Africa’s farmers seek private funds to boost productivity

Saturday September 14 2013

By Busani Bafana Special Correspondent

Africa currently imports almost $40 billion worth of food a year, but it should implement measures to attract private sector investment in agriculture in order to reduce its food import bill and increase its self-reliance, experts have said.

“In the next 10 years, African countries should not rely on food aid, but should produce their own food, and buy from within Africa when they run out of food,” agriculture researcher and director of the Barefoot Education for Africa Trust, Prof Mandivamba Rukuni told the press.

“The biggest trick is the private sector putting more money into agriculture. There is nowhere in the world today where you can get the government or industry moving if government and the private sector are not working together.

“Food self-reliance means wealth creation, and farmers should be directly linked to markets. More people will have more money in their pockets if more smallholder farmers are farming profitably, and this can be done,” Prof Rukuni said.

African countries, according to an Alliance for a Green Revolution in Africa’s (Agra) African Agriculture Stats Report launched in Maputo, Mozambique’s capital, on September 4, produced 157 million tonnes of cereals and imported 66 million tonnes in 2010.

In August, the Forum for Agricultural Research in Africa, an organisation that brings together and forms coalitions of major stakeholders in agricultural research and development, put the continent’s current food import bill at more than $40 billion, money it said would be better spent enabling African farmers to become self-sufficient.

African heads of state and government committed themselves to improving agricultural and rural development in Africa in the Maputo Declaration of 2003. The commitment includes the ambitious goal of governments allocating at least 10 per cent of national budgets to agriculture and rural development.

But in the past 10 years, only a few of the 54 African Union member states have made this investment. These include Burkina Faso, Ghana, Guinea, Mali, Niger and Senegal. A further 27 have developed formal national agriculture and food security investment plans.

Agriculture priority

Currently one of the few countries prioritising investment in agriculture is Nigeria. The government developed the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (Nirsal), which seeks to reduce the risk in the agricultural finance value chain by building long-term capacity and institutionalising incentives for agricultural lending. The goal of Nirsal is to expand bank lending in the agricultural value chain.

Nigeria’s Minister of Agriculture and Rural Development Akinwumi Adesina told the press that Nigeria was leveraging $3.5 billion for agriculture from local banks. The government is shouldering the risk in a bid to attract the private sector.

“We are working on new financing instruments that will allow our capital markets to work for agriculture. Agriculture accounts for 44 per cent of our GDP and 70 per cent of all employment but it has only two per cent of all bank lending in Nigeria,” Mr Adesina said.

Meanwhile, Prof Rukuni said that while most African countries have not been able to commit 10 per cent, they have seen the wisdom of doing so.

“Although 10 per cent is a nice figure to talk about, it is not a magic figure. What is more important moving forward is catalytic public financing, where government, its experts, farmers and private sector work together and really understand why it is important for government to invest to trigger private sector investment,” he said.

Citing China, India and Brazil as examples of public-private partnerships at work, Mr Rukuni said it was time for Africans to understand that there is no competiveness in agriculture without governments and the private sector setting joint targets in infrastructural development, for instance.

The Agra report notes that despite having over 70 per cent of prime uncultivated land, land holdings in Africa continue to shrink. This shrinkage has impacted on the productivity of the 33 million smallholder farmers responsible for up to 90 per cent of the continent’s agricultural output.

The Alliance estimates that a one per cent growth in agriculture will increase the income of the poor by more than 2.5 per cent, yet only 0.25 per cent of bank lending in the Common Market for Eastern and Southern Africa region goes to smallholder farmers.

The AU Commissioner responsible for Agriculture and Rural Development, Rhoda Peace Tumusiime, said investment in African agriculture has become more urgent than before and this was reflected in the political movement towards the development of national agriculture plans.