AFRICA- A recent report by Rabobank provides that the growing population, urbanization, and dietary changes in eastern Sub-Saharan Africa (ESSA) will boost the consumption of grains, especially wheat, in the next decade.
The report also reveals that this growth in demand will provide considerable opportunities for trade and business development in the region.
According to the report, ESSA comprises 22 different economies with a current population of 520 million, which is projected to reach 705 million by 2035.
This increase in production will increase the demand for grains such as white corn, the main staple food in the region.
According to Vito Martielli, Senior Analyst of Grains & Oilseeds at Rabobank, urbanization, income growth, and dietary changes will fuel the demand for wheat, especially in large cities like Nairobi, Kampala, Dar es Salaam, and Lusaka.
While the region is not self-sufficient in grains and relies on different sources of imports, the wheat trade is a global business, while the rice trade is mainly between ESSA and Asia.
The report predicts that the region’s eight largest economies will need an additional 2 million to 3 million metric tons of wheat imports by 2035.
However, this growth will differ among countries, depending on their production outlook. Some countries, such as Zambia and Zimbabwe, have high yields of wheat and could become net exporters by 2035.
Others, such as Ethiopia, the largest wheat consumer, and producer in the region, have the potential to increase production but not enough to meet demand.
Kenya, the largest white corn importer in the region, is trying to improve its self-sufficiency by opening up to genetically modified commodities and expanding irrigation access for farmers.
Key factors and opportunities for growth
Martielli outlines several factors and opportunities that could enable growth in the region, which include improving transport and logistics infrastructure to facilitate trade, enhancing farming businesses to boost local production, and supporting long-term policies that foster private-public partnerships.
Moreover, there are business opportunities in grains trade, ports and logistics infrastructure, and milling, and the demand and supply gap will create advantages for wheat importers, traders, and financiers.
Feed grain imports could also rise as animal feed demand grows in the medium to long term.
Additionally, the Rabobank report points out that investments are needed to improve the quality and capacity of logistics and storage facilities in key port hubs and inland areas, as well as post-harvest storage infrastructure, in order to seize these opportunities.
Transport infrastructure will also require project finance investment products, and milling capacity will expand, driven by local and regional players, as well as newcomers in some markets.
Moreover, strategies for geographical expansion, diversification, and/or consolidation will generate demand for mergers and acquisitions.
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