Authors: John Staatz, Frank Hollinger
Type of publication: West African Papers
Date of publication: 2016
Major drivers of changing food demand in west Africa
West Africa is highly diverse in terms of country size, population densities, agroclimatic conditions, natural resource endowments and economic policies, as well as linguistic, historic and cultural dimensions. Despite these differences, several broad drivers and trends are shaping consumer demand for food in the region. These include:
- Strong population growth. Although a number of authors have questioned the accuracy of official demographic and urbanisation statistics, the broad trends for the region are clear. UN projections indicate that the population of ECOWAS countries is expected to more than double between 2015 and 2050, rising from 349 million to 789 million. Much of this population growth will occur in the coastal countries, where population densities are 6 to 15 times higher than in the Sahelian states.
- Rapid urbanisation and migration. West Africa has experienced explosive urban growth since 1950, with the number of urban residents increasing by a factor of 30, from 5 million in that year to 150 million in 2015. With 43% of its population living in cities, West Africa is the most urbanised region of Sub-Saharan Africa. While metropolitan areas are the main interface with global markets, small cities and towns are the main interface with the rural economy and serve as a means by which urban food habits spread into rural areas.
- Youth bulge. The population is predominantly young, with 44% below the age of 15. This youthful population, increasingly urban and plugged into digital media, is adopting new lifestyles and changing food consumption patterns, spreading different modes of consumption from metropolitan areas into the hinterland. In addition to boosting the demand for additional and new types of food, the youth bulge is also fuelling the demand for new and rewarding jobs.
Growing incomes, but still strong income disparities. West Africa, like much of the developing world, has seen markedly improved economic progress since the mid-1980s. GDP per capita in the ECOWAS zone grew at an average annual rate of 3.8% over the period 2000-15, with all countries of the region except Liberia experiencing positive per capita GDP growth during that period. As West African economies have grown, the middle class has expanded.
The African Development Bank defines the middle class as individuals or families earning more than USD 2/capita/day (in 2010 dollars). In 2010, 25% of West Africa’s population met that definition, accounting for roughly 70 million people. Yet, 53% of these people fall into what the AfDB calls the “floating middle class”, defined as people with per capita incomes of between USD 2 and USD 4 per day. The middle class is concentrated in the three largest countries: 50% live in Nigeria, with an additional 27% in Côte d’Ivoire and Ghana. However, the countries with the highest share of their population in the middle class are Ghana (47%), Cabo Verde (46%), Côte d’Ivoire (37%) and Senegal (36%).
- Growing reliance on the market for food. As the population has urbanised and as rural economies have diversified, West Africans have become increasingly reliant on markets rather than home production as their main source of food. Reardon et al. estimate that between two-thirds and three-quarters of all food (in value terms) consumed in West Africa now passes through markets. These market transactions in the food economy were estimated to total USD 126 billion in 2010.
- High share of income spent on food. Despite the growth of the middle class, 75% of the West African population continues to live at under USD 2 per day. Consequently, consumers spend a large proportion of their income on food, ranging on average from 39% in Côte d’Ivoire to 65% in Nigeria. They are therefore highly sensitive to increases in food prices.
- Changing tastes and preferences. Urbanisation, migration, and broader exposure to electronic media have led to a broadening of food habits, ranging from greater consumption of processed cassava products in the Sahelian countries to the spread of Western-style fast food in some of the larger urban areas. Some of these changes (e.g., expanded consumption of poultry meat in the coastal states) has been facilitated by the availability of cheap imported food products. At the same time, with rising incomes and education, there are also increasing concerns among some segments of the population about the links between diet and health, creating a demand for healthier food products.
Implications for the food system
As a consequence of the drivers discussed above, demand for food in the region is rapidly growing and changing. The most striking changes are an increase in total quantities demanded, a growing demand for convenience, a diversification of diets towards more perishable products, and an increased concern about various aspects of product quality, including cleanliness and healthfulness.
Growth in volume of demand
The growth in population and per capita incomes is fuelling a rapid growth in the total volumes of food demanded in the region. Total population is estimated to grow at 2.5% per year between 2015 and 2020, slowing only to 2.1% per year between 2035 and 2040. Assuming an annual GDP per capita growth rate of 3% through 2020, and an average income elasticity of demand for food to be 0.7, this implies that the volume of food available will need to grow by a minimum of 4.6% per year through 2020.
Growing demand for convenience
Demand for convenience foods that are quick and easy to prepare and consume – is an overarching trend cutting across all countries and income groups. Increasingly pressed for time, consumers are willing to pay for others in the food system (processors, streetfood vendors) to carry out some or all of the food processing and preparation for them, leading to rapidly growing demand for post-harvest activities in the food system.
The most striking changes are an increase in total quantities demanded, a growing demand for convenience, a diversification of diets towards more perishable products, and an increased concern about various aspects of product quality, including cleanliness and healthfulness
In every country, urbanites devoted a higher percentage of their expenditures on processed maize products than did their rural counterparts. More striking, as average incomes increased across countries, the expenditures on processed products dramatically increased. Whereas over 98% of expenditures on maize in rural Niger were for unprocessed grain, city dwellers in Côte d’Ivoire devoted over 84% of their maize expenditures on processed products. The demand for convenience extends to manufactured foods. The processed food for which demand grew the fastest in Nigeria over the period 1998-2011 (at over 11% per year) was Asian-style instant noodles a food that is cheap and which can be prepared quickly by just adding boiling water.
Diet growth and diversification
West Africa’s food demand is becoming more diverse, mirroring similar trends in other developing regions. Food demand is evolving from undifferentiated bulk commodities prepared at home towards food products with differentiated quality attributes such as cleanliness, shelf-life, cooking time, freshness, nutritional content, packaging, labelling and presentation. While price remains a key determinant of demand for the large majority of the population, other product attributes are gaining importance in consumers’ purchasing decisions. The trend towards dietary diversification is especially marked in large coastal countries and urban areas, but also spreading to inland countries, smaller towns and rural areas.
Analysis of data from food balance sheets over a 30-year period (1980-2009) as well as information from budget consumption studies carried out in the 1990s and 2000s document this diversification as well as a striking increase in overall food availability as incomes have grown and the population has become more urbanised. Among the most apparent trends are the following:
- Increased per capita calorie and protein availability. All ECOWAS countries except two experienced increases in caloric availability per capita between 1980 and 2009, a few (Burkina Faso, Ghana, Mali and Nigeria) by up to 50%. Per capita protein availability also increased in most countries, in part because much of the protein consumed is cereal-based and cereal consumption was rising in most countries. In addition, several countries also experienced increases in per capita availability of animal-based protein.
- Diversification among starchy staples. Although starchy staples (cereals, roots and tubers) continue to account, on average, for between two-thirds and threequarters of the calories in West African diets, there has been diversification of these carbohydrate sources. The substitution of rice and to a lesser extent, wheat products for sorghum and millet, while important and widely documented, is only part of the story. The share of roots and tubers in total calories available from all starchy staples increased in 10 of the 15 ECOWAS countries between 1980 and 2009. In part this growth was due to the cassava revolution in some of the coastal countries such as Ghana, Nigeria and, more recently, Sierra Leone, but it also reflected continued strong growth of yam production, a sharp increase in sweet potato availability in some countries like Mali, and increases in consumption of Irish potatoes. The other striking feature was vigorous growth in per capita maize availability among most countries.
- Increased consumption of perishables. Consumption of perishables animalbased products, fruits and vegetables – is expanding rapidly. Along the coast, fish remains the dominant source of animal protein, although consumption of poultry, much of it imported from Latin America and Europe, has increased sharply. In the inland Sahelian countries, the dominant animal protein sources have remained red meat and dairy products. Consumption of dairy products, much of it based on imported milk powder, has also been expanding in the coastal countries. While data on horticultural production in West Africa are notoriously weak, available evidence from food balance sheets, budget consumption studies and the spread of peri-urban horticultural production all point to growing per capita consumption in recent years. The increases, particularly for fruit, have been most marked in countries with rapid economic growth, such as Cabo Verde and Ghana.
- More fats, sugar and alcoholic beverages. Over the period 1980-2009, per capita availability of fat increased in 14 of the 15 ECOWAS countries, declining only in Sierra Leone, where it initially had been highest of all the countries. Average per capita availability of alcoholic beverages (mainly beer) increased in 7 countries. The growing market for beer is offering new markets for West African farmers, as brewers in major consuming countries attempt to shift to more local raw materials, such as sorghum and cassava.
- Concerns about quality and healthfulness. The market reforms of the 1980s and 1990s, combined with rising incomes, have led to greater product differentiation in food markets. This differentiation is reflected in a broader range of formal and informal product grades and increased consumer willingness to pay for various aspects of product quality.
Implications for future food demand and for the agrifood system
The evolutions discussed above imply that West African food systems, particularly the post-harvest components that involve assembly, wholesaling, processing, packaging, and retailing, will face rapidly growing stress in the coming decades. The demand for convenience is essentially a demand for post-harvest services to be applied to raw agricultural products in order to make them quicker and easier to prepare and consume. This implies growing demand for food processing, packaging, logistics and innovative marketing.
The already heavy reliance of West Africans on the market for the majority of their food will grow even more as urbanisation continues and rural incomes increasingly diversify to include more non-farm activities. This growing reliance will put increasing strain on already stressed transport infrastructure, wholesale and retail systems, and personnel with the logistical and marketing skills to face these challenges. The strains and challenges of ensuring affordable product safety will climb as the volume of highly perishable products increases.
Response of the food system to changing demand
The response over the past 30 years from the different levels of West Africa’s food system – farm-level production, food processing, retailing, and policy – to these changes in demand has been mixed.
Production of most agricultural products especially basic food staples such as rice, maize and pulses grew vigorously since 1980, even on a per capita basis. However, for several food products with the most dynamic market demand meat, fish, dairy, rice, vegetable oils and sugar demand outpaced production, resulting in increased imports. In the aggregate, agricultural growth rates were generally below 6%, the target established by the Comprehensive Africa Agriculture Development Programme (CAADP).
The evolutions discussed above imply that West African food systems, particularly the post-harvest components that involve assembly, wholesaling, processing, packaging, and retailing, will face rapidly growing stress in the coming decades.
The rice sector, which is the focus of the most intense government investment and input subsidies since the food crisis of 2008, has been a notable exception to these patterns in recent years. AfricaRice reports that since 2008, 71% of the growth in rice production in the region has been due to yield increases, compared to only 24% prior to this time. A key policy question is whether the high level of input subsidies that contributed to this yield growth is financially sustainable.
Factors that have limited production and productivity growth over the past 30 years have been widely discussed in the literature. They include, among other things, market access and infrastructure-related constraints; weak access to improved inputs, technologies and support services (caused in part by underinvestment in agricultural research and extension); weak rural financial services; elevated production and market risks (ranging from weather-based risks to insecure land tenure and volatile world markets) and inadequate tools to manage them; policy volatility; and weak investments in critical public goods such as rule of law, rural education and vocational training.
Food processing and linked value chains
Most agricultural value chains remain plagued by poor co-ordination and limited trust among actors, exacerbated by underdeveloped marketing and transport infrastructure, and erratic electricity supplies. Scattered production and small marketed volumes – a consequence of the extensive growth model – lead to higher cost for product assembly, sorting and grading. These factors drive up risks and costs facing value-chain actors and limit the transmission of information and incentives from consumers to producers.
For example, unreliable electricity supply from the grid has forced many processors to install costly back-up generators. These costs fall heavily on processors of perishable commodities. Given these weaknesses, retailers and wholesalers often revert to imports to meet urban demand. Likewise, large agro processors targeting some of the most dynamic domestic market segments – e.g., pasta, bread, bakery products, dairy products and fruit juices – rely heavily on imported raw materials.
While the region lacks comparative advantages for large-scale import substitution of some of these raw materials (e.g. wheat and milk), in many cases local raw materials have been used successfully in West African agro-processing, showing the potential for import substitution if supply chains can be organised effectively.
The response of retailers to the evolving demand has varied across different segments of the food retailing sector. Retailing is still dominated by traditional marketing channels, including open markets, traditional wholesalers, neighbourhood stores and food vendors. The traditional retailing system has responded to the evolving demand by greatly expanding both the number of retailers and the scope of their activities. Most striking has been the rapid expansion of street-food vendors, responding to the need of low-income urban workers for fast, convenient meals.
Retailers have also expanded their sale of processed staples and imported canned and dry goods. Traditional open markets have struggled to cope with the burgeoning growth of demand, and are often characterised by crowded and unsanitary conditions. Urban congestion, weak public transport systems and erratic electricity service (which hinders the spread of refrigerators among consumers and hence forces them to shop frequently for perishables) have helped traditional neighbourhood retailers maintain a substantial share of the consumer market compared to larger modern retailers.
Most agricultural value chains remain plagued by poor co-ordination and limited trust among actors, exacerbated by underdeveloped marketing and transport infrastructure, and erratic electricity supplies
However, there are signs that the growth of the modern food retail segment (supermarkets and modern fast-food retailers) has accelerated in recent years. In particular major urban areas have seen strong growth in supermarkets and quick-service restaurant chains and outlets. Over the past five years the sector has seen the entry of regional and international players into both the modern grocery and food services sectors, particularly in Côte d’Ivoire, Ghana, Nigeria and Senegal. Yet, modern food retailing remains underdeveloped relative to the market size, urbanisation levels and economic dynamism of these countries.
The pace of growth and expansion will not only depend on the overall economic dynamism in the region, but also on the ability of investors to overcome the challenges related to the business and operating environments, such as access to finance and real estate, and underdeveloped domestic supply chains. Even in the case of modest growth, the development of domestic supply chains could enable producers to access higher value market segments.
Policy implications and recommendations
West Africa’s rapidly growing and changing pattern of food consumption offers great opportunities and challenges for stimulating greater internally generated growth within ECOWAS, more job creation and healthier diets. Developing a stronger understanding of how consumer demands are changing and adapting policies to respond to these demands will be crucial to mitigating the challenges and exploiting the opportunities.
The design of food system interventions starts with the consumer
In increasingly buyer-driven agricultural value chains, consumers are the ultimate financiers of the food system. Therefore, an improved understanding of their evolving preferences in terms of quality, convenience, safety and other food attributes is a prerequisite for producers to respond better to demand trends and successfully compete with imports. This approach requires improved market information on specific product attributes, more effective grades and standards and better co-ordination among agricultural value-chain actors.
At the same time, consumers of all income brackets need better information on the nutritional qualities and health implications of different food products in order to make informed purchasing decisions. Information on nutritious local foods should be made broadly available and the production and marketing of such food products promoted.
The rising middle class will continue to search for safer and higher value-added foods. Strengthening national food safety systems is therefore important not only for public health but also to enhance consumers’ trust in domestic food products, countervailing the tendency to rely on international brands for their perceived higher food safety levels. Increased capacity to meet higher food safety standards is also critical for promoting exports into higher value and niche markets.
In increasingly buyer-driven agricultural value chains, consumers are the ultimate financiers of the food system. Therefore, an improved understanding of their evolving preferences in terms of quality, convenience, safety and other food attributes is a prerequisite for producers to respond better to demand trends and successfully compete with imports
Key policy recommendations Six elements are key to increasing food system efficiency in order to address the challenges discussed above:
- Improve the quality of public investment ECOWAS/CAADP has stressed the importance of increasing the level of public investments in agriculture up to the CAADP target of 10% of the government budget. While the level of investment is important, a better investment mix is even more important. Public expenditures need to focus more than in the past on improving the performance of the off-farm elements of the food system (such as marketing, processing, packaging and logistics), which are increasingly under stress. At the farm level, public expenditures need to emphasize investments in infrastructure, technology development and farmer support services, rather than just input subsidies, in order to boost long-term productivity.
- Improve rural-urban linkages and intraregional trade The strongest growth in demand for food will continue to come from urban areas, especially in coastal countries. Investments in transport and marketing infrastructure to improve market access, reduce post-harvest losses and expand input markets and support services in the rural hinterland will be critical in allowing West African farmers to capture a large share of this growing demand. Investments in hard infrastructure should also be complemented by improvements in institutional and regulatory soft infrastructure. Examples include reforming rules restricting competition in the trucking industry that drive up transport costs, improving systems of contracting and contract enforcement among actors at all levels in the food system, and designing and implementing grades and standards that provide incentives to producers to invest in upgrading product quality.
- Deepen regional integration Greater regional integration is the key to addressing many of the challenges discussed above. Free movement of goods and services reduces price volatility and allows the development of cross-border value chains. Moreover, to be competitive in a wide range of products with large global actors such as Brazil, China and India, West African agriculture needs to capture
- Build the skills base for West Africa’s food system in the 21st century Transforming West Africa’s food system into a modern driver of economic growth will require a profoundly different set of skills at all levels of the systems than currently exist in most ECOWAS countries. Needed actions include strengthening basic literacy, particularly at the farm level; linking curricula (e.g. in mathematics and biology) in primary and secondary schools to applications in farming and agro-industry; expanding vocational education programmes in the large range of technical skills needed by workers in a modern food system; attracting more girls to the sciences, given the important role that women play in West African agriculture; and broadening undergraduate university education in agricultural faculties to include fields that are crucial to downstream areas of the food system, such as food science, packaging and logistics.
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