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Wednesday, 23 February 2011 13:31

Agriculture Support Still Low in Africa

By Martin Luther Oketch

AFRICA, February 23, 2011 (The Monitor) - Africa still possesses an abundance of one resource that is becoming ever more fiercely fought over: agricultural land. However, in a World Bank meeting last week, it was revealed that only one per cent of commercial lending in Africa went to agriculture in 2010.

 

This percentage, the World Bank, private sector and commercial banks say, is not enough to grow the sector by at least 5 per cent annually.

 

"About 60 per cent of the world's uncultivated farmland is in Africa, yet the continent receives only five per cent of global investments in agriculture," said the World Bank Managing Director, Ms Ngozi Okonjo-Iweala.

 

In addition, about 40 to 50 per cent of Africa's total farm yield is believed to be destroyed or lost between the harvest, warehousing, conservation, post-harvest marketing and transport to the final consumer.

 

However, funding to the sector still remains too low in the continent. To salvage the situation, the meeting recommended that at least three major demands need to be tackled: subsidised funding, resources from foundations and trust funds and the setting up of farm estates established to benefit from major infrastructure projects in order to boost the productivity of Africa's farm sector, create jobs, improve livelihoods and alleviate poverty.

 

An essential first step, the experts agreed, must consist of helping smallholder farmers gain access to credit, farm inputs and protection for their land rights. However, leaders of some of Africa's biggest commercial banks like Eco Bank and Standard Chartered Bank confessed during the talks that their banks are ill-equipped to fund the sector.

 

Representatives of large scale farmers in attendance included: Cargill, Zambeef and Tilda Rice and they argued that this clears the way for the World Bank to step in as the lender of last resort.

 

World Bank President, Mr Robert Zoellick, pledged the Bank's support in helping establish subsidised loans and mobilise resources from foundations and trust funds to help nurse Africa's baby agricultural industry to the maturity needed for it to satisfy demand from global retail giants like Walmart and Shoprite.

 

The meeting, however, complained about World Bank funding, which they say is hard to access. Their frustration targeted the World Bank's private sector arm (IFC), accusing it of being a prisoner to procedure, bureaucracy and bank policy guidelines. Even less amicable, one of them accused IFC of applying its own rules arbitrarily.

 

"If you get three independent consultants to read IFC guidelines, you get three different interpretations," one of the participants said prompting President Zoellick to offer immediate help in addressing any issues of unnecessary red tape or cumbersome procedures, if more precise information could be provided.

 

The representatives of African commercial farmers told the meeting that every dollar in subsidised loans devoted to Africa leverages up to $20 in private capital.

Portuguese Delegation Seeks Investment Opportunities. Maputo — Thirty Portuguese businessmen are visiting Mozambique to seek business opportunities in transport infrastructure.

 

They are accompanying the Portuguese Minister of Public Works, Transport and Communications, Antonio Mendoza, who has been visiting Mozambique. The business delegation met on Monday in Maputo with Mozambican businessmen at a seminar on investment opportunities. They were informed of investment possibilities in the new industrial parks to be set up in Moatize (Tete province), Mocuba (Zambezia) and Dondo (Sofala), as well as the established industrial city of Matola.

 

They were also briefed on the Science and Technology Park under construction at Maluana, about 80 kilometres north of Maputo, the possibility of a new mineral port at Ponta Techobanine in the far south of the country, and the opportunities presented by the Zambezi Valley.

 

According to the General Director of the Mozambican government's Investment Promotion Centre (CPI), Lourenço Sambo, there is also major investment potential in the Special Economic Zone that is being set up alongside the northern port of Nacala.

 

It was noticed that the rail transport demands fresh investment due to the coal projects under development in Tete. The challenge is to explore the capacity of rail systems to respond to the demand in the country and the region as well as developing an industry for the production of wagons.

 

For his part, Mozambican Transport Minister Paulo Zucula said the government's goal is to streamline the transport sector and to respond better to the challenges and demands that arise.

 

"The infrastructure and transport sectors are vital for the development of any economy", said Zucula. "At this meeting, we hope to boost those sectors so that we are able to respond more effectively to the demands and challenges facing the transport industry".

Mendonca claimed that the 30 Portuguese companies represented on this tour have proven experience.

 

Some are already operating in Mozambique and wish to lay new foundations for their businesses.

 

"We want the activities of Portuguese companies to help develop skills in Mozambique", he said, and called for partnerships to be formed "on a basis of equality and mutual interest". (END/2011)

 

 
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