May 4, 2020   SOURCE: PR NewsWire

COVID-19 or Hunger: The Time to Transform Africa's Food Systems is Now

NAIROBI, Kenya, May 4, 2020 /PRNewswire/ -- Governments across Africa have put in place policies to stop the spread of COVID-19 with the first lockdowns resulting in significant restrictions on the movement of people and goods. But the disruption of intermediary businesses in agricultural value chains could have the most consequential impact on food security and livelihoods.

This includes reduced supplies of caloric staples and other nutritious foods to consumers (many of whom already spend up to 50% of their income on food), loss of jobs in food processing, and - for those who are farmer-allied - lower incomes and support to smallholder farmers who contribute to more than 80 percent of agricultural production in Africa.

Intermediary businesses can include producer cooperatives, aggregators, processors and vertically integrated brands. These linchpin firms are now struggling with COVID-19 related challenges that imperil their continued operation, according to a coalition of international practitioners who support these businesses with capital and technical assistance comprising Bain & Company, TechnoServe, Partners in Food Solutions, Land O'Lakes Venture37, Acumen and Root Capital.

A TechnoServe survey of over 100 food processors spanning sub-Saharan Africa, shows that over 60% of these enterprises do not feel adequately prepared, including having limited liquidity, for meeting the challenges presented by COVID-19:

    --  For those that have been deemed essential services and can continue to
        operate, normal levels of production is hindered by COVID-19 related
        challenges for labour to get to work and operate safely.
    --  There are broad disruptions to demand, with shifting buying habits from
        stockpiling and reduced consumer incomes, while markets are closed and
        school feeding programmes halted.
    --  Logistics across the value chain have been affected as curfews and
        lockdowns are restricting movement of people and goods.

As a result, some food processing businesses are shutting down and, according to TechnoServe, only 31% of companies are retaining their full workforce, with the majority putting workers on leave and 17% already making layoffs.

"Some companies are trying to pivot," says Jeff Dykstra, CEO of Partners in Food Solutions, "but the expected slowdown in business is limiting investment at a time when innovating for this new operating environment is critical. Also, without sufficient liquidity and working capital, these businesses will not be able to continue making payments to suppliers and investing in farmers by maintaining extension services or providing farmers with credit."

Food processing businesses advance socio-economic development by providing nourishment, jobs and incomes in Africa, while building more resilient local food systems. They help smallholder farmers withstand global fluctuations in the markets and, where appropriate, reduce reliance on imports.

"Supporting these firms and smallholder farmers - which our research shows many of whom are in the 'missing middle' where affordable commercial financing is not readily available and have already struggled with a capital gap pre-COVID-19 - is also necessary to strengthen the longer term ability of Africa to feed itself, build more resilient food systems and harness the economic potential of African agriculture and food. All of which are critical to Africa's economic development," says Christopher Mitchell, a partner at Bain & Company and leader of the firm's work in African Food Systems.

The international donor community and African governments have an opportunity to act now to mitigate against a food security crisis arising from the pandemic and to set a path toward food system transformation that would yield greater nutritional, economic, societal and environmental benefits for decades to come:

    1. First, African governments need to ensure their COVID-19 response
       supports food supply chains. This includes declaring agriculture, food
       processing, logistics, and food retailing essential businesses, and
       ensuring the availability and distribution of personal protective
       equipment (PPE) and even soap and hand sanitiser to all workers across
       the food system.
    2. Second, the full range of capital from public funds, grants from the
       donor community, debt to equity from investors is required to ensure
       intermediary businesses such as food processing have the liquidity to
       continue operating and invest in necessary innovations, such as digital
       platforms that more efficiently match farmers to markets and support
       farmer productivity. Capital provision must be coupled with advisory
       support and technical assistance for business continuity planning. 
       Investment across a range of commodities, including staples such as
       cereals, legumes, roots and tubers, fresh fruits and vegetables, dairy
       and even export oriented cash crops such as tea, coffee and nuts, are all
       critical for farmer livelihoods, to feed local populations and generate
       foreign exchange reserves.
    3. Third, NGO implementers and the private sector can provide critical
       beyond-capital assistance. For example, TechnoServe and Partners in Food
       Solutions along with private sector partners are providing remote
       technical assistance to hundreds of food processors in Africa and have
       published guides on safe operations for workers and food production.
       Business advice for these processors, on topics such as cash- flow
       management, contract renegotiation and product adaptation, is also
       critical to survival. In Malawi, Land O'Lakes Venture37 is providing face
       masks, hand sanitiser and hand washing stations to dairy cooperatives to
       ensure that Ministry of Health protocols around COVID-19 prevention can
       be properly followed and fresh milk continues to be delivered daily. The
       private sector, particularly large brewers and soft drink companies, have
       supply and distribution networks that can be leveraged for upstream and
       downstream logistics to help facilitate a stable, safe food supply.

Editor's Note: To arrange an interview, contact Nicola Wilson at nicola.wilson@bain.com or +27 71 155 9834

About Bain & Company

Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. Across 58 offices in 37 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster and more enduring outcomes. In 2015 we committed to invest $1B in pro bono services over 10 years to leading organisations working to solve the most difficult problems in education, economic development and the environment. Learn more at www.bain.com and follow us on Twitter @BainAlerts.

Media Contact
Nicola Wilson
Bain & Company
Tel: +27 71 155 9834
nicola.wilson@bain.com

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