Africa’s agri challenges
Jobs, food security and net production are very important to ensure Africa can feed itself going into the next decades.
Africa is often described as the world’s youngest continent: 220 million Africans are between 15 and 25 and are expected to be around 350 million by 2030. How can the local market absorb these new workers? How can we ensure that the rural world creates wealth and becomes a job provider on its own?
To address these challenges, the agricultural sector, which currently employs 60% of the African workforce and contributes up to 25% of the continent's gross domestic product (GDP), will have to go through a transformation process.
In order to prosper in a sustainable manner and maintain its food sovereignty, Africa crucially has to produce what it consumes whilst reducing its imports of processed products. Indeed, many opportunities in the agricultural sector are still largely underexploited due to limited access to capital: the sector attracts less than 5% of loans from the continent’s financial institutions, while less than 10% of producers have access to credit.
Traditional sources of financing and investment in Africa’s agriculture sector are no longer relevant, and past experience has confirmed the need for alternative and innovative financing methods such as those offered by the private sector as a complement to development aid. These include risk management tools such as index-based climate insurance that helps farmers mitigate climate risks; collateral products such as warehouse receipt programmes that eliminate the need for external collateral; or private partnerships such as equitable assistance programmes for smallholders that connect agriculture and food companies with farmers, thus enabling bank financing of agricultural inputs to improve productivity.
Obviously, the rapid growth of mobile phones throughout Africa is offering even more opportunities for transformative innovations to improve rural development financing. For example, Nigeria and Kenya were the first countries to develop subsidy distribution systems for farmers for the purchase of fertiliser thanks to partnerships with mobile technology companies and network providers.
In conclusion, let us recall that whilst public sector investment is certainly important for agriculture, private sector is ultimately the driving force behind rural development activity and growth. African states must mobilise all their efforts to create a conducive environment for an increased commitment from the local private sector.
Today, Africa remains the only continent to be a net importer of agricultural products, whilst more than half of African people depend on agriculture for all or part of their livelihoods.
Fati N'zi Hassane
*Fati N'zi Hassane is the head of Programmes, Skills and Employment for Youth, NEPAD
To address these challenges, the agricultural sector, which currently employs 60% of the African workforce and contributes up to 25% of the continent's gross domestic product (GDP), will have to go through a transformation process.
In order to prosper in a sustainable manner and maintain its food sovereignty, Africa crucially has to produce what it consumes whilst reducing its imports of processed products. Indeed, many opportunities in the agricultural sector are still largely underexploited due to limited access to capital: the sector attracts less than 5% of loans from the continent’s financial institutions, while less than 10% of producers have access to credit.
Traditional sources of financing and investment in Africa’s agriculture sector are no longer relevant, and past experience has confirmed the need for alternative and innovative financing methods such as those offered by the private sector as a complement to development aid. These include risk management tools such as index-based climate insurance that helps farmers mitigate climate risks; collateral products such as warehouse receipt programmes that eliminate the need for external collateral; or private partnerships such as equitable assistance programmes for smallholders that connect agriculture and food companies with farmers, thus enabling bank financing of agricultural inputs to improve productivity.
Obviously, the rapid growth of mobile phones throughout Africa is offering even more opportunities for transformative innovations to improve rural development financing. For example, Nigeria and Kenya were the first countries to develop subsidy distribution systems for farmers for the purchase of fertiliser thanks to partnerships with mobile technology companies and network providers.
In conclusion, let us recall that whilst public sector investment is certainly important for agriculture, private sector is ultimately the driving force behind rural development activity and growth. African states must mobilise all their efforts to create a conducive environment for an increased commitment from the local private sector.
Today, Africa remains the only continent to be a net importer of agricultural products, whilst more than half of African people depend on agriculture for all or part of their livelihoods.
Fati N'zi Hassane
*Fati N'zi Hassane is the head of Programmes, Skills and Employment for Youth, NEPAD
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