International Finance Corporation (2010), Outcomes Report, Regional Agriculture and Food Security Forum 2010. Livingstone, Zambia: April 6-9.

This report summarizes a recent conference that brought together representatives from agriculture, development organizations, and financial institutions to identify ways to improve productivity in African agriculture.

Agriculture contributes as much as 60% of the GDP of many Sub-Saharan African countries, employs 70% to 90% of the population, totals 60% to 70% of consumption spending, and earns 10% to 50% of foreign exchange.  Therefore it is hard to overstate the importance of this sector, however, its funding and productivity lags far behind other regions.

This report reviews the finding of a recent conference on advances in agriculture as a development tool held by the International Finance Corporation, European Union, commercial banks Rabobank and Zanaco, and Dalberg Global Development Advisors in April 2010.  Input was solicited from industry leaders, financial institutions, farmers’ groups, and civil society organizations.  Four goals were identified: maximizing efficiencies through farmer and production support, harmonizing and developing partnerships to improve the enabling environment for growth, identifying opportunities and broadening access to finance and investment, and maximizing social and environmental impact through inclusive private sector strategies.

Small farmers frequently face obstacles in access to services, raw materials, finance, and information.  Large farmers face a more macroeconomic spectrum of problems, including scant incentives for investment, poor data, opaque business cultures, and market distortions due to government interventions.  Conference attendees from agricultural exchanges argued for the need for more transparency, a better legal framework, and less restrictive crop trade regimes.  Finance attendees proposed several strategies to resolve these problems, including guarantee funds, risk mitigation techniques, donor and technical partnerships, and dialogues with other farmers and stakeholders. 

The rather novel conclusion of the conference involved a “market for ideas” in which participants bid on the most promising agricultural development initiatives. 

An outgrower financing option backed by NBS, Illovo Sugar Malawi, and IFC will provide $3.7 million in financing for a 335-hectare community trust farm, the income from which will fund schools, clinics, boreholes, and irrigated gardens.  Second, an index-based weather insurance program in Zambia backed by COMESA/ACTESA, COMRAP, and USAID PROFIT will launch a pilot program for data-driven weather insurance in Zambia.  Third, a grain market expansion program sponsored by Zamace, USAID PROFIT, and WFP will offer equipment on credit in order to promote community grain storage, cleaning, and grading.  Fourth, agricultural activity centers backed by Zamace, EU, and ZNFU will offer storage, lab testing, crop weighing, and financial services to farmers.  Fifth, a small grower mechanization program sponsored by AFGRI Corporation, John Deere, CFU, IFC, and USAID PROFIT Zambia will offer credit and mechanization to smallholders. 

African agriculture is a priority sector for the IFC going into the future.  IFC FY09 investments in African agribusiness increased 38% over the previous year to reach $160 million.  In the near future, IFC priority funding areas include infrastructure designed to reduce crop waste and increase market access (including storage, logistics, and distribution facilities), irrigation, fertilizers and pesticides, linking smallholders into large food processor and food retailer supply chains, smallholder finance, weather insurance, and technology and knowledge transfer.