Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

18 March 2013

Unlocking the Potential of Agribusiness

A new World Bank report titled Growing Africa explores the  role of agribusiness in creating jobs and reducing poverty in Sub Saharan Africa.
  • Africa has a huge challenge to create jobs, especially for the 25 million young people who will enter the labour force each year by 2025.
  • Agriculture and agribusiness together are projected to be a US$ 1 trillion industry in Sub-Saharan Africa (SSA) by 2030 compared to US$ 313 billion in 2010.
  • Agribusiness can play a critical role in jump-starting economic transformation through the development of agro-based industries that bring much-needed jobs and incomes.
  • The attention focused on production agriculture will not achieve its developmental goals in isolation from agribusinesses, ranging from small and medium enterprises to multinational companies.
  • The challenge is thus threefold: (1) develop downstream agribusiness activities (such as processing) as well as upstream activities (such as supplying inputs), (2) develop commercial agriculture, and (3) support and link smallholders and small enterprises to productive value chains.
  • Private sector interest in African agribusiness is unprecedented. The past decade has witnessed an upsurge in interest from the private sector in African agriculture and agribusiness, including interest from foreign investors and investment funds. The challenge is to harness investors’ interest in ways that generate jobs, provide opportunities for smallholders, respect the rights of local communities, and protect the environment.
  • The growth of competitive agribusiness in Africa is severely constrained by the low use of modern inputs and limited access to improved technologies
  • Irrigation is critical to increase and stabilize production, reduce risks, and provide the basis for higher-value agriculture. Given the severe constraints on public sector resources and capacity, tapping private capital and management skills will be essential to accelerate investment in irrigation.
The report cites AgDevCo as an example of an innovative financing facility which can help early-stage agribusinessess overcome the challenges of operating in frontier markets.