How dollar shortages are reshaping agribusiness in East, Southern Africa

Dar es Salaam.  Africa's agricultural sector has continued to offer significant long-term growth opportunities, but persistent shortages of foreign currency, supply chain disruptions and broader economic pressures are increasingly threatening the industry's ability to realise its full potential.

According to Absa Africa Regions Head of Agribusiness, Mr Ray Van Rooyen, the continent's strong agricultural fundamentals remain intact, supported by expanding food demand, a growing population and vast areas of arable land.

However, he said the sector has simultaneously faced mounting operational challenges that have constrained growth across many countries.

Speaking on the outlook for African agriculture, Mr Van Rooyen said the sector has entered a period characterised by both opportunity and uncertainty.

 He noted that while agriculture remained one of the continent's most promising industries, progress has not been uniform across markets.

"It would be a mistake to be overly optimistic given how haphazard the trend is. African agriculture has fundamental challenges, while still showing strong growth in certain areas," he said.

Mr Van Rooyen explained that Africa's agricultural potential has largely been driven by three long-term factors: the availability of agricultural land, rapid population growth and the emergence of a larger middle-income consumer base.

He said changing consumer preferences has increased demand for processed and higher-value food products, creating new opportunities for investment in storage facilities, agro-processing and regional trade networks.

These trends, he noted, have strengthened the need for more organised agricultural value chains capable of linking producers to domestic and international markets.

However, he cautioned that the sector has remained vulnerable to external shocks, including geopolitical tensions, fluctuations in energy prices, disruptions to global supply chains and volatile exchange rates.

According to Mr Van Rooyen, agribusinesses could no longer afford to operate with a purely domestic focus.

"Any agribusiness still thinking purely in local terms is going to find itself at a disadvantage," he said.

He added that regional and international market connections have become increasingly important for maintaining competitiveness and ensuring business sustainability.

Among the challenges facing the sector, Mr Van Rooyen identified shortages of foreign currency, particularly access to US dollars, as one of the most immediate and disruptive constraints affecting agribusinesses in several African countries.

He explained that many businesses have successfully negotiated contracts for fertiliser, fuel, agricultural chemicals and machinery, only to encounter lengthy delays in obtaining the foreign currency required to complete import transactions.

"In several markets, an agribusiness can have a transaction fully agreed and a supplier ready to deliver and still wait months to secure the dollars needed to complete that import," he said.

The consequences of such delays, he noted, have been felt directly on farms and throughout agricultural value chains. Late fertiliser deliveries often resulted in farmers missing critical application periods, while delayed shipments of machinery parts left equipment idle during planting and harvesting seasons.

Because farming activities followed biological and seasonal cycles, he said, lost time could rarely be recovered within the same production season.

As a result, yield losses were often incurred before crops had even been planted. Mr Van Rooyen said the foreign exchange challenge has been more widespread than many observers realised, although the severity varied from one country to another depending on foreign currency reserves, import dependence and broader macroeconomic conditions.

He noted that businesses operating across several African markets have increasingly encountered what he described as "multi-layered currency friction", requiring them to navigate different exchange control regimes and foreign currency regulations simultaneously.

The situation, he said, has highlighted the need for financial institutions to provide broader support beyond traditional lending.

"For financial institutions working in this space, it also reinforces how important it is to think about solutions that go beyond conventional lending. Helping clients navigate payments, currency risk, and the mechanics of import transactions is increasingly as important as providing the financing itself," he said.

Alongside currency-related challenges, African agriculture has also experienced rising competition and deeper regional integration.

Mr Van Rooyen said increased participation by commercial players across agricultural value chains has improved efficiency and encouraged productivity gains.

Although stronger competition has placed pressure on profit margins in some segments of the industry, he argued that it ultimately contributed to the long-term development of the sector.

 At the same time, regional integration has accelerated through growing cross-border trade, expanding processing networks and increasing investor interest in regional agricultural strategies.

 Logistics companies and agro-processors have increasingly structured their operations around regional supply chains rather than individual domestic markets.

Looking ahead, Mr Van Rooyen said the future of African agriculture would be shaped less by expansion in cultivated land and more by improvements in productivity and efficiency.

He noted that medium-scale farmers have increasingly achieved better results through incremental improvements rather than large-scale transformation projects.

Such improvements included greater use of agronomic data, more accurate soil analysis, improved fertiliser application rates and better systems for monitoring yields.

He added that precision agriculture technologies have helped farmers reduce waste, improve resource utilisation and increase profitability.

Access to timely market information, including commodity price movements and optimal selling periods, has also become an increasingly important factor in improving farm performance.

"The technology to support all of this is more accessible and more affordable than it has ever been. At the end of the day, the fundamentals of good farming practice and sound financial management remain the foundation," he said.

On the policy front, Mr Van Rooyen said predictable and transparent regulatory frameworks remained essential for attracting long-term investment into agriculture.

He noted that investments in processing facilities, storage infrastructure and mechanisation typically required extended payback periods, making policy certainty particularly important.

"Investors and financiers need confidence in market stability. Security of land tenure and trade regulations need to be clear and consistently applied," he said.

Countries that have provided greater regulatory certainty, he added, have generally attracted more private-sector investment into agriculture than those characterised by frequent policy changes.

Mr Van Rooyen said Absa has continued to develop financing solutions tailored to the unique characteristics of African agriculture, particularly in equipment and input financing.

He noted that conventional lending models often struggle to accommodate the realities of agricultural production because of high interest rates, limited collateral options and seasonal cash flow patterns.

To address these challenges, the bank is focusing on developing financial products that better reflected the cyclical nature of farm incomes.

The institution is also working closely with clients seeking to import machinery and agricultural inputs, particularly in markets affected by foreign exchange shortages.

Mr Van Rooyen said Tanzania remains an important component of Absa's regional agribusiness strategy, with ongoing engagement with clients helping to shape product development and risk management solutions across the bank's agricultural portfolio.