Bridging Finance and Innovation to Advance Africa
Cross-posted from This is Africa.
In a speech to members of the Zimbabwean farming community in 1994, then-South African president Nelson Mandela remarked: “There are few better ways to show one’s love for one’s country and the well-being of one’s nation than by working on the soil.”
Indeed, agriculture has been a critical driver of well-being for centuries, ensuring the food security central to human health and catalysing the productivity needed for economic prosperity. As such, agriculture has been a critical part of The Rockefeller Foundation’s mission to “promote the well-being” of humanity over the course of our first 100 years – from the economic development of the southern United States in the early 20th century to the seeds that sparked the Green Revolution and fed a billion people throughout Latin America and Asia.
Agriculture has become among the most powerful engines for Africa’s economies.
Africa is poised for the world’s next green revolution. Across the continent, there has been a renewed commitment from governments, non-governmental organisations and the private sector to move agriculture from a development challenge to a business opportunity. As a result, countries such as Nigeria are moving to once again become net exporters, rather than importers of agricultural commodities. Agriculture has become among the most powerful engines for Africa’s economies, many of which have experienced rapid growth over the last decade.
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Despite these developments, many smallholder farmers, who form the backbone of Africa’s agriculture sector, remain trapped in poverty without access to financing and other tools to increase their productivity and profitability. In 2006, The Rockefeller Foundation partnered with our colleagues at the Gates Foundation to launch the Alliance for a Green Revolution in Africa (AGRA), with the aim to ensure that millions more smallholders have access to the better seeds, healthy soils, profitable markets, storage and transport, and supporting policies needed to transform agriculture and drive sustainable economic growth.
The agricultural and financial sectors must form new linkages and better align their visions.
But more must be done to break down the barriers that remain to scaling up innovation and investing in farmers on a large scale. To do so, the agricultural and financial sectors must form new linkages and better align their visions, blending those who can implement innovative approaches to boost agricultural production and supply inputs such as seeds, fertiliser, and water, and outputs including storage, processing and distribution facilities, and access to markets, with those who can finance those activities.
To help bridge these sectors, in July The Rockefeller Foundation hosted a summit in Abuja, Nigeria, titled ‘Realising the Potential of Africa’s Agriculture: Catalytic Innovations for Growth’. The summit, one of our centennial convenings focused on forward-looking solutions to challenges that will define our second century of strategic philanthropy, brought together agriculture and finance ministers, along with other leaders, from more than 23 African nations, in an unprecedented conversation to identify concrete ways to strengthen African agricultural markets and value chains to benefit smallholder farmers.
Over the course of the summit, participants identified a number of innovative solutions and financing models that can encourage increased lending to farmers. One such model, known as credit guarantees, was pioneered by The Rockefeller Foundation and has been taken to scale by AGRA with promising results. For example, the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending (Nirsal) offers strong incentives and technical assistance to banks, building the confidence and agricultural understanding of lenders with the goal of increasing the percentage of bank lending to farmers and agricultural enterprises from 1.4 percent to 7 percent in the next 10 years. Nirsal has already helped to unlock additional investment: earlier this year, USAID and the Nigerian government each provided guarantees to increase private financing and leverage up to $100m in commercial lending.
The poorest farmers are eligible to pay for insurance with their labour through resilience-building projects in their communities.
These innovative finance models will go a long way to replicate and scale many of the agricultural innovations already happening across the continent. The Dutch Agriculture Development and Trading Company, for example, developed a technology that brings a mobile cassava processing plant to villages and enables farmers in Mozambique to process their roots into cassava cakes that can be stored for up to two years – opening new markets that were once limited because of root spoilage during transportation. In another example, The Rockefeller Foundation-supported Horn of Africa Risk Transfer for Adaptation project, an integrated risk management scheme developed by the Relief Society of Tigray and Oxfam America, helps Ethiopian farmers strengthen their food and income security through a combination of improved resource management, crop insurance, microcredit, and savings. The poorest farmers are eligible to pay for insurance with their labour through resilience-building projects in their communities.
In addition to financing, catalytic innovations for growth are also emerging, including leveraging mobile phone technology to better share and disseminate information, structuring agricultural jobs as rural entrepreneurial enterprises to attract younger workers, and addressing gender inequities that hinder the income generation of women farmers.
With greater collaboration between finance and agriculture to find, scale, and invest in catalytic innovations for growth, Africa will be closer not only to realising its agricultural potential but to achieving its economic promise – for the well-being of African farmers, for the strength of their nations, and for the prosperity of the entire continent.
In this interview with This is Africa, President Judith Rodin Judith Rodin discusses The Rockefeller Foundation’s strategic priorities and vision for Africa.