A View from Kampala: How Listening to Entrepreneurs Can Drive Food Security

By Diana L. Caley, Ph.D. - Advisor in the Food Security and Monitoring, Evaluation, and Learning practice at Crown Agents USA | September 14, 2017

Uganda’s entrepreneurs will play an important role in shaping smart agricultural market systems. Based on Crown Agents’ analysis and experience helping Uganda invest in these systems, we recommend an approach that addresses the low-hanging fruit of post-harvest loss. 
Kampala, Uganda’s sprawling capital city, is home to approximately 1.5 million residents and it may be among the most entrepreneurially gifted cities in the world. Entrepreneurs—defined as those who own or co-own a new business that has paid salaries or wages for at least three months—comprise a staggering 28 percent of the adult population. By contrast, the adult entrepreneurship rate is less than 5 percent in the United States and only 2.5 percent in India.

At the same time, Uganda is still among the poorest countries in the world, with nearly 70 percent of its population subsisting on less than $2.50 per day, a trend that has remained constant for the past four decades. During that time, Kampala has absorbed an ever-growing number of migrants, displaced persons, and refugees, who have consistently made up roughly half of the city’s population since the peak of Uganda’s civil war in the mid-1980’s. In short, Uganda’s largest city has benefitted from an almost constant flow of new residents, many of whom left rural areas in search of better economic and social opportunities and a more secure place to live, work, and worship.

Most of these migrants ended up in informal settlements—referred to locally as ‘slums’—where they learned to make ends meet by finding employment or engaging in any number of skilled or unskilled enterprises, from selling charcoal to automotive repair to on-the-go sidewalk pedicures. Today upwards of 60 percent of Kampala residents live in slums and few families have the luxury of producing their own food. This author’s 2016 study of urban food security in Kampala slums found that 96 percent of families (in a representative sample of slum residents) purchased most or all of their food and less than 2 percent produced most of their own. These figures suggest that the city’s most vulnerable residents (those residing in slums) are highly reliant on cash income to achieve household food security.
To increase local and global food supply, one of the lowest-hanging fruits is to reduce the amount of food lost between when crops are planted and reach the hands of consumers.

For the growing number of people worldwide who live in urban areas, access to food hinges primarily on two factors: a family’s ability to earn enough money and the price of food in the market. While progress toward eradicating structural poverty and improving urban livelihood security has proven challenging, the second part of the equation—reducing food prices—may constitute a promising path forward. If markets perform according to the basic laws of supply and demand—such that when supply increases, prices generally tend to fall—one of the most straightforward ways to improve the food security of the urban poor is to increase the food supply. In turn, one of the lowest-hanging fruits in terms of increasing local and global food supplies is to reduce the amount of food that is lost between when crops are planted and food reaches the hands of consumers. 

This so-called “post-harvest loss” refers to the loss of food quantity (volume) and quality (nutrient density and safety). For example, grains, nuts, or other crops contaminated by aflatoxins—dangerous toxins that result from poor drying and storage methods—must be destroyed to prevent consumers (and livestock) from becoming ill. Post-harvest loss has myriad negative impacts on local and global food systems, and reducing it has been recognized as one of the most promising and well-documented pathways to increase local, regional, and global food supplies and improve the health and wellbeing of people around the globe. 

What does post-harvest loss have to do with the urban poor? The food prices that Kampala consumers pay—say 2,400 Ugandan shillings (67 cents) for a kilogram of maize flour, for example—are determined by how much it cost to produce, process, package, and transport the maize from rural farmers to the point of sale in the city. The price that urban consumers see (the ‘sticker price’) can be magnitudes greater than what rural producers received for the unprocessed maize at their farm gate because value is added to the final product at each point along the food value chain from the planting of seeds the previous season to storing the grains to milling the flour to transporting it in convenient packages to urban retailers. Urban consumers are also ultimately paying for food that never actually makes it into the food supply since so much would-be food is damaged or lost between the field and the consumer. There are also important environmental implications of post-harvest loss since land, water, and other non-renewable resources are used to produce, package, and transport foods that are never consumed. While negative externalities like environmental degradation are rarely reflected in the sticker price that urban consumers see, city-dwelling families still end up paying for all of the inputs (such as seeds, herbicides, pesticides, irrigation, land, fuel, equipment, and labor) that were used to produce food that was lost after harvest. 

The key to solving post-harvest loss is to identify and make strategic investments in the efficiency of agricultural market systems. 

The key to solving post-harvest loss—and improving access to lower-cost food for cash-reliant urban consumers—is to identify and make strategic investments to improve the efficiency of agricultural market systems. Investments in agricultural and agribusiness value chains will have the greatest likelihood of success if they are carried out through well-coordinated and logically sequenced efforts by multiple stakeholders, which may include the private sector, public sector, multilateral and bilateral donors, and others. Crown Agents’ work with Ugandan Revenue Authority (URA) is an example of market system investment- working together, we helped the URA develop strategy, policy, and training to improve Uganda’s trade facilitation and revenue collection. Such partnerships will become increasingly important—and attractive to investors—as the private sector recognizes the business case for investing in mutually beneficial market system investments, like post-harvest loss reduction. Multi-national corporations and small businesses alike want to sell more foods that are safe and well-suited to the preferences of their consumers; private and public sector actors want a healthy and productive workforce; and, communities and their elected officials want healthy and resilient families. 

Another key ingredient of these successful partnerships is the inclusion of local entrepreneurs who can bring a deep and nuanced understanding of how local markets function and how to address market failures through highly contextualized regulatory or other improvements. Local entrepreneurs are often best suited to identify how, when, and under what circumstances a business enterprise might make the most strategic “upstream” investments in agribusiness value chains that will lead to the greatest “downstream” payoffs. A socially-conscious food processing company might want to determine, for example, what financial and social returns they could expect to see on an upstream investment in post-harvest loss reduction in the maize value chain by answering the following questions: would offering a package of financing and subsidized crop storage equipment (e.g. moisture meters and storage silos) to rural farmers reduce aflatoxin and lead to a higher-quality final product and a supply of healthier and more productive workers? Would smallholder maize farmers be interested in risk financing products and services and if so, how might these farmers reinvest those profits into school fees, better meals for their families, or diversifying their livelihoods?
In Uganda, one of the greatest resources that policymakers can employ to answer these questions are the hundreds of thousands of local entrepreneurs who understand what consumers want and how to market high-quality products. In Kampala, entrepreneurs have learned to adapt to rapidly changing demographics as the city absorbed migrants from different cultural, ethnic, and language-sharing groups from across the country, continent, and beyond. 
Those of us in the business of addressing the urban hunger should start tapping into the local expertise, knowledge, and insights of local entrepreneurs to determine how, when, and under what circumstances small upstream investments will pay the greatest dividends in terms of reducing post-harvest loss and increasing food security.

Dr. Diana L. Caley, a social scientist and international development practitioner, is an Advisor in the Food Security and Monitoring, Evaluation, and Learning practice at Crown Agents USA, in Washington, DC. A Returned Peace Corps Volunteer (Morocco), she has conducted research and implemented development assistance programs in Egypt, Iraq, Mexico, Peru, Uganda, Tanzania, and Yemen. Dr. Caley holds a B.A. from George Washington University and a Ph.D. from New York University.