Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) has witnessed a 600% increase in lending by banks to the agriculture sector, rising from 0.7% of total bank lending to 5% within four years. This has since led to banks establishing their own agricultural lending desks and marking the country as one of the nations that have successfully developed a national risk-sharing facility for banks to lend to agriculture.
This was disclosed by the President of the African Development Bank (AfDB) Akinwumi Adesina while addressing participants at the African Green Revolution Forum (AGRF) in Nairobi. While the continent spends US $35 billion on food imports each year, Adesina addressed the challenge of post-harvest losses in Africa, while outlining the importance of policy regulations to end the losses. According to him, “Massive quantities of food crops, fresh fruits and vegetables and dairy products go to waste in rural areas, while Africa depends on food imports.
Underlining the importance of policies to support the establishment of private sector-driven food processing and manufacturing companies in rural areas to deal with the immense food waste, enough to feed at least 300 million people a year, at a session on the Role of Policy in Enabling Public-Private Partnerships to Achieve African Agricultural Transformation”. Adesina said, “that is more than the 250 million people that go hungry each year in Africa.
Adesina added that reports indicate that post-harvest losses (PHL) in Africa are equivalent to the annual caloric requirement of 48 million people, and worth US $4 billion in lost revenue per year. The agro-allied industrial zones and staple-crop processing zones in rural areas, supported with consolidated infrastructure, including roads, water, electricity, will drive down the cost of doing business for private food and agribusiness firms. They will also create markets for farmers, boost economic opportunities in rural areas, stimulate jobs and attract higher domestic and foreign investments in the rural areas. “They will turn the rural areas into zones of economic prosperity,” he said.
For Kenya’s Minister of Agriculture, Livestock and Fisheries, Willy Bett, he said that the country has instituted policies to accommodate crop processing, such as macadamia nuts, the country’s told the forum. “We have changed our policies to include processing of macadamia nuts. We want production and processing to be done here so that we boost the industry and mostly the local farmers,” he stated.
The inability of farmers to access insurance and finance was emphasised as a major setback to agriculture, with Shenggen Fan, the Director General of the International Food Policy Research Institute, blaming this for making farmers susceptible to shocks. He said access to financing was necessary to protect farmers against vulnerability.
Adesina however noted the fact that despite accounting for some 32% of the GDP, the agriculture sector receives less than 3% of the banking sector’s financing. He called on governments to address failures and reduce the risks facing the financial sector that block lending to agriculture.
But investments in science, technology and innovation in Africa’s agriculture are equally important, according to Dominique Charron, the Director for Agriculture and Environment at the Ottawa-based International Development Research Centre. “If you want to transform agriculture, we need to invest in innovation, ICT, science, and help build the capacity of Africa’s farmers in these areas,” Charron told the forum.
She therefore called for part of the financial pledges to agriculture made by several organisations at the ongoing AGRF to be channeled toward innovation, ICT and science. A September 7, 2016 session on “Making Political, Policy and Financial Commitments” saw several organisations, including the AfDB, make commitments to agriculture amounting to over US $30 billion.
