Welcome to AgriBusiness Forum Insights, a series of short interviews with a selection of the AgriBusiness Forum speakers who answer 5 questions about their particular field of expertise that they will be presenting in Kampala.
Meet Namanga Ngongi
President of the Alliance for a Green Revolution in Africa (AGRA)
EMRC: Your organisation plays a vital role in the support and upliftment of smallholder farmers across Africa towards the ending of poverty and hunger, what is your future vision of Africa in say 2020 and what role do they play in it?
AGRA’s vision of Africa in 2020 is a continent that is globally prosperous and food secure. The adoption of productivity enhancing technologies by some 20 million smallholder farmers would have led to a doubling of their incomes and resulted in the reduction of poverty by half for more than 100 million people, members of the farming households. Many more millions would have benefited from access to food at affordable prices. Smallholder farmers, especially women, have a key role to play as they are the major food producers. Their capacity to access inputs such as improved seeds and fertilizers and affordable credit is critical to realising that vision. Increased marketable food surpluses will contribute to reducing inflation and facilitating the creation of off-farm employment is a key condition for poverty reduction.
EMRC: What role does the private sector play in ensuring food security and which specific areas require increased support and investment from the private sector?
Agriculture is the largest private sector activity in Africa although it is not generally regarded as such. The private sector plays a very important role in the delivery of inputs such as seeds and fertilizers and services to farmers including mechanization of land preparation. They also serve as aggregators of produce especially for smallholder farmers thus reducing transaction costs and opening up market outlets. Small and Medium Enterprises and warehouse operators are increasingly setting up processing, packaging and storage units thus increasing the value of agricultural commodities and incomes for the farm sector. The private sector needs to invest more in the production of improved seeds, production and blending of fertilizers, setting up and management of storage facilities and in the provision of financial services including weather-related risk insurance.
EMRC: AGRA maintains that Innovative Financing is key to solving the lack of access to credit for Africa’s smallholder farmers - how do you define Innovative Financing?
Africa cannot depend indefinitely on ODA (official development assistance )to develop its abundant land resources to feed its people. There are considerable financial resources in Africa in both the public and private sectors that can be mobilised and channelled to support agriculture, however, innovative models are needed. Innovative finance is defined by AGRA to mean: developing financing and risk sharing instruments that leverage the resources of the financial sector both public and private into development. These include credit guarantee schemes and weather-indexed risk insurance products. The goal is to create systemic change in the way the financial institutions deal with agriculture.
EMRC: What makes the 2009 partnership with Standard Bank in Uganda and the recent landmark agreement with CBN (Central Bank of Nigeria) and AGRA unique from traditional agricultural financing and loans? How are these partnerships playing out?
Current financial systems do not serve African farmers. Despite the fact that agriculture employs some 70 percent of the population and contributes 35-40 percent of GDP, only 1 percent of commercial bank lending goes to African agriculture. This is due to real and perceived risks of lending to agriculture and the lack of capacity in the banking sector to handle loans to agriculture. AGRA has come up with models for dealing with both issues: reduce risks to banks and build their capacity to develop appropriate lending products for farmers. The partnership with Standard Bank benefited from earlier experience of AGRA’s work with other banks. It helped to unlock $ 100 million for farmers and agribusinesses, all across the value chain in Ghana, Mozambique, Tanzania and Uganda. This is the largest scheme of its kind in Africa. This has generated momentum and today AGRA is working with the Central Bank of Nigeria to design an even larger scheme to leverage some $ 3 billion from commercial banks for investment along the agriculture value chain. In addition AGRA is working with several partners to set up an Impact Investment Fund for African Agriculture to help leverage up to $ 2.5 billion from banks in other African countries.
EMRC: Many intl orgs try to move closer to our over-arching goal of ending poverty across the continent and in this regard, the just-ended African Green Revolution Forum in Ghana called for action. What will you ask at the upcoming pan-African AgriBusiness Forum 2010 in Kampala to make sure your call-for-action is followed up and to further mobilise others?
What is key is the recognition of the key role that smallholder farmers and agriculture play in the fight against poverty and a commitment to invest in aggregation and processing enterprises in rural Africa. This will stimulate the adoption of productivity-enhancing technologies and lead to production of marketable surpluses. That is a sure way to reducing poverty among smallholder farmers who together with their families constitute the majority of Africa’s population. A more prosperous rural population will purchase more of the products produced by the urban sector thus leading to higher employment and incomes. Agribusinesses should take advantage of the financial schemes put together by AGRA and its partners and invest in rural Africa. Poverty can be made history much faster through investments in agriculture.