Scaling up agricultural financing in Africa

Africa, rich in natural resources and arable land, holds immense potential in the agricultural sector. However, despite having 25% of the world's arable land and the youngest continent, Africa still faces challenges in financing the agricultural industry. The African Green Revolution Forum brings to light the complexities and means of scaling up agricultural financing in Africa. Sanajala, the Regional Director for East and Southern Africa at the International Fund for Agricultural Development, sheds light on the key issues surrounding agricultural financing on the continent. President Canayo's vision of agriculture as a business rather than just a poverty alleviation exercise highlights the need for increased investment in the sector. With vast potential in agriculture to reduce poverty significantly, Africa has yet to reach the goal of investing 10% of public sector resources in agriculture. Only a few countries have fulfilled the Malabo and Maputo declarations, promising to allocate 10% of their budgets to agriculture. The low levels of investment in research, mechanization, and infrastructure have resulted in low agricultural productivity, making Africa the least transformed economy globally. The dependence on foreign investments and the outflow of revenue from the agriculture sector further emphasize the need to aggregate resources from within the continent and external funds. Sanajala advocates for public-private partnerships to catalyze investments, create value chains, and promote finance inclusion for rural households and small enterprises. By leveraging both public and private sector funding, Africa can drive sustainable development in the agricultural sector. One of the challenges in agricultural investment is the perceived risk versus the actual risk. Banks often struggle to understand the realities on the ground, while farmers face financial literacy issues. The International Fund for Agricultural Development supports rural financial services and creates an enabling environment for private sector engagement. By mitigating risks associated with agricultural investments, such as climate change impacts, Ifad empowers smallholder farmers to access credit and build resilient farming practices. Through initiatives like attracting youth to savings cooperatives in Uganda, establishing climate resilience programs in Rwanda, and equity financing partnerships in Uganda, Ifad is paving the way for sustainable agricultural development. By investing in the capacity building of farmers, creating viable business plans, and providing additional resources for climate adaptation and risk management, Ifad is unlocking the agricultural potential in Africa. As Africa looks to transform its agricultural sector and boost food security, addressing the financing challenges and seizing the investment opportunities will be crucial. With the right mix of public and private sector support, Africa can harness its agricultural abundance to drive economic growth, alleviate poverty, and create sustainable livelihoods for millions across the continent.