Two sides of the same coin: Attaining food security and export growth in agriculture in Africa

In Nairobi this week, business and policy leaders from the United States and Africa are gathering for the 8th annual U.S. – Sub-Saharan African Trade and Economic Cooperation Forum, known as AGOA.  This year, the forum tackles a crucial issue: how Africa can take full advantage of the export opportunities offered by trade with the world’s largest economy.

For Africa’s smallholder farmers—who dominate the agricultural sector—the challenge involves access to finance and to markets.  The solutions require public and private investments to transform Africa’s smallholder-based subsistence agriculture into a highly productive, efficient, sustainable and competitive system.

Agriculture represents one-third of the gross national product of sub-Saharan African countries, and employs two-thirds of its workers. Most of these are smallholder farmers who cultivate a hectare or less of land, and produce one-quarter the average global yield.  Sound investments could quickly and sustainably double or triple this current low yield, and do so while protecting the environment.  This will enable Africa’s smallholder farmers to feed the continent, and, ultimately, to help feed the world.

The investments needed to trigger such profound changes have been calculated at up to US $39 billion a year for all of sub-Saharan Africa.  The funds will come from a variety of sources: from African governments committed to allocating 10 percent of their annual budgets to agriculture; from international partners; and from a range of private sector investors, including Africa’s own commercial banks.

The latter represents a largely untapped source of funds for agriculture. Although farmers have long been considered “too risky” for lending, we have recently seen close to US $200 million dollars in market-based and low-interest loans availed to them from African banks. This money is available to smallholder farmers, small-scale agricultural businesses, and African entrepreneurs across the value chain. The seeds of these partnerships are beginning to bear fruit in many parts of Africa.

In Kenya, Equity Bank’s program with AGRA and the International Fund for Agricultural Development, Kilimo Biashara, has availed nearly $10 million to thousands of farmers and agribusinesses. Rural agro-dealers and suppliers have used the loans to stock their shops with improved seeds and appropriate fertilizers.  Farmers have used them to purchase these inputs and thus increase their yields.

AGRA would like to leverage an additional $4 billion in financing for smallholder farmers and agricultural value chains over the next five years. Such financing can help fill a large gap for cash-strapped farmers, who otherwise have little to invest in their farms, and whose unsustainable farming remains a poverty trap for millions.

Such financing is especially important to women farmers, who produce 60 to 80 percent of Africa’s food, yet receive less than 10 percent of rural credit.  To unleash Africa’s agricultural potential, women farmers need full and equal access to finance – as well as to land, technologies, extension services and markets.

Such access will enable farmers to produce an abundance of food.  But raising productivity is not enough.   Farmers must also be able to get that food to markets.  To link farmers and markets, investments are needed: in adequate storage to reduce post harvest losses; market information systems; food processing and other forms of value addition; in strengthening farmers’ associations and ability to negotiate; and in developing the underlying infrastructure.  The region must also develop a unified grading system for agricultural products that meets rigorous standards for trade.

Given the scale of investments needed, AGRA is focusing its efforts on directing resources and building partnerships in areas that have the best chances of success—the breadbasket regions of Africa.  Here, integrated programs in seeds, soils, market access, policy reform, water management, and infrastructure development can initiate a cascade of changes across the agricultural system.  In addition, AGRA supports innovation and spreads success wherever possible.  Beyond breadbaskets, it is important to boost farm incomes across even wider and more challenging environments.

AGOA can open up important market opportunities for agricultural produce from Africa. The challenge will be to produce enough, and to meet the standards required to qualify for AGOA market access. If agricultural productivity remains low, food insecurity and hunger will remain the norm, and export opportunities will be lost.

The US and Africa should invest in stimulating more rapid agricultural growth for millions of Africa’s smallholder farmers, enabling them to feed themselves and earn higher incomes from expanded markets.  Only then will the benefits of AGOA reach those who matter most: smallholder farmers, especially women.

by Namanga Ngongi

Dr. Namanga Ngongi is President of the Alliance for a Green Revolution in Africa (AGRA)

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