African banks, insurance institutions and investors have been challenged to relax their stringent requirements for the funding of emerging agribusiness ventures on the continent.
Industry experts made the clarion call during an agribusiness discussion at the inaugural Africa Investment Forum at the Sandton Convention Centre, in Johannesburg on Thursday, 8 November.
Panellists in the discussion said this was one of several bottlenecks needed to be cleared for the sector to thrive on the continent. Among the challenges, they said, were that financial institutions remained sceptical of investing in small-scale farmers due to the perceived risk associated with them.
About 60% of the world’s arable land is in Africa and it has billions of rands in investment potential.
Challenge to find innovative solutions
TP Nchocho, the chief executive of the Land and Agriculture Bank, challenged investors to find innovative solutions to also assist financial services and insurance institutions in order to develop simple market products to reduce risk.
Challenges, Nchocho said, emanated from excessive agricultural insurance for commercial farmers and it was out of the reach of many smallholder farmers.
“Not only is agriculture complicated in terms of its scientific nature, it’s also complicated in terms of logistics. It is also vulnerable to natural perils. A broiler farmer today can experience a disease event and lose their entire flock of birds – it has happened a couple of times in my organisation.”
Nigerian finance minister Zainab Shamsuna Ahmed said African governments and investors needed to support and believe in their emerging farmers and not cower to the foreign regions.
“We keep talking about political will but political will also includes being true to ourselves. If we make an agreement that is supposed to be implemented and we turn around and allow in [people] from outside our continent, we package them and send them out to the big markets, then we don’t have political will. That is being part of the problem,” she said.
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