Overview
Cashew business has emerged as a lucrative sector for many African countries in recent years. Cashew, which is native to Brazil, was introduced to Africa in the 16th century. Over the years, African countries have been exporting raw cashew nuts to other parts of the world. However, the situation is changing, and African countries are now processing and exporting cashew kernels, which has significantly increased their earnings.
The cashew business has become a game changer for Africa, especially for countries like Nigeria, Tanzania, Ivory Coast, Ghana, and Benin. These countries have invested heavily in cashew processing plants, and their efforts are now paying off. For example, Tanzania has become the largest exporter of cashew kernels in Africa, earning the country millions of dollars in foreign exchange while Nigeria has become the second largest producer of raw cashew nuts after Ivory Coast with estimated annual production of over 800000 metric tons.
The cashew business presents a significant opportunity for African entrepreneurs to create wealth, provide employment, and contribute to economic development. However, entrepreneurs will need to overcome the challenges of limited access to finance, infrastructure, technology and policy support to fully exploit this opportunity. With proper support, entrepreneurs can build thriving businesses in the cashew value chain, contributing to the prosperity of their respective countries and the continent at large. In this essay, we explored the benefits and future outcomes of the cashew business for African entrepreneurs, as well as the challenges they may face.
Benefits and future outcomes
The cashew business is a growing industry in Africa, with entrepreneurs seeking to capitalize on the increasing demand for cashews worldwide. The cashew business presents a significant opportunity for African entrepreneurs to create wealth and employment in their respective countries. The demand for cashews is steadily increasing globally, with countries such as India, Vietnam, and Brazil dominating the market. However, Africa has an advantage in terms of production as it is one of the largest cashew producers in the world. African entrepreneurs can tap into this opportunity by investing in the value chain, from production to processing and marketing. This will not only create job opportunities but also contribute to the economic development of the continent.
Of the main advantages of the cashew business is its labor-intensive nature. This means that it provides employment opportunities for many people in rural areas, where poverty levels are high. The cashew industry has helped to alleviate poverty in many African countries, providing income for small-scale farmers who grow the cashew trees and for workers in the processing plants. With the promotion of gender equality, women make up a significant portion of the workforce in the cashew industry, both in the farming and processing stages. This has helped to empower women and promote their participation in the economy.
Secondly, the cashew business provides a sustainable source of income for smallholder farmers in Africa. Cashew is a crop that thrives in semi-arid regions, making it an ideal crop for African farmers in such areas. With proper support, smallholder farmers can increase their yields and earn a decent income from the cashew trade. Entrepreneurs can provide this support through training, access to credit, and market linkages, among other initiatives.
Furthermore, the cashew business has the potential to improve food security in Africa. With the increase in demand for cashews, farmers can diversify their crops, reducing their reliance on traditional crops such as maize and cassava. This will not only ensure food security but also increase the resilience of communities in the face of climate change. Cashew farming and processing can as well provide a reliable source of income as it helps to diversify their income streams, which reduces the risks associated with depending on a single source of income.
Challenges faced in Africa
Africa grows most of the world’s raw cashews but only processes a fraction of them, thus, missing out on a wealth of opportunity offered by booming global demand. But as the global market for cashews is booming, Africa is greatly falling behind in its revenue generation due to its lack of processing industries and limited access to finance, which is crucial for entrepreneurs to scale up their businesses. Most entrepreneurs in Africa rely on personal savings or family and friends to finance their businesses, limiting their ability to compete with well-established players in the market.
However, there are also challenges associated with the lack of investment in infrastructure, particularly in transport and energy. This has made it difficult for some African countries to compete with other countries in the global market as they have to export the nuts for processing and buy them back at a retail price lower than costs incurred.
Secondly, there is limited infrastructure, particularly in rural areas where most cashew farmers are located. Poor roads, limited access to electricity, and inadequate storage facilities pose significant challenges for entrepreneurs in the cashew business. Addressing these infrastructure challenges will require significant investment and collaboration between the public and private sectors.
Additionally, there is a need to improve the quality of cashews produced in Africa, as this can have a significant impact on the prices that African countries can fetch in the global market.
Policy Recommendations and Conclusion
Former President of the Federal Republic of Nigeria, H.E. Chief Olusegun Obasanjo, GCFR, at the 2022 16th ACA Cashew Conference & Expo. highlighted the need for the formulation and implementation of favorable policies, both at national and continental levels to ensure the growth of the African cashew industry. He also highlighted the importance of increasing production and local processing as well as a Cashew 2030 Committee.
These contentions notwithstanding, the first recommendation for African countries is to ensure the position of a legal and regulatory certainty for enterprise, local and foreign investors to thrive. Second, collaboratively and proactively working to achieve AfCFTA’s noble sustainability, wealth creation and poverty reduction. Third, institutions like the African Development Bank and local development financial institutions can play a more critical role by innovatively facilitating access capital to SMEs (key drivers of growth) in regional member countries and locally.
None of these however will be accomplished in one fell swoop, but they will certainly constitute major steps in the necessary advancement towards eliminating the challenges in the cashew industry and expanding all production.
In conclusion, the cashew business presents a significant opportunity for African entrepreneurs to create wealth, provide employment, and contribute to economic development. However, entrepreneurs will need to overcome the challenges of limited access to finance and infrastructure, technology, capacity building and policy support to fully exploit this opportunity. With proper support, entrepreneurs can build thriving businesses in the cashew value chain, contributing to the prosperity of their respective countries and the continent at large. By taking these steps, entrepreneurs can build successful cashew businesses that contribute to the economic development of Africa.
References
African Cashew Alliance. (2020). Cashew Sector in Africa: State of the Art. Retrieved from https://africancashewalliance.com/wp-content/uploads/2020/11/State-of-the-Art-Cashew-Sector-in-Africa-2020.pdf
Mziray, N., & Adesina, A. (2019). The African Cashew Initiative: Enhancing Smallholder Incomes and Export Competitiveness. In S. T. Girma & C. E. O. Odimegwu (Eds.), Agricultural Transformation in Africa: The Journey So Far (pp. 225-240). Springer.
Rutsaert, P., Maertens, M., & Roosen, J. (2017). Challenges and opportunities for promoting cashew nut production in Africa. Development Policy Review, 35(3), 385-405.
World Bank. (2020). Cashew Value Chain in Tanzania: Constraints and Opportunities. Retrieved from https://www.worldbank.org/en/topic/agriculture/brief/cashew-value-chain-in-tanzania-constraints-and-opportunities/
Zeller, M., & Sharma, M. K. (2021). Financing agriculture and agribusiness in sub-Saharan Africa: The importance of local financial institutions. Food Policy, 102010, 102010.
2022 AfCFTA conference from https://guardian.ng/opinion/afcfta-policy-questions-and-key-next-steps/