Standard Bank and the Alliance for a Green Revolution in Africa (AGRA), are to create an innovative multi-million dollar fund geared towards fishing-out Africa small farmers from poverty.
The fund, which will be piloted with farmers from Ghana, Mozambique, Tanzania and Uganda will see AGRA, an organization headed by former Secretary-General of the United Nation, Kofi Annan, and Standard bank contributing well over US $ 100 million.
According to the statement released by the two organizations, AGRA and partners are providing US $ 10 million while Standard Bank will avail P 100 million over three years to ÔÇô small and medium size farmers — the most previously considered the too risky group for lending.
A memorandum of understanding governing the partnership was signed in Accra, Ghana, by the chief executive of the Standard Bank Jacko Maree, president of AGRA, Namanga Ngogi and the minister of agriculture of Mozambique Soares Nhaca, who is also a board member of millennium challenge account Mozambique and first country for the program.
Kofi Annan, AGRA chairman, said at the signing ceremony, “Our action today recognizes that the global food crisis is exerting major problems in Africa . Inflation, food shortages and trade imbalances all pose huge social, economic and political risks.
“But while credit is frozen worldwide, Africa cannot wait for a thaw. Programmes such as this, which increase the productivity of smallholder farmers and help catalyse an African Green Revolution, will ultimately enable Africa to achieve food security and stability and thus improve global outlook.”
Lack of access to finance is a major obstacle that prevents farmers from investing in basic inputs, such as good seeds, fertilizers and small-scale irrigation needed to raise farm productivity and generate profit. As a result, their yields remain one quarter the global average, leading to pervasive hunger and poverty across Africa .
Likewise, little or no commercial financing has been available to entrepreneurs seeking to build businesses that could boost Africa ‘s food production and enable farmers to earn a profit.
Added Standard Bank Group chief executive, Jacko Maree, “The large share of agriculture in Africa’s GDP suggests that strong growth in agriculture is necessary for overall economic growth. There is a need and an opportunity for investment that will develop the middle ground in Africa’s agriculture.
Africa has enormous natural potential and the continent has to unlock this potential in order to reap the benefits of our natural resources.”
As a leading emerging markets bank, mare argues “our goal is to perform a transformative role in the continent’s agricultural sector in partnership with other organizations.”
“Transforming small scale farmers into medium-sized enterprises is essential to address the food security and to stimulate growth,” Maree noted.
Across sub- Sahara Africa , the agricultural sector generates significant percentages of national but receives only one percent of total commercial lending.
The majority of this money has gone to large-scale agriculture, leaving smallholder with only the change in their pockets to invest in their farms.
In Mozambique, 45 percent of the population is undernourished and few of our smallholder farmers can access high-yielding seeds and fertilizers,” Soares Nhaca the Mozambique agriculture minister decried, adding “The need is especially urgent now to ensure that farmers have access to inputs for planting season.”