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A supporting enabling environment in Africa, including role of credit/savings for small-scale farming


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Presentation by James Kinyangi from the African Development Bank at the Land and Water Advantage event on the sidelines of COP23.

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A supporting enabling environment in Africa, including role of credit/savings for small-scale farming

  1. 1. James Kinyangi and Justus Kabyemera, The African Development Bank, Abidjan, Cote D’Ivoire
  2. 2. Agriculture remains a major source of income in Africa; however, untapped potential has resulted in chronic poverty and food insecurity
  3. 3. Smallholder Farmers Benefit from business Opportunities Along the Agricultural Value Chain Input Industry Primary Production First Level Processing Second Level Processing Distribution and Marketing • Input providers • Agro dealers • Mechanizati on, Equipment supply/hirin g • Etc. • Modern farm clusters • Green houses • Livestock • Etc. • Aggregation centers • Cold storage, ripening chambers • Warehousing • Primary processing hubs, • SME value addition • Etc. • Industrial processing • Quality control • Machinery for agro- processing • Etc. • Logistics & transport • Marketing • Packaging & branding • E-Commerce platforms for agro & food products • Wholesale and retail services • Food Services, restaurants • Etc.
  4. 4. Example: Country-level Transformation is already underway across Africa Becoming a major exporting player within 10 years Kenya Exporting horticulture out of Africa Improving yields through modernized input distribution Nigeria Scale farmer registration and input distribution Total horticulture exports, billion KSH Total floriculture exports, million USD Becoming a major exporting player within 10 years Ethiopia Exporting floriculture out of Africa Total farmers registered, million users 97 21 2005 +11% 201420102000 2013 +41% 2016p 550 0.66 178 13 346 20102001 2005 10.3 2013 2014 4.2 2012 GESS was introduced to farmers in April 2012 • Ethiopian Horticulture Producers and Exporters (EHPEA) actively managing the sector • Strong Government support in (1) infrastructure and logistics, (2) access to land, (3) provision of long-term credit and (4) attracting domestic and foreign investors • Strong political will and government support to transform the input supply system • Use of public funds to leverage private-sector investment (i.e. agro- dealers networks) • Leverage mobile technology to achieve scale and provide nationwide access • Strong foreign investor and partner support developing and driving the industry • Contract farming model used to assure consistent supply • Political will to support smallholder farmer development
  5. 5. Unsupportive business environment only one of the barriers to transformation of the smallholder agriculture across Africa Limited coordination of research and development Limited reach of extension to boost on-farm production Poorly organized post-harvest aggregation and transport Inconsistent capacity for effective value addition Poorly developed market linkages and trade corridors Insufficient utilization of inputs and mechanization Under- performing value chains Insufficient infrastructure Insufficient transport, energy, water, waste management and other hard infrastructure, leading to uncompetitive cost structures Undeveloped soft infrastructure including aging smallholder farmers and a lack of skills for commercial agriculture and agro-allied industries Limited access to agricultural finance Real and perceived risk limiting private sector investment High service cost due to small deal sizes, lack of credit data, and low capacity in agricultural lending Limited market attractiveness relative to perceived higher returns outside of the agriculture sector Adverse agri- business environment Unfavorable market access and incentives limiting trade and capacity to produce high-quality products Unsupportive business enabling environment restricting land tenure, water access and general ease of doing business Ineffective sector regulation creating long lead times for new technologies and inconsistent trade policies Limited inclusivity, sustainability and nutrition Insufficient inclusivity of women and youth in agricultural development Limited access and affordability of commodities with high nutrition levels Limited incentives to ensure sustainability and climate- resilient practices
  6. 6. 7ENABLERS to support agricultural growth, productivity and value addition 1) Increase Productivity (TAAT, Mechanization) 2) Value Addition (PHL, Agropoles,) 3) Hard and Soft Infrastructure (Agropoles, Agric Transformation Centres (ATC), Farmers’ Registration, E-wallet) 4) Agricultural Finance (Non-Sovereign Operations, RSFM, AFAWA, SME Finance, Sovereign Risk Support) 5) Agribusiness Environment (Enabling the Business of Agriculture, Land Policy Initiative….) 6) Inclusivity, Sustainability, and Nutrition (Climate Smart Agriculture, AFAWA, Nutrition, Blue Economy, ENABLE Youth) 7) Coordination (Leadership4Ag, Malabo Panel, Agricultural Commodity Platforms)
  7. 7. A supporting enabling environment in Africa includes risk management, asset protection and the inclusion of women and youth RSFMs  Facilities under development in Liberia, Ghana, Rwanda and Uganda  Scoping for Diaspora Bond Action Plans in: Mali, Nigeria and Cape Verde  Enabler 4: Agriculture Finance AFAWA  USD 13.17 million secured for a continent-wide 50 million African Women Speak Networking Platform  Study on table banking under development for Kenya, Malawi, Rwanda and Zambia  Enabler 4: Agriculture Finance  Enabler 6: Inclusion, sustainability, nutrition
  8. 8. Example: UGANDA AGRICULTURAL VALUE CHAIN DEVELOPMENT PROGRAM • The objective is to contribute to poverty reduction and economic growth in Uganda through increased smallholder productivity and marketing of agricultural produce. • The project will focus on three commodity value chains, namely: Rice, Maize and Dairy/Beef value chains; and will comprise of i) Production and Productivity Enhancement, ii) Infrastructure Development, iii) Market Development and Trade Facilitation; (iv) Innovative Financing Mechanism. Description • Project cost is estimated at USD 113 million • To be financed by ADF loan of USD 102 million • The Government of Uganda will contribute USD 11 million. Financing