The meeting also discussed modalities for tripling intra African trade and create a continental apex agribusiness structure to oversee growth of agribusinesses in the continent.
Stakeholders who included seed companies, women enterprise organisations, youth organizations trading companies, cooperatives, farmers, processors and agribusiness consulting firms reached agreements on agribusiness strategy, intra agricultural goods trade and formation of agribusiness apex body.
The significance of agribusiness for wealth creation in Africa has been widely recognised in recent years, a statement issued after the meeting said. GDP growth alone, based chiefly on exports of oil, minerals and agricultural commodities with little or no processing involved, has not led to sustained poverty reduction, it added.
In order to accelerate sustainable growth and development, a rural transformation process is needed to raise the economic value of agricultural commodities and create off-farm employment opportunities for is areas such as post-harvest processing, logistics, finance, marketing or quality management Farming should be seen as a modern industry with distinctive scientific, technological and management inputs: the focus of development assistance must move beyond agriculture, towards agribusiness.
In a typical agribusiness value chain, raw materials and other inputs flow from pre-production to processing and on to end markets. A coordinated mobilization of resources is required to improve the productivity of resource endowments and production factors – land, labour and technology.
This involves enhancing skills and know-how in areas such as management and marketing; capital through finance and investment; knowledge and adoption of quality control and food safety measures, new and adapted technologies such as processing machinery, land preparation equipment, irrigation technology, and inputs adapted to changing environments (e.g. drought-resistant seeds, fertilizers),” the stakeholders agreed in principle. Most of these resources are now held by the private sector.
Private investment flows (both domestic and foreign) in sub-Saharan Africa have been on a steady rise over the past decade; in 2008, private fixed investment represented more than three times the volume of official development assistance.
Several funds have been established in response to a fast-growing interest of private investors in the potential of agribusiness in the developing world and in low-income countries across Africa in particular.
They offer a range of structured products from debt to equity, catering to varying risk appetite of investors, as well as a diverse market from smallholder farming enterprises to large agribusinesses.
Services to agribusiness investors at pre-investment stage include developing pipelines for private finance; sharing basic information on agriculture, agribusiness and value chains; organising workshops for SMEs on innovative sources of finance;
promoting linkages between private finance and development projects in general and, most importantly, exploring synergies between private finance and public investment projects by introducing private investment projects to government officials or donors, and documenting the potential impact of a public investment on the expansion of a value chain.
At post-investment stage, development assistance will reduce transactions costs for agribusiness investors while supporting smallholder farmers by organising the supply side in rural communities; developing wherever warranted out-grower schemes; building processing capabilities in rural SMEs;
improving the productivity, quality and consistency of their output; or facilitating the management of supply chains through the introduction of traceability mechanisms. Substantial and well-coordinated financing, as well as other resources, will be necessary to steer African agriculture to a more productive and efficient path.
Among the main actors in this transformation are farmers and traders; suppliers of fertilisers, pesticides and seeds; rural energy service companies; transporters and processors; and providers of technology or rural finance.
At the end of the chain, domestic and foreign buyers must be guided by strong and coordinated signals in the form of clear and predictable public policies, as well as adequate physical and institutional infrastructure.
This is where national governments, development finance institutions and public aid agencies can best target their efforts.
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