Growth in rural Africa is possible through innovative financing

I believe we are about to energize the agricultural sector in Africa, creating sustainable and inclusive growth. However, we are not there yet.

Last year, close to 100 investment commitments were made by private sector companies under the respective frameworks of the Grow Africa partnership and the New Alliance for Food Security and Nutrition. These were framed to support African-led, country-specific strategies for inclusive agricultural growth. In less than one year, all commitments have seen progress; 40% of these have progressed to an actual investment phase on the ground. This represents a new level of confidence and trust within the private sector, both from local and international companies.

Though good progress has been made, I have to admit that I am also quite impatient. From a private sector perspective, we face policy and regulatory issues on the ground, which are obstacles for rapid implementation. Examples include import and export costs, red tape that is hampering regional market development, and clarity on land tenure issues.

I would like to highlight the importance of land rights as it is a key driver for me in an effort to make small and medium-sized African farms into viable businesses. The basis for successful rural development is investing in more productive farming. If the farmer can’t be sure that he or she will benefit from such investments, why invest? Proper governance structures and legal reform to ensure clarity on land rights is a foundation stone.

At the global level, I find clear evidence of strong leadership and an entrepreneurial spirit. However, another imperative is to bring this constructive and problem-solving attitude down right through the respective organizations and link it to innovation taking place on the ground. Only with a complete top-to-bottom, solution-oriented approach will we ensure that the necessary transformation takes place.

Another reason why I am impatient is the slow dissemination of innovative financing. We see examples of successful intervention in the Beira corridor in Mozambique where, triggered by initial catalytic financing and technical support, farmers and companies are beginning to thrive in emerging agribusiness clusters. Meanwhile, in Tanzania partners have spent years just on establishing the process for setting up a catalytic fund.

Given the importance of innovative financing, all partners involved should learn from these two experiences. The Beira case should be duplicated and multiplied, while the challenges experienced by the partners in Tanzania should be understood and removed to speed up the momentum.

I urge all involved to help establish innovative financing that is adapted to the needs at the farm level. This is urgently needed to nurture emerging clusters and farmer collectives, where entrepreneurial farmers and businesses can respond to opportunities.

Author: Jørgen Haslestad is President and Chief Executive Officer of Yara International.

Image: A farmers harvests artichockes in Algiers REUTERS/Louafi Larbi