Building Industrial Economies in Africa through Mechanization of Agriculture
In Kumasi, Ghana, a small group of young entrepreneurs, all in their early and mid-20s, are making agricultural mechanization available to farmers while at the same time building the Ghanian industrial base and creating jobs. Their company, SAYeTECH, specializes in multi-crop threshers that allow easier production of soybean in African farming. A commercialization partner of the Feed the Future Soybean Innovation Lab (SIL), SAYeTECH has reached over $350,000 in thresher sales in just three years.
Economists and policymakers generally consider a strong manufacturing sector to be a vital path to economic development and growth. Industrialization can drive development and alleviate unemployment and poverty by providing decent jobs for large numbers of workers. Unfortunately, Africa lags behind other continents in industrialization, with only 1.9% of global manufacturing. Africa imports manufactured goods at a 3:1 ratio to manufactured exports, an imbalance that further weakens African economies.
Asia recently underwent an industrial revolution and many agricultural implements manufactured there are being imported into Africa. While this imported equipment can greatly assist African farmers, it does much less to help build local industrialization and development of African economies in a way that provides new jobs, reduces unemployment and creates a middle class.
African manufacturing enterprises are capable of fabricating agricultural equipment and meeting the needs of their farmers. Their efforts can be assisted by policies and practices of national governments and development organizations. A big challenge for local manufacturing is the policy of allowing duty-free agricultural equipment imports while taxing raw materials, such as sheet metal, that are needed for local fabrication. Government subsidies for foreign-made tractors and implements can also undercut the efforts of local equipment manufacturers, who must base pricing on full costs, thus, making competition with imports difficult. In addition to better policies that will assist local manufacturing, African fabricators also need support with engineering, tooling and financial investment.
SIL started their program on local manufacturing of multi-crop threshers in 2016 with design research and support of African engineering students to develop low-cost threshers. By 2018, a design by two Ghanaian fabricators had been adopted by SIL to be used as an open-source plan for multi-crop thresher fabrication. The machine was extensively field tested, and workshops were conducted in 10 African countries to teach the design to local fabricators. Local nongovernmental organizations (NGOs), manufacturing companies and government agencies worked with SIL to disseminate the manufacturing manual and hands-on fabrication training.
This focus on local manufacturing has led to numerous businesses either adopting the local fabrication of crop threshers or the development of new private sector enterprises specializing in agricultural equipment. One business to newly enter the agricultural mechanization manufacturing sector in Ethiopia is the Center for Applied Manufacturing, Services and Engineering (CAMS Engineering) PLC — which is set to reach nearly $500,000 in sales in their first two years of business. Both CAMS and SAYeTECH realized that they needed to focus on service providers as their customer base, rather than individual farmers. Even small equipment is often too expensive for most smallholders, so professional service providers with financial backing purchase equipment and charge farmers for using its service.
While low access to capital is easily recognized as an impediment to farmer investment in mechanization, it is also a bottleneck for African manufacturers. The development of manufacturing infrastructure (tooling, facility development, etc.) and the purchase of raw materials needs capital that is difficult to access in most African economies, where interest rates are routinely above 25-30%. Private and public investment in agricultural equipment manufacturing businesses across Africa may open this sector to local entrepreneurs, whose success in manufacturing high-quality agricultural equipment will double as a boost to their local agricultural sectors. The availability of agricultural mechanization, such as tractors, planters, sprayers, threshers and combines, leads to more productive agricultural systems and reduced drudgery for African farmers.
Supporting agricultural mechanization in Africa by supporting local manufacturing is a winning strategy. As increased industrialization creates jobs, the sons and daughters of famers can use their manufacturing incomes to invest in equipment for their families back home. The talent and the drive for local manufacturing exists in the hands and hearts of many African manufacturers. Support in the form of policies, financial investment, knowledge-sharing and training will lead to a productive agricultural and industrialization boom across Africa.