According to a recent African Union study, about 20 million jobs are at risk in Africa as various projections seem to confirm that the continent’s economies would shrink this year.
As an entrepreneur working to unlock the potential of African youth and facilitate better people-centered policies, I scheduled a set of interviews with thought leaders and experts on the continent to discuss what actions are required to mitigate the job loss. I also wondered how African entrepreneurs can hit a refresh button on their business models to meet today’s market needs.
This first installment features a Ghanaian serial entrepreneur, Michael Zormelo, the CEO of OMNI Group of Companies, with a focus on sustainable agriculture.
Michael is an oil, gas and chemicals expert. He runs businesses across the energy, engineering, and agribusiness sectors. His entrepreneurial leadership spans over 20 years, with a growth spurt starting from a high school venture, where he and his friends established a furniture company in Virginia to retail mattresses.
He established Omnifert, a multi-million dollar fertilizer blending plant, in 2015 to close the gap in the agro-inputs processing market in Ghana, and as a link between the agro-chemicals and agribusiness industries. Established in 2010, his subsidiary in the Omni Group umbrella, Omni Energy, is a provider of Value Added Oilfield Support Services in the oil and gas industry with operations in Ghana, Algeria, Dubai, Cameroon, Congo, Ivory Coast, South Africa, and Tanzania.
Before Omni Energy, in 2000, Michael founded Mustek Ltd., which specializes in engineering, energy and utilities. He has supported other organizations in the capacity of Member of the Court of Governors, Ghana-India Kofi Annan Centre of Excellence (2001–2008), ICT Advisor to Telecom-Liberia (2004-2005), IT Advisor to the Inspector General of Police, Liberia (2004-2005). Michael Zormelo has a BSc in Petroleum Engineering and Marketing from Marietta College in Ohio.
Raising productivity and increasing the efficiency of agricultural value chains are critical to the success of Africa’s rural economies and the income growth of their populations. What are your views on how Sub-Saharan Africa (SSA) can improve products and services to gain more global market share?
Sub-Saharan Africa can improve the value of agricultural products and services to grow its share in the global economy by applying the following recommendations:
First, deploying mechanization to maximize output, leveraging technology (especially IT) to enhance crop production and increase worker safety, and maintaining excellent quality assurance and control processes.
Second, the enablers for achieving the above objective include easy access to credit, guaranteed off-takers, export guarantees, standardization, de-risking of the value chain, future-focused extension services, technical support, and tax waivers to stimulate investment and import duty waivers on essential inputs.
Third, on the infrastructure side, there needs to be a deliberate improvement in rural-urban transportation (on-time!), energy, power, and irrigation. The World Bank suggests that food losses in Sub-Saharan Africa are over $4 billion per year, and the factors listed above are critical contributory factors.
There are concerns that the rise of globalization has widened income inequality. Talk about how Sub-Saharan African countries can limit the threat of increased Agricultural trade and market liberalization, especially on low-income and subsistence farmers.
To limit the threat of foreign agricultural trade and negative market liberalization forces, in addition to steps previously mentioned above, Sub-Saharan Africa should ensure the following.
Full implementation of the African Continental Free Trade Area (AFTCA) and optimization of its socio-economic opportunities; import tariffs on selected agricultural commodity chains; local commodity exchanges to create transparency, provide fairer pricing, and efficient markets for agricultural commodities. Market liberalization is good when transparency, and consequently, reasonable pricing is provided. Countries should develop markets in rural areas, not just cities. Supermarkets should contribute to strengthening markets in rural areas. And this could be achieved through basic level subsidiaries for locally produced and packaged brands. Branding and packaging don’t always have to be expensive.
How do you think SSA agricultural value chains can also achieve higher value on the continent and what role can PPP play in enhancing growth prospects?
Like my previous response, and in addition to the steps proffered for improving the value of products and services, there needs to be increased investment in the agricultural value chain through Public-Private Partnerships, especially in inputs, storage, processing, packaging, and distribution. And active participation and patronization of commodity exchange platforms by these entities.
Talk about how SSA countries can create innovative financing opportunities in making agribusiness benefits more widespread.
In my opinion, the key to unlocking financial initiatives is by de-risking the value chain through various ways such as identification, delineation, and authentication of farm plots – Geographic Information System coordinates and title deeds.
Capturing and including smallholder and subsistence farmers in the financial and banking system, including mobile banking platforms; aggregating smallholder and subsistence farmers, their farm plots, and produce into cooperatives to access credit, off-takers, and support; creating collateral registers and using credit checks.
Different African countries can come up with relevant quotas for agricultural produce. Different countries have various commodities; some have a better quality of the same merchandise. Countries can offtake from each other where quality is higher. Countries can reach agreements amongst themselves. Ministries of Trade in the respective countries can sign off financing agreements knowing there are big off-takers. That will provide benefits for all stakeholders as each has some commodities they are leaders in; financing opportunities increase when off-takers increase.
What are your thoughts on the current upheaval at the African Development Bank?
Trust and monitor the process and hope for a truthful outcome that will enhance the AfDB and its contribution to African development, especially in the agricultural sector. AfDB’s input, especially in recent years, has been of critical importance, and Africans want and expect much more from the body in the coming years.
Many thanks to Mrs. Tucci Ivowi, Founding Member & Deputy CEO of the Ghana Commodity Exchange, for making the introduction for this interview. If you’d like to participate in a subsequent discussion, kindly reach out to me by email at tomchris@sfanonline.org.