No region of the world has ever industrialised without the agricultural sector being first transformed. Africa is the last continent to do so and needs to catch up fast.
Although 60% of the population are involved in farming, it accounts for less than one seventh of its GDP, and African agricultural yield is the lowest in the world.
Yet this very fact offers a large-scale opportunity for international investors and big-ticket entrepreneurs. In Africa, economic diversification and lasting wealth creation begins with a vibrant agriculture sector. Between $30 and $40 billion a year over the next ten years is needed to transform African agriculture and create the vibrancy. It’s a lot of money, but it is available, even within Africa, if the projects are good enough.
And they ought to be good enough, since such investments will create new markets worth at least $85 billion per year in added revenue by 2025. That’s a potential return of at least 100%. But which producers will own, influence and leverage these markets? Most, surely, must be African, for we must own our economic development if it is to properly benefit our continent.
With such transformation would come the reduction of Africa’s net trade deficit in food, potentially bringing net savings of up to an extraordinary $110 billion per year within ten years. Africa has no reason or should have no business to import more food than it exports.
The continent has 65% of the world’s uncultivated arable land and huge reserves of water, solar, wind and geothermal energy. Too many Africans suffer from poverty but Africa is an unimaginably rich and fertile continent in resources, minerals and other commodities. The potential is enormous.
But Dr Borlaug reminded us that we cannot eat potential. We have to work on it, convert it, use it, transform it, enhance it. To bring about this transformation, public and private sectors should be acting together with all stakeholders. They are needed to provide significant opportunities for Africa’s emerging innovators and entrepreneurs, as well as its financiers, fund managers and financial advisers.
The technologies to feed Africa exist already; they need to be scaled up for widespread adoption. They need to be taken to the farmers. This will not happen by itself. It will require specific incentives.
That is why the African Development Bank and the World Bank are intending to jointly provide $800 million through the “Technologies for African Agricultural Transformation” (TAAT), a flagship programme for the scaling up of agricultural technologies to reach millions of farmers in Africa over the next ten years. Over the past few years, the Bank has been able to bring about a comprehensive re-evaluation of the potentially enormous role of agriculture in the transformation of Africa, and will provide $24 billion over the next ten years to contribute to African agricultural transformation.
An issue for early resolution is the current low level of commercial financing for agriculture. Finance and farming have not been easy partners in Africa, and the farming sector receives less than 3% of the overall financing provided by the banking sector. The African Development Bank is promoting national risk sharing facilities in every country to leverage agricultural finance, similar to the Nigeria Incentive-Based Risk Sharing for Agricultural Lending (NIRSAL), a facility designed to reduce the risks of lending to Nigerian agriculture value chains.
In addition, the Bank is scaling up innovative approaches to get technologies to farmers at scale, using the power of mobile phones. While I was Nigerian Minister of Agriculture between 2011 and 2015, we deployed the electronic wallet system that allowed farmers to get access to improved seeds and fertilizers, using electronic vouchers on their phones.
A global first, the e-wallet system was revolutionary. Over four years, 15 million farmers were reached, 2.5 million of them women. Food production expanded by over 21 million tonnes. Today, several African countries are adopting the approach, as well as others such as Afghanistan.
If we can successfully and quickly matching tools and technologies with needs and potential, as well as facilitating better access to financing and to the agricultural inputs and assists that are taken for granted in developed world agriculture, I predict that the next few years will see agriculture emerge fully from poverty and subsistence. Farming and food processing will become the next big booming business sector of Africa, with entrepreneurs, financiers, inventors and innovators all gathering round a honey pot of bankable projects, programmes and opportunities.
As recipient of the 2017 World Food Prize, I am more determined than ever to ensure that the African Development Bank plays its active role as a catalyst of Africa’s prosperity through agriculture and food processing, especially by concentrating on youth and women. There is no doubt in my mind that the future African millionaires and billionaires will come from the agricultural sector.