Africa needs about 1.25 million US dollars to boost agribusiness, a highly lucrative sector which has been slowly growing due to lack of funds, according to a newly released report by the Alliance for Green Revolution in Africa (AGRA).
Africa Enterprise Challenge Fund Chairman Paul Boateng said at the ongoing Africa Green Revolution Forum in Nairobi on Tuesday that the huge financial gap presents a window of opportunity for banks, venture capital firms and other lenders to push business in agriculture related products to new heights.
Mr. Boateng said the lack of financing has seen many agribusinesses stagnate making it difficult for Africa to realise its true agribusiness potential.
“We need banks, foundations, venture capitalists to do more, but for that to happen we need political will as well as investor will, we also need partnerships with innovative farmers, enterprise farmers, Small and Medium sized enterprise and large scale multinationals underpinned by a commitment towards agriculture in Africa,” he stated.
He said African countries needed to focus on delivery rather than commitments and implement the Maputo Declaration 2003 commitments to invest 10 percent of national budgets to agricultural development.
According to African Agriculture Status Report (AASR) launched in Nairobi on Tuesday, countries that invested in agriculture reaped benefits of food security and strong economic growth.
The report shows that a decade of intense domestic attention to farmers and food production had generated the most successful development effort in African history. “The last ten years have made a strong case for agriculture as the surest path for producing sustainable economic growth that is felt in all sectors of society and particularly among poor Africans,” said AGRA President, Agnes Kalibata.
According to the report, after decades of stagnation, much of Africa has enjoyed sustained agriculture productivity growth since 2005, and as a result poverty rates have declined in places like Ghana, Rwanda, Ethiopia and Burkina Faso.
It noted that agriculture had its biggest impact to countries that moved quickly to embrace the African Union’s Comprehensive African Agriculture Development Programme (CAADP) which was created in 2013.
A key component of CAADP was its call for African governments to allocate 10 per cent of national budgets to agriculture and aim for six per cent growth to the sector.
The report says there were promising development of products like crop insurance tied to weather indexes, farm loan programmes that share the risk among many participants, and innovative uses of mobile banking services and microfinance, but notes only about six per cent of rural households in sub-Saharan Africa are borrowing from formal financial institutions.
Investments allocated to agricultural research and extension services has fallen precisely when they are needed most, the report states. “At a time when climate change is producing intense demand for crop varieties and other innovations that can help farmers adapt, investments are not keeping up.
For example, expenditures in Zambia, Malawi, and Tanzania in 2014 represented only 1.4 percent or less than overall budget allocations agriculture,” the report underlines.