Connect Africa – Insights into African Agriculture
Connect Africa hosts webinar on how African agriculture can multiply productivity, become global force
Caption: Clockwise from top left: The webinar panel comprising Dr Vinika Rao, Executive Director, INSEAD Africa Initiative & Emerging Markets Institute; Ranveer S Chauhan, Chairman of the NTU-SBF Centre for African Studies; Brendon Jones, founder, Connect Africa; and Sri (Mr V. Srivathsan), the Managing Director and CEO of Africa and the Middle East at Olam.
Singapore, 29 April 2022: Connect Africa, the premier business platform for Africa based in Singapore, hosted a webinar on Monday, 25 April 2022, which took a deep dive into how international financial centres (IFCs) such as Singapore and Mauritius can support agricultural investments into Africa and help it scale to the next level.
This topical theme, against the backdrop of the global Earth Day celebrations on 22 April 2022, served as a timely reminder of how global value chain and supply disruptions on the back of the pandemic are leading to a renewed movement towards food sufficiency. It excitingly encompassed insightful views from two experts on how African economies can feed not just their own, but a wide cross-section of the global population, by tapping into the vast, arable land at the continent’s disposal.
Why African agriculture is key to regional economic progress
The session, held in association with INSEAD’s Africa Initiative, Olam International and the pan-African news forum Platform Africa, was opened by Brendon Jones, the founder of the Connect Africa initiative. Brendon briefly touched upon Connect Africa and invited participants to contribute towards this noble endeavour to unite Africa-centric stakeholders in Southeast Asia under a common umbrella.
He then handed over to Dr Vinika Rao, Executive Director, INSEAD Africa Initiative & Emerging Markets Institute, for the opening address. Vinika provided some key statistics on agriculture in Africa, succinctly underscoring how agriculture is the most important economic activity in the continent with a GDP contribution of at least 15% and employing two-thirds of its population. She noted that agriculture has a significant economic and social footprint in Africa, and that by global standards too, African agriculture is a force to reckon with, given that the continent is home to 60% of the world’s arable land. Against this backdrop, she mentioned that arable land under permanent crops occupies less than 10% of this vast total and that productivity continues to be woefully low.
Indicating the importance of agriculture in the global context today, Vinika soberingly remarked, “Recent events like the pandemic have shown us just how vulnerable global agricultural supply chains are.” She continued, “At the INSEAD Africa Initiative, our emphasis is that agriculture in Africa be managed in a responsible manner in order to prioritise the interests of the local community and safeguard the resources. Thereby ensuring a sustainable business model with long-term positive impact on all the different stakeholders, including people, businesses and the planet.”
On this note, she handed over to Brendon to moderate the fireside chat featuring two expert speakers – Sri (Mr V. Srivathsan), the Managing Director and CEO of Africa and the Middle East at Olam, and Ranveer S Chauhan, Chairman of the NTU-SBF Centre for African Studies. In addition to the statistics highlighted by Vinika, Brendon pointed out how, despite smallholder farmers accounting for 90% of food production in sub-Saharan Africa, the traditional finance sector is meeting less than 3% of the global needs for smallholder financing. Finally, he set the stage for a discussion around how Covid has impacted the agricultural landscape in Africa, by noting that a recent survey saw 40% of African agricultural organisations report that they faced at least temporary closures due to the pandemic.
He then invited the speakers to provide their views on how African agriculture can overcome such challenges and emerge stronger from the shadow of the pandemic, around the following pillars:
(a) Strategies for developing the agro-industry in Africa;
(b) the potential for Singapore-African corporates to collaborate and partner for Africa ventures, involving both Singapore and Mauritius as launch platforms to invest in Africa; and
(c) Lessons from Olam’s 3 decades of investing in and operating in the agri-sector in Africa.
Galvanising smallholder farmers: Case studies from Nigeria, Chad, Benin and Côte d’Ivoire
Sri started the fireside chat by emphasising that strategies for African agriculture must target an increase in productivity for smallholder farmers. On this note, he unfolded one of the most vibrant success stories in African agriculture that he had witnessed while working with Olam.
“In Nigeria, taking a cue from the government’s focus on self-sufficiency in rice, we modestly started the Rice Extension farming programme with 500 farmers in in early 2000s and now 40,000 farmers are part of this Programme. More than 70% of our paddy requirement is met through this programme. Meanwhile, the productivity has increased from less than 1 tonne of paddy per hectare to 3 and a ½ tonnes of paddy a hectare,” Sri elaborated, noting that Chad had seen a similar productivity spike in cotton once Olam galvanised the smallholder farmer segment.
For his part, Ranveer recounted the case study of Benin cashew farmers, where he noted that in 1990 when Olam entered the space, cashew productivity multiplied from 10,000 tonnes of produce at a country level, to 40,000 in the first few years and finally spiked to a high of 70,000 over the decade.
“The example of Benin cashew farmers shows how privatisation and open access to international markets can be key factors for growth in African agriculture,” he averred, noting that such a rise in productivity not only translates into a better living for the farmers themselves but also makes the economy stronger overall by making it a global force to reckon with in the supply of select agricultural commodities. In another such instance, he pointed out how Côte d’Ivoire had seen rubber production go up from 70,000 tonnes in 1990 to 200,000 tonnes in the 2000s. It may be noted that the country currently counts among the five biggest exporters of rubber globally.
Both Sri and Ranveer also underscored the fact that intermediaries have historically played an important part in African agriculture due to their role as aggregators – a role that has been made crucial by the miniscule nature of the small scale farmers’ land holdings in most African economies. Sri in particular remarked that it is tough to say whether ‘intermediaries are helping grow the sector or are exploitative’, while noting that local buying agents were key to the sector 20-25 years ago but that their roles are now being increasingly made redundant by technology and the resultant proliferation of apps that directly connect farmers and agri-processing firms.
Meanwhile, Ranveer remarked that Singapore-based agri-processing groups such as Olam, Wilmar and Tolaram have sizeable footprints in Africa and continue to dominate the landscape, even as smaller players are emerging, such as NivéSal and TOP International Holdings. Sri concluded this section on the note that, while it is inevitable that the big, multi-geography operators will get talked about, it is actually the small scale operators that will make the real shift happen, especially in critical areas such as micro finance where a majority of farmer funding is coming from.
The million dollar question: Where will farmer funding come from?
In response to Brendon’s all-too-important question on how such small scale farmers can receive the funding that is critical to their growth and essential to any increases in productivity, Ranveer noted that the sector sadly continues to be under-funded and must look to lessons from countries such as India that have managed to unlock access to finance for their farmers.
Indeed, Ranveer held out the shining example of India’s central bank, the Reserve Bank of India (RBI), that had forced the private sector banks in the country to prioritise agricultural loans and extend credit to this crucial sector as a mandate rather than an afterthought. He rued that the banking sector in Africa does not have robust agricultural credit products but pointed out that Mauritius is a fast-rising player in the agri-financing space in Africa. He noted that a politically and economically stable economy such as Mauritius offers a viable gateway to investors looking to tap into Africa’s high-return agri-sector from safe shores. With the many Double Taxation Avoidance Agreements the island economy has in place with its African counterparts, Mauritius is indeed a great option for investors eying the African agricultural sector as a high-return avenue.
Meanwhile, he also remarked that while banks in Singapore are not geared to lend to agricultural initiatives all the way in Africa, there are many private sector initiatives, such as those uniting under the banner of Connect Africa, that are bringing succour to farmers in Africa on the financing front.
For his part, Sri spoke about the Central Bank of Nigeria which had initiated an Anchor Borrowers’ Programme (ABP) under the aegis of the federal government in select rice-growing states to act as a prime source of farmer funding. He also lauded their interventions on the fertiliser distribution front, which again acted as a key intervention for farm equipment financing.
Finally, Sri concluded the fireside chat on this thought-provoking note: “The landscape for African agriculture is changing with the implementation of the African Continental Free Trade Area (AfCFTA). I believe there is tremendous play for the million dollar players, African businesses as well as those from Southeast Asia in this exciting space.”
To hear the experts for yourself, click here.
About Connect Africa:
Connect Africa is a not-for-profit, Africa-focused business networking community, whose aim is to connect and leverage African skills and knowledge in Southeast Asia and Africa, to raise the profile of Africa as a Continent of investment opportunities. By connecting such skills and knowledge, the aim of Connect Africa is to develop into a “deal” platform linking human and monetary capital looking to capitalise on trade and investment opportunities in Africa.
Further information on Connect Africa, including how to become a member, is available on our website: www.connectafrica.com.sg. Follow us on LinkedIn at: https://www.linkedin.com/company/connect-africa-south-east-asia/
About Olam International:
Olam Group is a leading food and agri-business supplying food, ingredients, feed and fibre to 20,900 customers worldwide. Its value chain spans over 60 countries and includes farming, processing and distribution operations, as well as a global network of farmers. By re-imagining global agriculture and food systems, Olam Group aims to address the many challenges involved in meeting the needs of a growing global population, while achieving positive impact for farming communities, our planet and all our stakeholders.
Headquartered and listed in Singapore, Olam Group currently ranks among the top 30 largest primary listed companies in terms of market capitalisation on SGX-ST. Since June 2020, Olam Group has been included in the FTSE4Good Index Series, a global sustainable investment index series developed by FTSE Russell, following a rigorous assessment of Olam’s supply chain activities, impact on the environment and governance transparency. The FTSE4Good Index Series identifies companies that demonstrate strong Environmental, Social and Governance (ESG) practices and is used by a variety of market participants to create and assess responsible investment funds.
About the INSEAD Africa Initiative:
The INSEAD Africa Initiative (IAI) marks another step in INSEAD’s long and rich relationship with Africa. As Africa progresses on its journey of economic, societal and environmental progress, Business is playing a key role in driving that transition. The Africa Initiative aims to develop and disseminate the best of business thought leadership, teaching and research on this vast and diverse continent of 54 countries, great linguistic and cultural heritage, unique values and natural resources, and incredible ingenuity and flair for innovation. We believe that business has tremendous potential to be a force for good in Africa, aided by leaders who value social impact and are committed to the UN Sustainability Development Goals to drive these positive changes.
We believe that sound business education will be the engine for creating such leaders. With a core mission to bring together people, cultures and ideas to develop responsible leaders who transform business and society, INSEAD has a crucial role to play. Our faculty already conduct research and teaching on management practices on the continent, and our alumni, both in Africa itself and around the globe, will help us enhance our engagement with Africa.
For more information, visit https://www.insead.edu/centres/africa-initiative
About Platform Africa:
Set up by representatives of the business, legal and media communities in Mauritius in 2016, Platform Africa focuses on providing first hand news and views from those who are already doing business in Africa in the areas of finance and the economy, sustainability, leadership, innovation, health, lifestyle, culture and entertainment. Towards this end, Platform Africa acts as a media partner for high level events regarding Mauritius and Africa and targets an audience of business leaders, investors, entrepreneurs, government representatives and international institutions across the continent.
For more information on Connect Africa, please contact:
Name: Brendon Jones
Email ID: email@example.com
Mobile: (65) 8 428 6614