Using Value Chain Approaches In Agribusiness And Agriculture In Sub-Saharan Africa

Value chains are a key framework for understanding how a product moves from the producer to

the customer. The value chain perspective provides an important means to understand the

business-business relationships, mechanisms for increasing efficiency, and ways to enable

business to increase productivity and add value. It provides a reference point for improvements

in services and the business environment. It is a vehicle for pro-poor initiatives and for linking

small businesses with the market.

Value chains reside at the core of high-impact and sustainable initiatives focused on improving

productivity, competitiveness, entrepreneurship, and SME growth.

Africa’s exports remain dominated by primary commodities, and the share of agriculture in

SSA’s total exports has declined sharply in the last 40 years. Only a few SSA countries have

achieved significant diversification of their exports. Despite those trends, agriculture remains the

main export-revenue source for many SSA countries and the largest income generator for their

populations. Much, even most, African agricultural production is of low unit value and the result

of low-productivity value chains. SSA’s agriculture productivity measure of USD 343 value

added per worker (2004) is the world’s lowest – world agricultural productivity per worker

averages three times that of SSA; Latin American productivity per worker averages nearly ten

times the sub-Saharan African average.

Despite the successes of many African exporters in selling to new markets, without further

improvements to their business environments and the competitiveness of their export

commodities, many SSA countries risk being trapped by producing low-skill, low-value products

and services, struggling to obtain a significant value-added share in global trade. The

productivity and efficiency of agricultural value chains are basic to the success of SSA rural

economies and to the incomes of SSA rural populations.

Our Guide first examines core concepts and issues relating to value chains. We review then focus on five themes, of particular relevance to African agricultural value chains, which can contribute to effective implementation tools and approaches:

• Trust and cooperation

• Governance

• Market power

• Innovation and knowledge

• Focus/intervention points.

These topics pertain to conditions and challenges faced by value chain participants and

practitioners. They resonate throughout the many cases described in our modular.

Agrodomain presents methodological tools and approaches that incorporate important

value chain concepts with the themes discussed and with sound business principles. The

accompanying cases illustrate the application of the tools. The tools and case studies discussed

in this Guide have been selected for their usefulness in directing and supporting market-driven,

private-sector initiative and action.

We offers 11 value chain implementation tools, presented within the implementation

cycle of a value chain program.

• Designing strategies and business plans—Obtaining and using information

• Developing robust new businesses

• Supplying the market—Aligning supply to match market opportunity

• Reaching the market—Market positioning and market opportunities

• Improving the business and policy environment

• Monitoring results in value-chain development

Each tool is followed by descriptions of one or more actual cases. These cases illustrate the

tool’s application and are coupled with embedded mini-cases for additional illumination.

Roughly 60 percent of the examples are from Africa; others come from Europe, Latin America,

and Asia. The Guide frequently returns to the same cases when describing different tools, which

serves to highlight the multiple dimensions of a single value chain and the rich set of

opportunities value chain initiatives can offer.

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