How agri businesses can access more capital markets

Access to finance remains a critical setback for farmers in Africa, hindering the potential for growth and innovation in the agriculture sector. In a recent interview on CNBC Africa, Ritma Shukla delved into the challenges faced by agribusinesses in accessing capital markets and explored potential solutions to bridge this gap. With only 2% of total financing going to agriculture and the share of private sector lending to agriculture ranging from 5% to 6% in African countries, it is evident that more needs to be done to meet the financial needs of the sector. The conversation highlighted the need for governments to support the flow of finance and discussed key barriers that must be addressed to improve access to capital markets for agribusinesses. One key challenge identified was the disconnect between producers and capital providers, emphasizing the importance of structuring transactions in a way that aligns with market demands. Another critical issue is the lack of market access for farmers, with the suggestion of leveraging commodities exchanges to facilitate trade. Additionally, the discussion touched on the role of risk instruments in catalyzing financial transactions and the need for greater involvement of development finance institutions (DFIs) in supporting the sector. Despite ongoing efforts to enhance lending for the agricultural sector, the fragmentation of the industry and declining agricultural productivity per capita pose significant obstacles to scaling up agribusinesses. It was emphasized that empowering African businesses to drive food transformation is essential, with a call for governments to provide strategic frameworks and policies to enable their growth. The potential of green bonds as a financing instrument for sustainable agriculture was also explored, highlighting the importance of blending different finance and capital structures to support the sector's expansion. Climate risks and resilience were identified as critical considerations, with a focus on innovative solutions such as carbon credits and asset-backed commercial papers to address the evolving challenges in the agribusiness landscape. The interview underscored the urgent need for collaborative efforts from stakeholders across the public and private sectors to unlock access to capital markets and drive the growth of agribusinesses in Africa.