In 2013 some $7.2 billion of private capital was committed to African agriculture projects through Grow Africa, the partnership programme established by the World Economic Forum, NEPAD and the African Union to accelerate the transformation of African agriculture. This is twice the amount in 2012.
Of this, some $970 million has already been invested creating 33,000 new jobs effecting 2.6 million smallholder farmers across the continent, according to Grow Africa’s recent annual report.
“Investments linked to Grow Africa offer a limited but fascinating window on what is happening with the business of African agriculture,” reads the report. “They suggest that the private sector is demonstrating unparalleled dynamism and commitment towards the sector. Companies express a long-term strategic view on African agriculture. Encouragingly, this includes a serious intent to engage smallholders commercially and to add value along the value chain through processing and serving domestic markets.”
Companies within Africa have contributed most of the investment with half directed to Nigeria, reflecting the country’s renewed political commitment to agriculture. This has made it an attractive destination for domestic and international investors, according to the report.
The increase in investment confirmations outlined in the report is consistent with a broader growth trend in African agriculture which, according to the World Bank, will triple in size by 2030 to become a $1 trillion industry.
However, the report points out that the flow of investment is being held back by problems such as poor access to, and affordability of, relevant financial products.
“The 2013 Grow Africa report shows good progress on many fronts, but overall, it shows that the level of investment, and the speed and reliability of reforms to the sector, are too slow to be truly transformative for Africa’s smallholders,” said Ibrahim Assane Mayaki, Chief Executive Officer of NEPAD, one of Grow Africa’s co-founders.
“Governments must accelerate action to improve the enabling environment in response to market priorities,” said Mayaki. “And the private sector must innovate and be willing to take on and share risk.”