you need to know about Africa