African food systems are under pressure―from growing urbanization, youth unemployment and, perhaps most crucially, climate crisis. Covid-19 is one more blow, and the resulting disruption to long-term economic development may prove as devastating as its impact on public health.
In May 2020, Bain & Company joined forces with a number of our enduring pro bono clients—including TechnoServe, Partners in Food Solutions, Root Capital and Land O’Lakes Venture37—and the United States African Development Foundation (USADF) to establish the Coalition for Farmer-Allied Intermediaries (CFAI). The coalition’s mission is to catalyze a movement around farmer-allied intermediaries in order to transform and build more resilient African food systems. We aim to help scale many more profitable, competitive enterprises that enhance smallholder famer livelihoods, nutrition and food security, socioeconomic development, and environmental sustainability through more effective collaborative action.
The effects of Covid-19
Many agricultural intermediary businesses—especially those in the “missing middle” underserved by commercial lenders and investors, but too big for microfinancing—have been severely impacted by market, supply chain and operational disruptions caused by the pandemic. According to TechnoServe surveys of over 100 food processors spanning sub-Saharan Africa, more than 60% of these enterprises do not feel prepared, including having adequate liquidity, to meet the challenges presented by Covid-19 and its expected economic impact. Some food processing businesses are shutting down, and at least 50% have scaled back operations. As of July, one in four have downsized their workforces through layoffs or forced leave.
This disruption could have significant impact on food security and livelihoods. Dangers include reduced supplies and higher prices of caloric staples and other nutritious foods for consumers, many of whom already spend half their income on food, as well as loss of food processing jobs and less support for the smallholder farmers who contribute to more than 80% of Africa’s agricultural production.
It will be key to protect the intermediaries anchoring the food systems that help support the livelihoods of millions of smallholder farmers, hundreds of thousands of jobs, and the food that feeds hundreds of millions of people across Africa.
A first step: Resiliency Grant Pilot
In August, with $500,000 provided by Cargill and USADF, CFAI launched the Resiliency Grant Pilot program to support 10 farmer-allied intermediaries in Kenya and Ghana, helping to sustain livelihoods and food security during the pandemic. These grants will support intermediaries’ safe operations, workforce maintenance, smallholder farmer investments, and product and distribution adaptations. The ultimate goal is to scale this capital investment, as well as advisory and system coordination supports, to hundreds of farmer-allied intermediaries.
Enterprises that ally with smallholder farmers are key to unlocking Africa’s food production and economic potential. How farmer-allied intermediaries can act as the linchpin firms for building more resilient food systems in Africa.