By Kindra Halvorson, Chief Transformation Officer, TechnoServe

In Zambia, a farmer is asking herself how she will buy fertilizer as the price of imported goods skyrockets. The managers of a Tanzanian flour mill are fretting about how to keep production lines in operation when they can’t source replacement parts from countries under lockdown. Outside Nairobi, the owner of a small corner shop is wondering how to maintain sales when her customers have lost their income and the store’s hours of operations are restricted.

These are all scenes of African food businesses struggling to cope with the impacts of the COVID-19 crisis. And while the pandemic will have far-reaching effects around the world, one of the most significant threats it poses is to global and local food systems.

A food system on the edge

Even before the pandemic, food systems faced notable challenges. At the start of the year, the Global Report on Food Crises identified 135 million people worldwide as currently or imminently food-insecure, and the World Food Program now estimates that an additional 130 million people could be pushed into hunger as a result of the pandemic.

Africa, already home to more than half of the world’s people living in acute food insecurity, is particularly vulnerable to disruptions in food systems.  Social distancing, restrictions on movement, and other reactions to the pandemic will make it more difficult to grow, transport, process, distribute, and sell food.

The slowdown in agricultural trade as a result of movement restrictions has already reduced food security in urban areas and among school children and other groups that were receiving food through institutional programs that are now closed. A poll taken across 12 African countries in April found that 80% of respondents were worried about having enough food to eat.

The impacts will also be felt in rural areas. Rural households in East and Southern Africa allot 29% of their food expenditures to processed foods. Smallholder farmers who supplement their sales of crops with informal work, which typically accounts for 20% to 50% of their earnings, are experiencing declining incomes as these off-farm opportunities disappear. While current restrictions continue and new ones are put in place, farmers and other rural residents risk being deprived of both their livelihoods and access to shelf-stable processed foods.

Finally, the crisis will have differentiated impacts on men and women throughout the food system. Underlying inequalities in men’s and women’s access to productive resources, ability to earn and control income, and time spent on unpaid household responsibilities will deepen, straining women’s ability to cope and recover. In response to food insecurity, women often respond by limiting the income spent on nutritious foods, reducing their own consumption, and selling their assets. This has negative impacts on their own health and that of girls, boys and vulnerable populations.

However, we still have the chance to mitigate and even prevent food crises. Rapid but thoughtful interventions to help small and medium-sized food enterprises remain in operation through this crisis and recover stronger will have benefits not only for those businesses but also for the women and men farmers that supply them, the retailers that distribute food, and the consumers that depend upon their products.

We’ll talk below about how urgent interventions with three critical and inter-related components of the food system—processors, smallholder farmers and micro-retailers—can prevent a food crisis from spinning out of control.

Food processing and sourcing: Strengthening the central link in Africa’s value chains

Firms such as flour mills, dairies, and vegetable and fruit processors are essential to ensuring that safe, nutritious food reaches all consumers, including the most vulnerable. In addition to their role in food security, processors will play an important part of the economic recovery because of their linkages up and down the value chain, providing stable markets for smallholder farmers, aggregators and transporters, and jobs for women and men  in economies where formal employment is scarce.

The challenges

COVID-19 is creating new challenges for these firms, however. In a survey of 106 food processors across sub-Saharan Africa, we found that 62% of these companies did not feel prepared to weather the current crisis. One of the first elements of the supply chain to have been seriously disrupted is the access of processed foods to markets: more than 30% of firms report that their marketing, sales, and distribution activities have decreased by 50% or more. 

Longer term, we anticipate other challenges for the food processing sector. While most firms are currently working through their existing stock, they have already cited problems resupplying raw materials, such as grain, due to limitations on transportation. Firms are also likely to be challenged sourcing supplies, spare parts, and technical expertise from overseas.  Finally, while demand is currently high for many staple foods, the long-lasting economic consequences of the pandemic will likely make it difficult for many consumers to afford to purchase food, so efforts must seek to maximize access and affordability.

The response

Addressing these challenges will require creative solutions and coordination across the private sector, governments, and other stakeholders. Providing these firms tailored advisory services that help to close the human-capital and research-and-development gaps—and helping them think through the implications of the crisis, evaluate their finances, and plan for various scenarios—will allow the companies to make the necessary adjustments to their business approaches, such as:

• Addressing new production and workforce challenges created by the pandemic
• Putting measures in place, like childcare and secure transportation, to support working mothers and reduce women’s loss of income;
• Managing cash flow, renegotiating the terms of loans, and accessing government assistance;
• Adapting route-to-market: finding new outlets, such as direct-to-consumer sales or digital platforms, when previous end-markets are shut down or difficult to access;
• Securing the supply of imported and domestic raw materials by diversifying suppliers, strengthening linkages back to farmers, and working with government agencies to allow for transport of food commodities and essential materials;
• Diversifying product range and target markets, including linkages to relief agencies and government safety-net programs where they exist, as well as consumer-facing marketing channels where demand is growing (e.g., micro-retailers); and
• Reconfiguring production lines to make in-demand products.

Aggregators of various shapes and sizes, including producer organizations and entrepreneur-led businesses, also have a vital role to play. As small businesses confronting a crisis, these firms often need support to adapt their business model to the changing market and operational and financial challenges imposed by the COVID-19 crisis, and to find creative ways to generate revenue. These entrepreneurs and small businesses always face steep challenges, and the COVID-19 crisis has created new needs:

• Government permission to transport crops in spite of lockdowns and restrictions;
• Health advice and protective supplies, among other resources, to maximize safety of truck drivers, buyers, warehouse staff and others that will come into contact with a large number of people and products;
• Improved volume and quality of storage capacity, as the pandemic forces aggregators to reduce travel and the number of transactions they carry out;
• Working capital with flexible repayment terms in order to buy from smallholders and pay for transportation, which has become more urgent as the pandemic has slowed payment from buyers, and lenders have reduced financing due to increased risks in the sector.  

Smallholder Farmers: Short-term actions to mitigate the COVID-19 threat have long-term consequences for food production

The challenges

For many smallholder farmers, located in rural areas where COVID-19 has generally been slower to spread, the direct impacts of the pandemic may still feel distant. However, these rural entrepreneurs are nonetheless suffering from lack of access to markets for their crops, which is impacting their income and therefore access to healthcare and nutritious food, among other things. These challenges are felt more severely by women farmers due to their already limited access to credit, poorer market linkages, and weaker bargaining power. Without a gender-responsive approach to secure access to markets or inputs in the short-term, and reliable price signals in the medium-term, farmers may turn away from producing those very commodities that are critical for national food security, and we risk losing the gains made in the last decade to close the gender gaps in agriculture.

The response

As the pandemic evolves, women and men farmers need:

• Reliable health and safety information;
• Safe access to markets, including reliable transportation and crop collection points where adequate safety measures are taken;
• Working capital to pay laborers for harvesting and to access essential inputs, especially where input costs may be rising significantly due to currency devaluations;
• Physical access to inputs and implements;
• Advice and support for food security, e.g., retaining food reserves despite cash pressures and planting kitchen gardens with more nutrient-dense foods;
• Sound advice on crop diversification and strategies for reducing their risks in light of anticipated fluctuations in market demand and prices.

Wherever possible, reaching smallholders with such support can most cost-effectively and sustainably be achieved by working through existing partners and local market actors that can not only help farmers through the pandemic but also strengthen ties in a way that will support economic recovery and resilience in the system.

Micro-retailers: Reaching the base of the pyramid

The final step in getting food into the hands of base-of-the-pyramid consumers typically passes through informal sales channels or micro-retailers like Phillip Nderitu, who runs a corner store outside Nairobi. Small shops like Phillip’s supply 80% of basic goods to consumers, and 96% of retail in Kenya happens in enterprises that sell less than $150 per day. The sector also provides important income-generating opportunities for women who make up a significant share of micro retail owners.

The challenges

But these shops face their own challenges during the crisis. “The COVID-19 pandemic has been a blow to our shop. Sales have reduced significantly. Prices of items have skyrocketed… reducing customers' purchasing power…. The curfew has also affected my business since I am serving fewer customers than expected,” Phillip said. Store owners like Phillip are also struggling to keep some items in stock as distribution networks are disrupted.

The response

TechnoServe’s programs have created WhatsApp groups in which shopkeepers can share their challenges and brainstorm solutions with the support of business advisors. Shopkeepers are implementing new safety protocols and shifting their stock to the essential products that consumers demand. Our staff is currently helping retailers better manage their finances during the crisis, identify new ways of reaching customers—such as receiving remote orders—and access finance. Continuous advisory services and strong networks, especially with wholesalers and suppliers, can help micro-retailers make it through the crisis.  As more of our support moves to remote channels, we are being particularly attentive to encouraging women’s continued participation in our programs: in addition to the disproportionate burden of domestic responsibilities that women carry, there is also a gender gap in digital access and literacy that must be factored into program design and implementation.

The COVID-19 pandemic is a new challenge, and we are still learning how best to respond. However, we know from past experience that timely support can help small businesses weather a crisis; when civil unrest erupted in Nicaragua in 2018, for example, nearly a third of small businesses failed, but 87% of the enterprises participating in TechnoServe’s Impulsa tu Empresa program were able to stay in business.

The unprecedented scope of the COVID-19 pandemic requires an unprecedented response. Food processors and agricultural SMEs require immediate investments of financial and technical support to sustain nutritious food supply chains. Interventions should focus on the most immediate threats to these businesses—workforce safety and reliability, supply chain functionality, marketing and distribution, financing, and policy—with the objectives of helping them weather the immediate crisis and position themselves to be successful in the “new” industries and economies that will emerge due to impacts of the pandemic. Through this support, we can help to assure the supply of nutritious foods for urban and rural consumers, markets and livelihoods for smallholder farmers, and jobs for those that can still go to work.

If we do that, Africa can build food systems that are able to withstand the current pandemic and emerge more inclusive and more resilient to future crises.

For more information, read TechnoServe's guides, Smallholder Farmers and COVID-19: From Response to Recovery and Resilience and Food Processing in a Pandemic: Challenges and Responses for Africa’s Food Processors Facing COVID-19