Innovations Session N°5

Food and Nutrition Security: the contribution of MSMEs and businesses

The recording of the session is available in English and French on YouTube

 

The key role of MSMEs and businesses in producing nutritious food

Making nutritious and safe foods available, accessible, affordable, and desirable for improved nutrition requires action from all stakeholders in the food system, including producers, processors, retailers, and consumers, in both private and public institutions.

Local MSMEs and businesses have a key role to play as they provide most of the food consumed in Africa. They play a key role on the supply chain in domestic markets, generate jobs and income, especially amongst youth, are closely linked to producers and rural areas, know the food preferences of their clients and are rapid adopters of technologies and innovations. SMEs and businesses also serve institutional markets, such as government feeding programs and humanitarian agencies.

However, MSMEs struggle to make nutritious foods affordable to poor consumers in an economically viable manner, due to the high production costs involved. To address a severe impact on the availability of nutritious foods, food insecurity, and hunger in the aftermath of the COVID-19 pandemic, increased support will be needed to improve domestic value chain resiliency, enhance value chain coordination, and foster innovation. This chain is dominated by smallholder farmers and small to medium traders and wholesalers, who transport produce from rural production zones to urban web markets through a web of small to medium-scale traders.

Studies by the Global Alliance for Improved Nutrition (GAIN) recommend a more supportive tax system for MSMEs that produce nutritious food; agricultural policies that support the production of more diverse and nutrient-rich foods; stimulating technology and innovation adapted to the scale of SMEs and transfer of technologies; reducing administrative barriers for MSMEs and facilitate essential business procedures, access to necessary inputs such as credit, infrastructure and energy.

MSMEs should be included in any public- or private-sector efforts to increase the availability, accessibility, and affordability of nutritious foods in Africa. MSMEs are the missing middle in accessing funds and investments as they are too big for micro-finance and too small for commercial lending. Therefore, efforts to increase available financing for nutritious foods producing MSMEs in Africa and other low-income regions is essential to strengthen food value chains and increase the supply of nutritious foods. Private capital – particularly blended finance – has considerable potential to fill the financing gap to unlock more investment in and technical support to MSMEs working in nutritious food value chains.

Agri-food exports from Africa to the European Union are key development enablers through job creation and increased revenues, especially among groups such as youth and rural women. But as importantly contribute to improved food security, nutrition and food safety thanks to the dissemination of knowledge and know-how on aspects such as sanitary and phytosanitary compliance, social empowerment and environmental protection, so that skills and technologies adopted for export markets also benefit production and thus consumption on dynamic local and regional markets.

Key points for discussion on transitioning to nutritious food  

• How African MSMEs and farmers organisations can increase production and marketing of nutritious food in a profitable way?
• What obstacles do they face? What support do they need?
• What incentives can be provided to MSMEs and smallholders to transition towards more healthy and nutritious food and what investments from the public and private sector can accelerate this transition?