The Export Performance of Africa’s Agribusiness Sector: A Policy Agenda for Change

‘If African countries do achieve growth rates substantially higher than what I have surmised, they will do so pursuing a growth model that is different from earlier miracles based on industrialisation. Perhaps, it will be agriculture-led growth. Perhaps, it will be services. But it will look quite different than what we have seen before.’ Rodrik, 2016

Africa’s abundant arable land and its weather conditions create natural comparative advantages unmatched by any other country and region. Yet, its share of world’s agriculture exports is the lowest in the world (Bjornlund, Bjornlund, & Van Rooyen, 2020; Jayne & Sanchez, 2021).^[1]

Despite this disturbing situation, the export competitiveness of Africa’s agribusiness sector has been marginalized by policymakers. This attention deficit is mirrored in the allocation of public spending to agribusiness, which accounts for 4% of African governments’ expenditure (Hodder & Migwalla, 2023). Rather, the focus of policy discussions and resources has been the manufacturing sector as the ultimate path for global integration, and the shift from agribusiness to manufacturing regarded as the ensuing transformation towards this end (Bio, Makinde, Ehui, & Ghanem, 2025; World Bank, 2021).

In this paper I seek to challenge the prevailing manufacturing-centric paradigm and makes the case for an agriculture-led export strategy, grounded in Africa’s unique endowments and the urgent need for sustainable growth. I begin by establishing the basis for my belief in the potential of Africa’s agribusiness sector to champion Africa’s global integration, based on the principle of comparative advantage. I then develop a policy agenda to amend the disturbing discrepancy between Africa’s potential and actual export performance. I suggest that the implications of this change for the continent’s global integration are likely to exceed those associated with the pursuit of the manufacturing-led structural transformation model that has been effective elsewhere (Bio et al., 2025; Newfarmer, Page, & Tarp, 2018; Rodrik, 2016).

The global integration of Africa’s agribusiness sector is of considerable importance not only for Africa but for the world as well. Africa is home to more than 50% of the world’s fertile land, much of it uncultivated. The productive utilization of this land is critical as concerns regarding environmental sustainability and food security have been mounting. Specialization enabled by trade is critical for the achieving this goal. As well, this issue should also of interest to IB scholarship. International activity in the agribusiness sector has been largely neglected by IB scholars. This attention level does not match the sector’s significance, accounting for around 7-8% of world exports and to much larger share of that of emerging markets, including those that attract most of IB research attention.

Africa’s Agribusiness Sector and Its Export Performance^[2]

Africa’s agribusiness sector is estimated to be around $1 trillion. It forms the backbones of the continent’s economy, accounting for about 35% of its GDP and over 60% of its workforce. However, Africa’s export performance of agriculture output has been meager and deteriorated over time. In the early 2020s, it accounted for 4% of the world’s total agriculture exports, about half its share in 1960 (World Bank, 2021).

This is disturbing because Africa’s land abundance and weather conditions create natural comparative advantage in agribusiness that is not matched by any other country or region. Africa’s land accounts for nearly half of the global total, most of it is arable land, not protected, not forested, and with low population density. Its weather provides perfect conditions for the growth of 80% of food consumed around the world (World Economic Forum, 2024). Economic theory suggests that such apparent comparative advantages would lead to superior export performance (Donaldson, 2019).

In the following section I advance a policy agenda designed to remove obstacles for the development of Africa’s agribusiness export and improve its performance. This agenda includes both domestic and cross-border policies, reflecting my belief that policy intervention has to start at home, to enable the development of the scale and quality needed for exporting. Within these realms I focus on the issues that in my judgement have received insufficient and/or inadequate attention by extant research and require fresh thinking.^[3] Where available, I bring examples of African countries that experimented with the policy approaches I recommend and draw lessons from their experience for other African countries.

I focus on the policy side, but I recognize that reaching the desired outcomes requires the combined actions of firms and policymakers. I bring the need for attention to firms’ actions as an essential supplement for this paper.

A Policy Agenda for Change

Domestic Policies to Develop Export Capabilities

Domestic policies to improve export performance should address obstacles for capability development, scaling and upgrading to enable agribusinesses reach the scale and quality needed to export successfully. I focus on two such policies whose effective implementation is likely to lead to substantial improvements.

Access to capital: Studies have repeatedly show that access to finance is a major challenge for agribusinesses in Africa, posing it as the most significant barrier for the sector’s development, ultimately undermining scale and challenging export (Boye et al., 2024; Gichuki & Kamau, 2022; Ninson & Brobbey, 2023).

Financial institutions are particularly reluctant to lend to the agribusiness sector due to perceived high risk, long maturation span of investment, lack of reliable collateral, and unstable revenue streams (SAFIN, 2025). In many African countries the agribusiness sector receives 1% of commercial landing despite contributing 25-40% of GDP (World Bank, 2021). Not only is capital scarce, but its cost is very high, at times double that of the rest of the economy (Gichuki & Kamau, 2022).

While there has been strong recognition of the challenges that these issues pose for Africa’s agribusiness sector, there have been fewer discussions of remedies, notably in relation to governments’ intervention. In the discussion below I seek to contribute to this end.

To begin, I reckon that governments should act as financiers themselves and increase substantially current lending. Growing recognition of the potential of the agribusiness sector has recently been reflected in capital allocation of some African governments. For instance, in 2024 the Kenyan government allocated US$7.7mil. for tea value addition, seeking to increase the share of export of Kenya’s branded tea^[4]. International and multilateral banks (e.g., AfDB, IFC) have also increased their landing to the agribusiness sector, but much more needs to be done to begin closing the finance deficit. SAFIN (2025) estimates that Africa has a $65 billion annual financing gap in the agribusiness sector.

Increasing investment in agribusiness would support itself over time by reducing the huge expenditure on food imports (Hodder & Migwalla, 2023). Nigeria’s local puree production project Tomato Jos has replaced $360M annually year in imports (Ford, 2020).

In addition to offering finance by themselves, governments should also support the involvement of private sector constituencies, directly or via public-private partnerships, by assuming the risk associated with this investment and providing collateral. South Africa’s Khula Credit Guarantee Scheme in which government-backed guarantees enable commercial banks and other agricultural lenders to lend to collateral-poor farmers offers an example. A similar template has been adopted in Kenya’s collaborative funding by evergreen funds and development banks, and in Tanzania where EU and government funds were channeled through local banks for agribusiness beneficiaries (Langelihle & Nyankomo, 2024).

Governments should also encourage the development of non-traditional sources of finance by the private sector (Singh, 2025). Private venture capital has shown considerable success in some African countries. In 2022, African startups raised $5 billion in VC investment according to data by Africa Development Bank. Funded startups, many of whom are in the agribusiness sector, have grown in Africa six times faster than globally during the 2010s (Maher, Laabi, Ivers, & Ngambeket, 2021). Micro-lending platforms are another form of non-traditional international fundings that should be encouraged by governments. In the early 2020s these institutions are estimated to have a combined loan portfolio of over $8.5 billion and experience significant growth.^[5] Governments should actively support these initiatives.

Land ownership: Most of Africa’s arable land, by some estimates more than 80%, is undocumented, managed through informal customary tenure rights, whose integration into statutory law has been challenging (Byamugisha, 2016). Highly inefficient land administration and outdated or poorly enforced land laws pose additional challenges. It takes twice as long and costs twice as much to transfer land in Africa than in OECD countries (Boone, 2018). This situation undermines the use of land as a collateral and constrains access to finance (Gichuki & Kamau, 2022). It also diminishes incentives for long-term investment in land fertilization, thus reducing land quality and productivity, and raises surmounting challenges for land transfer and consolidation. These undermine the achievement of the minimum scale needed for exporting.

Actions taken by a few African governments demonstrate the improvement that can be achieved by addressing these distortions. For instance, Ethiopia’s government issued land certificates to 20 million smallholders, resulting in vast increase of land rental activity. Malawi’s reforms redistributed 15,000 hectares from estates to smallholder collectives, boosting farmers’ incomes by 40% (World Bank, 2013). The governments of Mozambique, Uganda, and Liberia organized traditional customary institutions into legal entities, enabling formal contracts of land transactions with non-community members (Byamugisha, 2016). Using advanced technology Rwanda mapped 90% of the country’s communal lands. Tanzania employed satellite imagery for land-use planning (Francescon & Wouterse, 2021).

Reducing titling costs and putting in place less strenuous procedures to register land is another important policy initiative to address land ownership. Kenya’s experimentation with blockchain-based registries reduced titling costs from $1,200 to $50 per parcel (Francescon & Wouterse, 2021).

Cross-Border Policies to Increase Export

For most African countries, the export market represents the best growth option for the agribusiness sector (Otieno, 2025). Export enables firms to realize scale economies and increase productivity through learning.

African policymakers have been actively engaged in the introduction of cross-border policy measures designed to increase exports, both regionally and globally, but, as the data presented above attest, to insufficient effect. Below I suggest different approaches towards two policy initiatives that have been discussed previously but have not been addressed properly.

Focused policy measures across geographies and crops: Cross-border activities take place at different geographic levels, which offer different opportunities for scale economies and learning, with varying consequences for firms’ export performance (Tian & Yu, 2019). Similar variations exist also across different agriculture crops, offering rationale for targeted and nuanced policies across geographies and crops.

At the geographic level, different policies are needed for exports within sub-regions in Africa, across the continent, and globally in order to maximize scale and learning opportunities at each of these levels (Fon, Getachew, & Mol, 2025). For instance, sub-regional trade is driven by the benefits of geographic proximity, calling for policy measures that would reduce the non-geographic costs of trade, notably regulations. Improvements of regional connectivity and harmonization of regulations introduced by the East African Community (EAC) have led to increase in intra-EAC exports of dairy products by a multiple of 65 in the decade following the introduction of these measures (Karingi, Ottavia, & Sommer, 2018).

Beyond the continent, the majority of Africa’s agricultural trade occurs with remotely residing non-African partners,^[6] calling for policy measures that enable low-cost, fast delivery of perishable agriculture output. Senegal’s exports have grown by about 20% annually, largely due to the government’s investment in high-speed ships that enabled a shift from air to maritime transport (English, 2018). Ethiopia’s flowers export to the EU has flourished in large part due to the government’s investment in air transport, cold cargo facilities and streamlined cargo logistics (Gebreeyesus, 2018).

Beyond the distance constraints, a major barrier for exports outside the continent is compliance with international environmental and quality standards. Governments can play a central role in encouraging firms to get certified and reducing the costs of doing so. The establishment of certifying bodies for Global G.A.P. by the Kenyan government with the mandate of supporting the adaption of international standards significantly improved the export competitiveness of Kenyan producers (see also Otieno, 2025 for Kenya’s pastoralism).^[7] Policy measures introduced by Uganda’s government to encourage organic growth of feed for the dairy industry were instrumental to the success of the country’s dairy exports (Bamwesigye, Doli, Adamu, & Mansaray, 2020).

A targeted, nuanced policy is also needed towards different agribusiness crops. A number of African countries have successfully experimented with this approach. For instance, Kenya’s targeted avocado export development policy, specifically tailored to the characteristics of this industry, has turned it into the largest exporter of avocados in Africa with annual double-digit growth (Farming in Kenya Consultancy, 2025). Mali’s targeted support to mango producers enabled the country to develop an entire export-oriented mango value chain to successfully serve European markets.

Using trade policy to incentivize upgrading: Almost as a rule, African agribusiness firms export low-value raw material and fresh produce for processing elsewhere. Nigeria is among the world’s largest producer of tomatoes but exports all its output in unprocessed form. Until recently Nigeria was the world’s largest importer of tomato paste. Similarly, less than 5% of Kenyan tea exports, the country’s largest export industry, is branded. This situation entails that the profits of Africa’s agribusiness exporters are a fraction of those of the companies that process their raw material. Africa receives 2% of the $100 billion annual chocolate market although it grows 75% of global cocoa output. The need to amend this situation has long been recognized by national government and continental bodies but to little effect (Martin, 2018).

Trade policy should be employed to create market-based dynamics that incentivize upgrading and diminish the attraction of exporting unprocessed products. This should be done by introducing a differentiated imports policy that reduces competition in processed food and increases competition in raw materials and unprocessed food, diminishing the economic benefits of these operations. An illustration of the potential rewards of this policy in Africa is given by the EAC’s differentiated tariff structure that sheltered targeted agribusiness industries from excessive competition from outside the EAC and encouraged extensive intra-EAC trade (Karingi et al., 2018).^[8]

Similar differentiated approach should also be applied to export, where governments offer incentives to exporters that export processed agriculture output. Governments can raise the costs of export of unprocessed agricultural goods (e.g., via taxation) or – at the extreme - ban it altogether. This latter policy has been adopted by several African countries, most recently by Botswana that imposed a ban on export of raw diamond in 2025. Earlier attempts to implement this policy have resulted in minimal improvement. Uganda’s 2021 ban on exports of unprocessed raw agribusiness products has so far delivered minimal progress. The sheer size of Uganda’s exports has remained unprocessed. Similarly, Ivory Coast, the world’s largest producer of cocoa bean, has experimented with this approach for decades, but only a fraction of its cocoa exports is processed. The effectiveness of this policy is contingent upon the creation of enabling conditions and provision of necessary resources for upgrading. Neither of these were in place in Uganda nor the Ivory Coast (Martin, 2018; Menker, 2016). This lesson ought to be recognized by governments seeking to adopt similar approaches.

Table 1 presents a summary of the policy agenda I advance and explicates the mechanisms through which the proposed policy measures would affect export.

The cross-border policies I advocate carries an implicit or explicit degree of protectionism, a policy approach that has been subject to considerable debates. Both theory and evidence are inconclusive regarding the effectiveness of this approach in boosting local development and export (Branstetter, Li, & Ren, 2023; Menker, 2016). Notwithstanding the mixed outcomes, protectionist policies in the agribusiness sector have been highly prevalent around the world, turning the agribusiness sector into the world’s most protected sector (Steinbach, Yildirim, & Zurita, 2024).

The under-developed state of Africa’s agriculture sector offers strong rationale for protectionist policies. African governments have indeed introduced such policies, but their effectiveness has been constrained by limited state capacity as well as challenges of identifying targets for protectionism (Branstetter et al., 2023; Gebreeyesus, 2018). Future research may address these challenges and their potential remedies.

Concluding Remarks

Realizing Africa’s agribusiness export potential requires bold, coordinated domestic and cross-border reforms. By focusing on land tenure, access to capital, targeted trade facilitation, and value upgrading African governments can chart a new course for global integration and enable African countries increase their agribusiness exports. The examples I brought should serve as models for other African countries to facilitate their own agriculture exports.

The challenge of the agribusiness-led model of global integration that I advanced is that there are no historical precedents to its success (Rodrik, 2016). As noted in the epigraph to the paper, Africa might need a different growth model to the one that propelled growth of other countries (Rodrik, 2016). It might also need different frameworks for global integration. This is consistent with discussions of the need for ‘new ways of seeing’ in order to understand Africa (Nachum et al., 2023; Nachum & Ogutu, 2025).

About the Author

Lilac Nachum’s current research interests include the impact of AI on IB theory, the global integration of African firms, and international activity in the agribusiness sector. Her research has been published in the Academy of Management Journal, Strategic Management Journal, and the Journal of International Business Studies, among others, and in four books. She is a Fellow of the Academy of International Business and was a 2021-22 Fulbright scholar to Africa. She is an Associate Editor of the Journal of International Business Policy and the Africa Journal of Management.