Financing African agriculture: persuading the private sector to commit fully

23/05/2017
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The question of financing African agriculture again featured at the heart of the programme on the second day of the Annual Meetings of the African Development Bank (AfDB). How can the private sector be persuaded to commit significantly in order to meet the need to finance African agriculture? 

A roundtable at the meetings heard that the tools for “mixed financing” and capital must be increased in order to bring private institutional capital to agriculture while improving measures to finance small farmers. Support for small producers is at the heart of the AfDB's Feed Africa strategy to transform agriculture in Africa by 2025, which is in line with the second of its top five priorities (the High 5s): “Feed Africa”.

“Developing agriculture even further helps to reduce poverty, if it is done well. The challenge from now on is how private banks can provide loans to small farmers in order to develop their projects,” said Mark Suzman, President for Global Policy, Advocacy and Country Programs at the Bill and Melinda Gates Foundation.

Mezuo Nwuneli, Managing Director of the Fund for Agricultural Finance in Nigeria (FAFIN), believes that it is now necessary to work with the beneficiaries of loans. He said: “In the current environment, there is money out there. The question is, how do we release it? The private sector must be involved from the outset to create partnerships that can lead to change. These must be regulated by small farmers, who need to be present at the negotiating table, where all parties can be given a chance to speak”.

This idea was supported by Sean de Cleene, Vice-President of Business Development and Strategic Partnerships at the Alliance for a Green Revolution in Africa (AGRA). “You can’t just put seed and fertilizer into the hands of a farmer and expect it to be enough,” warned de Cleene. “We need to know what's happening on the market and establish new programs to free up the markets. Coordination is required between all value chains in order to make agriculture an economic engine that can attract investors.”

“It is not just money that is needed,” added Paul Boateng, president of the Africa Enterprise Challenge Fund (AECF), who also took part in the panel debate. “We also need to help small farmers by providing them with technical assistance,” he said. “We have to aim for something that's sustainable because investors always run the risk of losing money.”

Akinwumi Adesina, President of the African Development Bank, sought to put this argument into perspective: “We have ideas that can work. We just have to know the risks. Most of the time they are exaggerated in agriculture. But when banks see where the money goes, they commit. We are in the process of improving our organization so that we can receive the necessary funding for agriculture. Agriculture must be seen as a profitable business,” insisted Adesina.