At a recent event in Nairobi, early-stage venture backer Village Capital brought to a close its programme by inviting a number of startups in the agribusiness space to present their solutions for assisting smallholder farmers.

 

This saw the likes of Ghana’s Farmerline, which expands access to information to farmers, Rwanda’s Atikus Insurance, an initiative that extends access to credit via reimagined risk solutions, and Mifugo Trade, an online livestock marketing platform, pitching to investors for much-needed financing to scale their businesses.

 

And in Africa, agriculture is big business.

 

Across much of the continent, according to the World Bank, agriculture’s contribution to GDP is more than 20%, while in some countries, such as Ethiopia or the Central African Republic, it is higher than the 40-50% mark. Yet farmers, overwhelmingly based in rural areas, traditionally lack access to required networks and finance, with only 1% of commercial loans going to smallholder farmers. This relative underdevelopment of a vital sector, according to UN Food and Agriculture Organisation (FAO) agribusiness economist Eva Gálvez Nogales, is due to a lack of collaboration between various stakeholders, including government and investors.

 

Nogales is an open proponent of economic “agrocorridors”, which she believes can serve as a strategic tool to bring private capital and large-scale investment to agricultural projects in Africa. This, she believes, will benefit smallholder farmers and boost food security.

 

Agrocorridors are development programmes that foster agriculture along lines of transportation such as highways, railroads, ports or canals. They integrate investments, policy frameworks and local institutions.

 

Nogales’ report on the subject for the FAO, ‘Making economic corridors work for the agricultural sector’, highlights a couple of global success stories with agrocorridors, notably the Poverty Reduction and Alleviation Project in Peru, which began in 1998.

 

 

The novel approach relied on “star connector firms” that were able to quickly expand commercial networks along 13 corridors in the country, with the result being a “flowering” of overlooked market opportunities. Peru is now the world’s third-largest exporter of artichokes, produced through outgrower contracts and processed in several corridors. The government continued the approach after the bilateral agency responsible for it had departed, and it has been duplicated in a number of sister programmes. In Africa, thus far, the benefits of such agricultural corridors remain mostly overlooked, though Mozambique and Tanzania have started programmes aimed at implementing them. Nogales says implementation is hard work as it requires all stakeholders to rally around an agenda. 

 

Source : africanbusinessmagazine.com