The African Development Bank (AfDB) has provided a roadmap to the growth of agriculture in African countries with a plan to inject nearly US $2.4 billion every year for 10 years to build roads, irrigation infrastructure and storage facilities within Africa to attract high-value investors.
AfDB President Akinwumi Adesina says the Bank has embarked on a comprehensive programme to provide financial guarantees to farmers as well as investing large amounts of resources to build rural feeder roads to connect farmlands within African countries to improve the free movement of produce.
“Agriculture is a money-making business. Agriculture is like gold dust because you do not know what it is until you process it into a finished product,” the AfDB President said in an address to guests attending a session on “Transforming African Agriculture into a lucrative Business,” at the 52nd session of the Bank’s Annual Meeting on May 22, 2017 in the city of Ahmedabad, Gujarat State, in India.
The investment into agriculture sector is meant to position the sector in various countries as a profitable sector. This will attract investors and large-scale financiers, which would make it possible for small-scale farmers to break new barriers in finance and banking by accessing longer-term credit.
The Bank’s approach to transforming agriculture is part of its headline goals known as High 5s, which include ways of improving the economic well-being of the African population through focused investments in energy, regional integration, industrialisation and healthcare.
President Adesina said even though governments have previously got their priorities wrong by classifying agriculture as a social investment, the Bank has embarked on a process to rectify this approach by providing the basic requirements for an industrial uptake fueled by agriculture.
“Agriculture is the thing that feeds the world,” President Adesina reiterated. “The size of the agriculture food imports and trade would increase to US $1 trillion by 2030. Agriculture is a lucrative business. This is more so true because the world’s richest black man, Nigeria’s Aliko Dangote, is also betting big on agriculture by putting in US $300 million into food processing. It does tell you where to go.”
Investments in agricultural production have fueled economic growth in countries such as Kenya, Ethiopia and Uganda, which are major exporters of coffee, tea and cut-flowers.
The AfDB President believes agriculture, which is critical to the economic stability of African countries because high food prices and cost of imports affect the stability of local currencies, is now receiving better attention from Ministries of Finance and Governors of the Central Banks.
Khaled Sherif, Vice-President of the AfDB responsible for Regional Development, Integration and Business Delivery, told the session on “Transforming Agriculture into a Lucrative Business” that the rising share of agri-businesses as a segment of African economies demonstrated its lucrative nature.
Agri-business processing companies have steadily risen to account for 65 percent of the overall economy of Africa, which demonstrates that indeed Africa could steadily march towards its industrialisation path with agriculture as the driving force, powered by a vibrant banking sector and infrastructure.
According to Ada Osakwe, the Chief Executive Officer of Agrolay Ventures, a Nigerian agri-business start-up which has been able to re-invest profits and is looking to expand to East Africa, the packaging of fruit juices and fresh produce stands as a major sector for growth of the agri-business enterprise in Africa.
For more on the meetings: www.afdb.org/am