Boosting Africa's Agricultural Growth

Boosting Africa's Agricultural Growth

In mid-September, USAID, the government of Norway, and the World Economic Forum hosted an event on the sidelines of the United Nations General Assembly to discuss how best to help finance Africa’s agricultural growth and find new ways to better support those involved in growing, processing, and selling the food that consumers eat.

The agriculture sector employs two thirds of Africa’s workforce. Yet this fast-growing continent, which is expected to account for one fourth of the world’s population by 2050, still does not grow enough food to feed its people, as outlined by the United Nations’ second Sustainable Development Goal: Zero Hunger.

The elimination of hunger is one of the main objectives of the U.S. Agency for International Development, or USAID. “We're very, very focused on improving access for smallholder farmers, in particular, who produce the majority of food on the continent of Africa, on helping them access more inputs,” said Isobel Coleman, Deputy Administrator for Policy and Programming at USAID.

“Seeds. Fertilizer. Financing. Tonight's event was about increasing access to financing - not in a micro-sense, but in a bigger sense. ”

These are agricultural businesses who are beyond the need for microfinancing, but who are not big enough to work with many major banks.

“Financiers think of ... investing in agriculture in Africa as very risky,” said Isobel Coleman. This is why USAID launched the Financing for Agricultural Small-and-Medium Enterprises in Africa Fund, which has the potential to support 500 agri-SMEs and 1.5 million smallholder farmers. It is intended “to help de-risk the process for investors, to help by putting in grant money, plus some grant money from the government of Norway,” said Deputy Administrator Coleman. “Our goal is to start with $70 million but get to at least $200 million.”

“If a company runs into trouble, that donor money will be the first loss. We'll take the loss first. So, it helps companies that are going to be making bigger investments, leveraging that private sector capital, say, ‘Okay, well, they're going to take the first loss.’ So it de-risks the investment for them. And we hope that this will really surge in additional financing.”

“We're really ... trying to find $1 billion of funding to be able to help some smallholder farmers really grow their businesses, to have a significant impact on systems and value chains in agriculture in Africa over the coming years.”