Value Chains

Small and medium enterprises (SMEs) in the midstream of agrifood value chains—wholesalers, logistics, and processors—play a critical role to food security and value chain transformation. These enterprises help keep food supplies affordable and stable, provide employment and income for millions of rural and urban workers, and improve food quality and safety for consumers. However, in South Asia, Africa south of the Sahara (SSA), and other developing regions, SMEs often don’t play a role in the food system transformation conversation.

The agricultural productivity gap between actual and potential yields in Africa south of the Sahara has been a persistent challenge since the post-World War II independence movement. Despite efforts by governments, international foundations, UN agencies, and private investors, smallholder agricultural production continues to lag behind its potential, and products are often of low and variable quality.

As Ethiopia’s population has become increasingly urbanized over the past decade, more and more households have come to rely on markets, rather than their own farms, for their daily food needs. This dependence means that well-functioning agri-food value chains have become increasingly vital to food security for much of the population.

With the COVID-19 pandemic disrupting livelihoods, and the new African Continental Free Trade Area (AfCFTA) now beginning to influence food flows, agricultural trade in Africa is in a state of flux, with both challenges and opportunities. While AfCFTA implementation has begun, some crucial negotiations remain to be completed, and the full scope of its impact is not yet clear.

Prevalence of hunger and food insecurity have been on the rise in Africa south of the Sahara (SSA) in recent years after a long period of decline. In 2020, an estimated one in five people in the region faced hunger, more than double the proportion of any other region worldwide. The period 2019-2020 in SSA saw the strongest increase in annual undernourishment ever recorded. In 2020, estimated prevalence of undernourishment ranged from 10.1 percent in southern Africa to 31.8 percent in Central Africa.