COMESA EAC HORTICULTURAL ACCELERATOR (CEHA)

BACKGOUND

Horticulture offers significant potential for economic growth, including increases in rural incomes and employment opportunities, across the 21 Member States of the Common Market for Eastern and Southern Africa (COMESA). The horticulture sub-sector also offers significant potential for improving the financial agency of women given the high proportion (>50%) of women who work in the sub-sector along the value chain, from farming to processing and marketing. Given this potential, the Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA), a Specialized Agency of COMESA mandated by COMESA heads of State and Government to integrate smallholder farmers into domestic, regional, and international markets has prioritized building the capacity of the horticulture sub-sector across the COMESA region in its 2021-2031 Strategic Plan. The potential of horticulture has also been recognized by the East African Community (EAC) Member States, as reflected in the EAC’s Fruit and Vegetable Strategy 2021-2031. A COMESA-EAC Horticulture Accelerator (CEHA) was created in 2022 by public and private sector partners to better coordinate policy, value chain development programs, financing, and Research and Development (R&D) of the horticulture industry. The aim of CEHA is to speed up growth of the Fruit and Vegetable (F&V) sub-sector of the COMESA and EAC Regions.

In view of the above, the vision of CEHA is that by 2031, climate-smart horticulture value chains will become a significant driver of income growth, inclusive job creation, and improved nutrition throughout Eastern and Southern Africa. CEHA is initially focusing on three priority anchor value chains (VCs), namely avocado, onion and Irish potatoes as these specific value chains have agronomic, logistical, regulatory challenges and opportunities that are common to many other F&V crops. Therefore, Avocado, Onion and Irish potatoes were selected in 2022 through surveys and were based on:
• production capacity;
• impact potential;
• market growth and value chain competitiveness of the crops;
• alignment to government priorities and degree of development partner investment.

Avocado, onion, and Irish potato can generate a combined USD 230 million in additional value per year for approximately 450,000 smallholder farmers of a minimum viable farm size (e.g., 0.4ha with 60 trees for avocado, 1ha for onion farmers) to meet market demand. Other value chains, such as tomato and cabbage may be added in the near future as will be recommended through the structures of CEHA. The countries of focus of Ethiopia, Kenya, Rwanda, Tanzania and Uganda were selected based on the overall financial contribution of the horticulture sub-sector to the economy of the countries within Eastern part of the Common Market. In Kenya, it is estimated that avocado and Irish potato have the potential to create more than 50,000 and 380,000 additional jobs, respectively. In Tanzania and Uganda, the onion value chain is expected to create more than 230,000 rural jobs to capitalize on strong brand quality and growing demand. The BMGF grant of $5m to ACTESA / CEHA Secretariat over 5 years aims to leverage and influence over $1 billion of current and planned public, private, and donor investments related to the horticultural sector in East Africa (over 50% of which are targeted for Tanzania and Ethiopia). The CEHA will allow for more effective and efficient coordination of public, development agency, and private sector investments around common aims to generate higher impact that these investments made independently of each other.

CEHA STRUCTURES
CEHA has a bottom-up structure where strategic priorities identified by national-level stakeholders, mainly the horticulture private sector drive the priorities at a regional level. It consists of a CEHA Board, National Chapters National/Platforms as well as the CEHA Secretariat managed by ACTESA Secretariat. The CEHA Secretariat will also manage 4 CEHA technical committees, namely Trade, Standards and Marketing Committee, Infrastructure and Value Chains Co-ordination Committee, Research & Development Climate Change Committee and Nutrition, Gender and Metrics Committee. An annual General Assembly is comprised of a much broader set of stakeholders from governments, development agencies, and the private sector which would give COMESA and EAC Member States the opportunity to endorse the CEHA Board recommendations and any other engagement relevant for increased intra-regional horticultural trade.

At the country level, the national platforms will leverage existing structures, where applicable, as long as private sector voices drive market-driven policy and investment decisions. The national platforms would have a similar governance structure as the regional CEHA but comprised of at least 50% private sector representatives from across the national value chain: input suppliers, farmer organizations, processors, trade associations, and exporters. There would also be representatives from government, research, and major donors within the country investing in the fruit and vegetable sub-sector.

CEHA at National Platforms / Chapters will undertake the following:

• Establishing strategic horticultural production and processing clusters with agribusiness incubators throughout 5 targeted countries based on unique comparative and competitive advantage. These would serve to “crowd in” and better coordinate infrastructure (irrigation, power, roads) and processing investments and to leverage counter-seasonal export opportunities. Agribusiness incubators provide SMEs (e.g., nurseries, processors, and mechanization services) the seed-, venture-, and growth-stage capital and technical assistance within a risk sharing framework to allow these fledgling businesses to reach commercially-viability and scale.
• Strengthening supply chains within the clusters through farmer organizations and digitalization, using a processor and/or farmer organization as the entry point to provide financing, technical assistance, and mutually beneficial contracting with farmers in
  collaboration with input suppliers. Capacity building of farmer organizations to collect and market produce, provide financial literacy, and GAP training to farmers, and ensure timely inputs to farmers via a digital infrastructure to coordinate with logistics providers.
• Establishing strategic storage and logistical infrastructure between these clusters and key urban markets, ports, and border crossings. These would be complemented by micro or locally appropriate solutions such as mobile, solar-powered refrigerated containers that can be deployed at commercial farms or at farmer cooperatives or rural trading centres within easy travel distance for producers and easily transported by flatbed truck. A strong chain of custody is essential to providing grading and quality control, securing trade and financial transactions, and helping farmers access finance.

CEHA STRATEGIC FOCUS
The CEHA will facilitate the modernization of regional horticulture value chains across East Africa, leveraging the comparative advantage, infrastructure, and technology in each country by:

• Co-ordinating investments that are primarily private sector-led into production, processing clusters in support of the EAC, COMESA, and individual country horticulture strategies.
• Facilitating policy and standards improvements to stimulate trade, market access for multiple regional fruit and vegetable value chains across the region.
• Facilitating access to both working capital and capex finance, as well as to technical assistance, for processors, farmers, and other agribusinesses across the value chain to accelerate growth.
  The clusters will be based on a region’s comparative advantage in producing and processing a particular horticultural commodity such as variety grown, soil health, resilience to climate change, water requirements, logistical and storage infrastructure, and current level of private, public, and donor investment. These will allow for the collection of produce from farming areas to ensure proper handling, storage, and chain of custody required to reliably facilitate food safety management and financial services. As these clusters develop, CEHA will work together with private sector operator to ensure opportunities for both men and women SSPs to benefit from new and expanding markets are created, in line with line with ACTESA Strategic Plan 2021-2031.

Access to finance, high interest rates and collateral requirements, as well as lengthy processing times, are a constraint to growth. “Affordable and appropriate” financial products were stated as a need by SMEs across the focus value chains, while the lack of long-term credit facilities–especially for avocado given the 3–5-year growing cycle–is a constraint for farmers entering production. Access to certified quality planting material would involve the need for further R&D into improved seed varieties and superior breeder materials (for onion and potato), as well as access to finance for nurseries to ensure a sustainable supply of seeds and seedlings. It would also require the improvement and streamlining of input supply systems (e.g., satellite seed merchandisers, regional seed bulking and storage), improved quality and affordability of plant protection products, including Integrated Pest Management (IPM), and fertilizers, and improved access to mechanization services and water-saving irrigation solutions. There is also the need for improved agronomic practices, which would require better access to extension services, including trainings on use of quality seed/seedlings and growing crops for commercial purposes, strengthening farmer cooperatives, and improved advisory and training services on business skills to a range of SMEs.

The primary mechanism for strengthening value chain and injecting capital into agribusinesses will be based on a matching grant mechanism around three pillars:

1. financial support to millers,
2. capacity building (e.g., financial management., marketing, equipment selection via
   technical consultants), and
3. regional market integration. The clusters will serve as catalytic demonstration for achieving economies of scale in production, processing, and cold storage and logistics along with the policy reforms necessary for improving the enabling environment for farmers and other businesses. The CEHA will identify and work with cooperatives, packhouses, and processors to improve their operations and competitiveness, linking them to farmers, input suppliers, and markets based on existing horticulture investments in the EAC region. The business will need to provide their own capital commitment in a proposal to the CEHA requesting matching grants and/or investment capital along with technical assistance support. This approach is based on the successful matching grants program pioneered by the Foundation and GIZ for the Competitive African Rice Initiative.

The CEHA Secretariat will be responsible for reviewing, selecting, and monitoring matching grants programs with the agribusinesses, and all investments will be approved by the CEHA Board. Improvements to women’s agency and empowerment throughout the value chain will be heavily weighted criteria in the selection of matching grants. The CEHA aims also to become a repository of best practices in horticulture, from agronomy and market research to gender equity and nutrition given the dearth of available data needed for strategy development and investment. The priorities for this research and knowledge creation will be determined by the national platform members and CEHA Board members. Additional initiatives identified by stakeholders that require multi-stakeholder coordination and collaboration include:

• establishing strategic horticultural production and processing clusters within targeted geographies to “crowd in” and better coordinate infrastructure, production, and processing investments,
• strengthening supply chains within the clusters through capacity building of farmer organizations linked to markets and SME processors,
• establishing strategic storage and logistical infrastructure between these clusters and key urban markets and ports, and d) supporting SME growth and small scale producers (SSPs) within the clusters with innovative financing solutions and technical assistance. Over the short term, the business case is strongest for developing market linkages between Small Scale Producers (SSPs) and markets for higher-volume, higher-value horticultural crops whereby the marginal cost of adding more nutritious crops to the value chain are lower and more attractive over the longer term once the necessary infrastructure is in place and can be amortized over greater volumes.

COMESA through ACTESA Secretariat is looking forward to the transformation of the horticultural industry in our region currently at USD4 billion to double or triple in the next 10 years. CEHA will provvide m anany opppport u nnittiees ffor ththe COMESA and EAC Region especially the land owners with access to less than 1 hectare of land. High value fruits and vegetatables are consistentently more profitable than cereals and other common stapple crops, and the demands for these products are increasinng for both domestic and export markets.