AfDB’s Role in Efforts to Develop and Invest in Africa’s Agriculture

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From: 29/09/2009
To: 30/09/2009
Location: Nairobi, Kenya

Tunis, Tunisia, 25 September 2009 – The African Development Bank (AfDB) Group will participate in the 4th Annual Humanitarian Development Summit scheduled to take place from September 29-30, 2009, in Nairobi, Kenya.

The event will bring together government officials and key decision-makers in the aid and development community. This year’s event will focus, in particular, on investing in African infrastructure and agriculture, both a priority for the AfDB. At the event, the Bank will lay special emphasis on agricultural investment in Africa. Africa’s agriculture has a huge potential given the continent’s good climatic conditions. However, low agricultural productivity and high post-harvest losses, as well as poor infrastructure, especially in rural areas, are just some of the challenges and constraints the continent’s agricultural sector is facing.

According to AfDB agriculture manager, Chiji Ojukwu, the food crisis has clearly indicated that the quantity and quality of investment in Africa’s agricultural sector were inadequate. Not only were donors reducing their assistance to the sector, the assistance was also not effective. During the event, Mr. Ojukwu will underscore, on behalf of the AfDB, the need to invest in the continent’s agricultural sector. This situation calls for all African member countries and partners to mobilize additional resources in support of agriculture with more results-based interventions within the framework of the Comprehensive African Agriculture Development Program (CAADP). Most importantly, they should honour their commitment to the Maputo Declaration to allocate above 10% of national budgets to agricultural and rural development.

Funding for agriculture has always been one of the key strategic priorities of the AfDB. Between 1967 and 2008 the AfDB approved a total of 3,276 loans and grants, totaling UA 44.75 billion, approximately USD 70 billion; with the agricultural sector netting 16.1 per cent. In terms of emergency and humanitarian assistance, the Bank continues to support victims of natural disasters across the continent whenever they occur. Between 2004 and 2008, Bank support to emergency/humanitarian assistance totaled UA 20.3 million, around USD 32 million. In 2008 alone, the AfDB provided a record number of emergency humanitarian assistance totaling UA 2.97 million, around USD 4.65 million, including the control and eradication of avian flu in its regional member countries.

The development of agriculture should get the attention it deserves and a plan for agricultural recovery needs to be part and parcel of any plans for financial recovery. The critical role of regional financial institutions, including the AfDB becomes imperative in this drive, and should be fully recognized and realized. The Bank’s Medium Term Strategy is focused on facilitating new agricultural development initiatives.

Agriculture in the African Development Bank’s 2008 – 2012 Medium Term Strategy

Guided by its Medium Term Strategy, the Bank, through the African Food Crisis Response (AFCR), is projected to avail about UA 1.4 billion, around USD 2.19 billion, in the medium to long term to address issues of high food prices and food insecurity.  The Bank has already approved projects in the region of UA 219.61 million, around USD 344 million in 2008, and committed about UA 215.3 million, approximately USD 337 million, in 2009 in support of Africa’s agricultural sector.

AfDB agricultural investments are mainly implemented through infrastructure priority areas, such as expended agricultural and rural infrastructure, including irrigation and water mobilization, rural and farm access roads, livestock and fisheries.

The Bank’s Public Sector manages a portfolio of about 230 Operations with ongoing commitments of about USD 3 billion in 30 African countries. This excludes investment by the institution’s Private Sector Department.

AfDB is currently promoting special agriculture initiatives such as:

  • The African Food Crisis Response (AFCR) that provides a framework for accelerated support to the Bank’s regional member countries affected by increased food prices.
  • The Africa Fertilizer Financing Mechanism (AFFM), which assists regional member countries to increase agricultural productivity within the context of the Millennium Development Goals; and is creating an enabling environment for mobilizing investments needed to increase fertilizer use. 
  • The Agro-Industry Action Plan which became an operational priority for the Bank since 2007.
  • The Congo Basin Forest Fund (CBFF) which intends to improve food security and the livelihoods of the population, alleviate poverty and address climate change challenges by reducing the rate of deforestation in the Congo Basin. The Fund supported mainly by the UK and Norway (initial contribution of £100 million) will be used over a ten-year agreement period up to 2018, to finance Central African Forests Commission (COMIFAC)’s Action-Plan in different strategic areas aimed at conserving the Congo Basin rainforest.
  • The Climate for Development in Africa Program (ClimDev-Africa) that aims at enhancing economic growth and  sustainable development (SD) by mitigating vagaries of climate variability through the integration of  Climate Risk and Adaptation Management (CRAM) into pertinent sectoral policy and decision processes throughout the continent. ClimDev-Africa will be implemented under the direction of the Joint AUC-ECA- AfDB Secretariat.
  • Scaling up private sector operations for food security. The AfDB Private Sector Department (OPSM) interventions under AFCR focus on: (i) providing lines of credit to local banks for on-lending to agricultural producers, at the SME level; (ii) direct lending programme focusing on key sponsors or strategic partners actively involved with smallholder farmers; (iii) promoting private equity funds targeting the agribusiness sector; (iv) supporting the development of fertilizer projects; and (v) promoting Public-Private Partnership (PPP) approach to agricultural development. To date, OPSM has approved operations in 2008 and 2009 amounting to about USD 147 million for the private sector.
  • The African Agricultural Fund (AAF) and the African Outgrower Development Fund (AODF) – Private investments in agriculture are important to boost agricultural production and productivity. In partnership with AFD, IFAD, AGRA, the AfDB signed a Memorandum of Understanding (MOU) in April 2009 for the establishment of African agriculture investment fund for an initial capital of € 200 million which is expected to be raised to € 500 million. Similarly, the Bank is also working with the German Cooperation (BMZ/KWF) on its initiative aiming at establishing the African outgrower development fund to boost private investments in all sectors of the continent’s food industry. The Fund will have an initial capital of € 100 million.

As Africa’s leading development finance institution, the African Development Bank is in a unique position to play the role of policy advocacy on the continent, given its location on the African landscape, its mandate and its expertise.