Africa urgently needs to bolster investment in its agriculture sector as a strategic move to enhance its Gross Domestic Product (GDP).
A social entrepreneur and co-founder of Agriarche, Deina Mayaki, recently highlighted the glaring insufficiency of funding directed towards the agriculture sector, despite its role in employing over 60 percent of the continent’s population.
She noted that in the first quarter of 2024, a mere $50 million (11%) was attracted to agriculture, in stark contrast to the $151 million (32%) directed towards Transport/Logistics and $105 million (23%) towards FINTECH.
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She lamented the lack of prioritization for agricultural funding, citing a PWC report that showed less than 3.8% of commercial bank funding went into agriculture. Despite agriculture’s immense potential, access to finance remained a major hurdle, particularly for smallholder farmers.
“Agriculture claims to have about 60 to 70% of the African population employed by it. If we’re serious about feeding the nation and being self-sufficient in food, then we should invest in agriculture,” she added.
Mayaki emphasized the imperative of channelling adequate funding into agriculture, pinpointing the issue not as a lack of capital but rather the structural and delivery mechanisms in place.
“Agriculture should attract the necessary fundings. We need to prioritize the fundings that are coming into agriculture. The government can quote the 2015 subsidy programme and the 2020-2023 Anchor Borrow Programme that was done, but the capital itself isn’t the problem; it is the way it is structured and delivered,” she said.
She lamented the sector’s informality and fragmentation, leading to a dearth of feasibility throughout the ecosystem. Mayaki stressed that agriculture encompasses not just farming but also production, distribution, logistics, and last-mile delivery, with technology playing a pivotal role in enhancing visibility and addressing these challenges.
“The agriculture sector in Africa is very informal, very vague, highly fragmented. And this promotes a lack of feasibility across the ecosystem. And agriculture is beyond farming, it entails production, distribution, logistics, production, and last-mile delivery. And you are talking about hard and soft tech along the line, and this is where I advocate for technology because technology helps to enhance feasibility. One of the challenges is this vagueness because people are not confident to structure the financing for the ecosystem and to know what the needs are,” she said.
Among the obstacles hindering funding access to the sector, Mayaki cited insecurity in rural areas, the prevailing structure of agriculture in Africa, and the absence of a credit system for farmers. She underscored the significance of financial inclusion, noting that it extends beyond mere access to credit but encompasses digital and financial connectivity to global opportunities. Mayaki argued that the lack of financial inclusion perpetuates a vicious cycle wherein financial inflow into the sector is stifled, ultimately impacting millions of farmers.
“Lack of access to finance, inadequate technology-know-how, concerns around insecurity in major rural areas where agricultural activities take place are some of the factors affecting fundings to the sector. Farmers are the major actors, but they are financially excluded. And I would like to say that financial exclusion means that they are digitally and financially excluded so they have no way to connect to this global opportunity. And if you are not available on this credit system, for instance, for somebody who is probably in San Francisco or New York or somewhere in Abuja to have access to that information and based on that to have the confidence to lend to you, it thus cripples the financial inflow into the sector. And this happens to one farmer, it goes on to one million farmers and to 30 million farmers,” she stressed.
She also bemoaned the decline in startup funding, attributing it to a myriad of macroeconomic challenges, including currency devaluation and higher interest rates.
She advocated the need for structured frameworks and the availability of talent to attract more venture capital into the continent.
