Interview: Sefihait Kone
How can public-private partnerships (PPPs) mobilise capital to narrow the agricultural funding gap?
SEFIHAIT KONE: Access to affordable financing remains a key challenge in the agricultural sector, especially for smallholder farmers who account for more than 80% of the production base in sub-Saharan Africa. This funding gap is driven mainly by the notion that agri-lending is too risky. PPPs are well positioned to dispel this notion by developing innovative and tailor-made financial products to fund small and medium-sized enterprises and farmers. Additionally, investment in credit guarantee schemes by development banks will help draw private capital to agri-projects. This must be complemented by government policies to deepen the funding pool for agriculture, such as tax incentives for agri-investment and the tighter regulation of crowdfunding platforms.
What measures can be taken by the private sector to ameliorate food security?
KONE: Maize is the most important food crop in Nigeria.
However, there has been an imbalance in the demand and supply of maize in recent years, driving its price to an all-time high. A rise in the market price of maize adversely affects a significant portion of the population, the feed and poultry industry, and GDP. While improvements to the maize subsector would positively impact food security, key challenges remain, including insufficient production owing to unsustainable farm practices; inefficient agri-business policies; conflict and civil insecurity, such as banditry; and climate change.
The private sector will be vital in addressing these hurdles by deploying resilient farming products to help farmers to protect their crops and maximise food security. For example, the distribution of quality seeds through a decentralised seed quality assurance system would help the country reach its full potential in terms of maize productivity, as would fostering the implementation of modern agricultural practices through stakeholder meetings such as the Nigeria Maize Conference.
To what extent can digitalising the value chain help connect farmers to financial ecosystems?
KONE: The availability and accessibility of data are essential to the efficient allocation of credit to the agriculture sector. Otherwise, financial institutions are unable to accurately assess credit risk, reducing the number of loans to smallholder farmers. This is exacerbated by the unreliability of manual data collection tools, which are traditionally used in the sector. Thus, digitalising the smallholder farmer production system is a critical step towards catalysing financing to smallholder farmers, as data enhances the predictability of output. Such data would also be useful in connecting farmers to offtakers, reducing risk along the production value chain and enhancing creditworthiness in the eyes of lenders. Furthermore, artificial intelligence and blockchain technology present great potential in extracting key data points to support crop insurance.
Which steps can maximise the impact of infrastructure development in the agricultural sector?
KONE: Infrastructure development increases agricultural productivity, which in turn boosts economic growth in rural areas by raising income and affording educational opportunities. The rise in agricultural productivity from infrastructural investment, and the attending reduction in food prices, benefits both urban and rural inhabitants who are net food buyers. To sustain this impact, it will be important for industry stakeholders to improve infrastructure planning and decision-making by adhering to credible cost-benefit analysis, increase stakeholder coordination and collaboration to prioritise the public interest, as well as encourage the adoption of emerging technologies. Further, it will be necessary to enhance private sector involvement through greater use of PPPs, explore alternative approaches to utilising private investment to advance public infrastructure goals, and incorporate climate risk when evaluating the impact of investment.
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