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INNOVATIVE financing is crucial for agricultural transformation, wealth creation and long-term prosperity in Africa, according to this year’s Africa Agriculture Status Report. The report, co-authored by the African Development Bank, says while annual public investments in agriculture having risen across Africa, from $186,4 million per country between 1995 and 2003 to $219,6 million between 2008 and 2014, only 13 African countries have honoured their pledge to invest at least 10 percent of public funds in agriculture.
The African Union recognised the challenges of food insecurity and low agricultural productivity present to the long-term development of the continent. In the AU’s Second Ordinary Assembly held in July of 2003 in Maputo, Mozambique, African heads of state ratified an initiative called the Comprehensive Africa Agriculture Development Program.
The program, which is part of the New Partnership for Africa Development, was endorsed as a framework meant to create ambitious institutional and policy transformation in the agriculture sector. Its explicit goal is to “eliminate hunger and reduce poverty.
“If all (countries) that have pledged could make good on their promise, public funding for agriculture across Africa would rise from $12 billion (the amount allocated in 2014) to $40 billion,” said the report, unveiled at the ongoing African Green Revolution Forum.
Lack of adequate funding for agriculture has been cited as a major impediment to smallholder farmers, their organizations, as well as small and medium agro-enterprises, which lack access to basic financial services. The report calls on African governments to urgently step up partnerships with various actors to grow funding for agriculture.
At the same time creating an enabling environment to foster innovation to the benefit of the smallholder farmer is also critical.
The AfDB is one of the main players in agricultural financing on the continent. Between 1967 and 2014, it approved loans and grants to African member countries with commitments amounting to $100,7 billion, of which agriculture and rural development accounted for 12,4 percent ($12,45 billion).
Agriculture is one of the bank’s five key priority areas, also referred to as the High 5s. By 2025, the AfDB expects its Feed Africa Strategy (2016-2025) will, among other things, see about 320 million additional people enjoying access to adequate calories and nutrients, and up to 130 million people lifted out of poverty, representing 25 percent of the estimated 550 million currently living below the poverty line.
To achieve the goals of Feed Africa, the AfDB has earmarked an investment of about $2,4 billion of its resources annually over the 10-year period of the strategy.
The bank will also use these financial resources to leverage additional funding to meet the balance of between $30 billion and $40 billion needed annually to finance this strategy, including substantial increases in private and commercial bank financing.
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