After years of neglect, banks, private equity funds and microfinance institutions are bringing capital to African agriculture
Africa’s agriculture sector has struggled to access the financing it
needs for sustained growth. In part, a perceived combination of high
risk and modest returns – as well as the costs of extending traditional
banking infrastructures in rural areas – has deterred many banks and
financial institutions.
“There can be failures in critical infrastructure such as inadequate
cold storage facilities, unexpected disruptions in commodities trading,
lack of adequate feeder roads to production areas, inadequate dry
storage facilities, and congested ports prohibiting the export or import
of products on time,” says Chomba Sindazi, director of Standard
Chartered’s solutions structuring team for Africa. “And there can also
be delays in the supply of critical inputs such as fertilisers, seed and
fuel because of difficulties in getting goods to market. This is a
particular problem in landlocked countries where it can sometimes take
as long as four months to get the inputs to the required areas.”
Without tackling these constraints, and their knock-on effect on
lending, talk of Africa’s green revolution is premature. But solutions
are emerging at last, as banks, NGOs, micro-lenders, governments and
investment funds make inroads into the continent, bringing much-needed
capital to bear.
For large banks, Africa’s rural sector was long seen as a problem.
Just 10 percent of Africans with only primary-level education – which is
the majority of those in rural agriculture – have a bank account,
rising to 55 percent for those with a post-secondary qualification. But
rather than writing off this population, forward-thinking banks have
sought to find new vocabularies to speak to them. Togo-based Ecobank has
proven popular for its simplified language and procedures, which are
more accessible to a wider range of customers than global banks.
Standard Bank, which has operations in nearly 70 countries
worldwide, has also reviewed processes to suit the kinds of financial
information more commonly found in the informal and small-scale sector.
It has also broadened its range of services to include technical
expertise for lendees. The combination of lending and advisory services
is critical, helping the bank protect its portfolio, and helping
customers gain credit and repayment track records.
Standard Chartered shows the same trend. Instead of looking to
traditional collateral, Standard Chartered uses the value of the
commodity being financed as collateral for input financing – as opposed
to conventional mechanisms where collateral is secured through physical
assets and balance sheets. According to Mr Chomba: “Risks associated
with the cultivation of a range of soft commodities are mitigated
through a customised multi-peril insurance policy, and operational
issues are addressed through physical inspection and regular reporting
by a team of independent specialised contract managers and insurance
companies.”
The arrival of major banks bodes well for the efficiency of the
sector overall. “Banks are interested in investing in businesses and
entrepreneurs that are going to make money and are going to pay them
back – either interest or return on some form of an equity. As
businesses that are profitable come into the agricultural value chains,
that is going to bring in the financing that will support those
businesses,” says Gary Toenniessen, managing director at The Rockefeller
Foundation.
Taking equity
Equity financing provides an interesting – and fast-growing – source
of capital. According to the Emerging Markets Private Equity
Association, total private equity capital raised for sub-Saharan Africa
in 2012 was $1.4bn. Agribusiness is proving one of the primary draws.
The Carlyle Group, one of the world’s largest private equity firms, made
its first Africa play late last year, as part of a consortium that
included Pembani Remgro Infrastructure Fund and Standard Chartered
Private Equity.
The fund invested $210m in the Export Trading Group (ETG), a
Tanzanian agribusiness with interests in 29 African countries. ETG,
which manages both intra-African and global supply chains and has more
than 7,000 employees, says the investment will enhance its ability to
connect African smallholder farmers with consumers around the world. The
capital will expand the company’s geographical reach while adding to
the quantity and variety of products – which currently includes
commodities ranging from sesame seeds and cashews, to rice and
fertiliser.
Private equity can bring broader structural changes too. A part of
the Carlyle consortium investment will go towards building
infrastructure to allow processing to take place in east Africa.
“Typically the margins in processing are much greater than they are in
pure acquisition and distribution, so part of the capital will be used
to put up processing facilities around the continent,” says Marlon
Chigwende, managing director and co-head of the sub-Saharan Africa
buyout advisory team at Carlyle Africa.
Other PE funds and investment actors are also showing a strong
interest in African agribusiness. Phatisa’s African Agriculture Fund,
which focuses on small and medium-sized enterprises, signed its first
deal in 2012, backing Cameroon’s West End Farms. The same year, Morgan
Stanley Alternative Investment Partners and Capitalworks bought out
South Africa’s Rhodes Food Group.
Thursday, 30 October 2014
Friday, 15 August 2014
Friday, 25 July 2014
Corporate Farmers TV Reality show by Olusegun Obasanjo Foundation
Akin Alabi is a young Nigerian,
inspired by food policies adopted by H.E. Olusegun Obasanjo’s
governments during his time as leader of Nigeria and the resurgence of interest
in Agri-business. He has come up with a unique concept to motivate more
African Youth to venture into the Agro-Business arena via “Agrotainment -
As economic development in the
African context has moved to secondary and service industries in recent years,
the Abandonment of rural enterprise in Nigeria and other parts of Africa is
growing by the day. Factors which make the young and old migrate from rural to
Urban settings include Overpopulation, loss of interest in Agriculture, climate
change (including drought and failed rains), poverty and insecurity.
Corporate Farmers Tv Reality
Show is the first to be developed in Africa as an “Agrotainment” platform whose
mission is to lure the Youth back to the farm and bring passion for economic
empowerment through agribusiness.
The inspiration for this project is
in no small part to celebrate the living legend farmer, the only Agbeloba of
our generation Chief Olusegun Obasanjo. It is our hope that the participants in
the show will emulate Baba’s passion for agriculture. The concept was born to
bridge the need to improve the Agriculture sector in the country in which both
the Federal Government and State governments appear to be pursuing with
dexterity, the growth of Agriculture through the AgricultureTransformation A g
e n d a (ATA)·an initiative of the Federal Ministry of Agriculture and Rural
Development under the ministerial leadership of Dr Akinwunmi Adesin
How it will work: 40 various youths
in groups of 5 to 8 will be selected to live in the “Farm House” 3 months.
What will they do? : The project is
scheduled to run for a period of one year broken down into 3 sections
First : registration, selection and
Auditioning of contestants to choose the 40 young Farmers that will enter the
farm house
Second Quarter: 40 contestants
enters the farm house for a period of 3 months to do Agriculture in
another dimension via our Agricultural Technical team from IITA , Agricultural
Society of Nigeria. After which 5 will be selected as winner for the
Corporate Farmers TV Reality show season 1.
Third Quarter: This period is the
time to celebrate Agriculture in Nigeria and Africa through the first Nigeria
Agrotainment Award to celebrate Farmers, youth, and Federal states who have
contributed to the resurgence of Agriculture.
Kindly follow any of our social media links for more info www.corporatefarmers.tv
Blogspot: www.corporatefarmers.blogspot.com
Facebook: https://www.facebook.com/corporatefarmerstvshow?ref=hl
Thank you
Corporate Farmers International Ltd
5th Floor OAK Business Schoool
Ogba, Lagos
2348029110482, 2348023295359
Kindly follow any of our social media links for more info
Blogspot: www.corporatefarmers.blogspot.com
Facebook: www.facebook.com/corporatefarmers
Website: www.corporatefarmerstvrealityshow.com
Thank you
Akin Alabi
Corporate Farmers International Ltd
Ogba, Lagos
2348029110482
- See more at: http://olusegunobasanjofoundation.org/oof_blog/corporate-farmers-reality-tv-show-by-akin-alabi/#.U9Jv9bH
Blogspot: www.corporatefarmers.blogspot.com
Facebook: www.facebook.com/corporatefarmers
Website: www.corporatefarmerstvrealityshow.com
Thank you
Akin Alabi
Corporate Farmers International Ltd
Ogba, Lagos
2348029110482
- See more at: http://olusegunobasanjofoundation.org/oof_blog/corporate-farmers-reality-tv-show-by-akin-alabi/#.U9Jv9bH
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