Progress in agricultural investment in the continent is too slow to unlock the sector as an economic growth driver; this is according to Arne Cartridge, Chief Executive Officer of Grow Africa.
According to Grow Africa, the rate of return on agricultural investment is significantly influenced by the mix of government policy, access to finance, ease of transportation and telecommunications infrastructure, collectively termed the “enabling environment”.
During the Grow Africa Investment Forum ahead of the World Economic Forum on Africa, private-sector investors in African agriculture reported improvements in the enabling environment.
Grow Africa said, following the annual stock-taking of progress, results pointed to an urgent need for strengthening cross-sector collaboration, infrastructure and access to finance to ensure the conversion of investment potential to investment on the ground.
According to a survey conducted by the organisation, only 31 per cent of respondents feel that their country’s enabling environment was conducive to their investment and 58 per cent said it is “very important” that the enabling environment improves for them to successfully implement their investment commitment.
“Dissatisfaction with the quality of physical infrastructure was higher than for any other aspect of the enabling environment, with 54 per cent of respondents saying their needs are not being met,” said the report.
Grow Africa said most urgent call for improvement is in access to finance.
“Only 25 per cent of the companies surveyed said they could access appropriate finance for their investment, and more respondents (69 per cent) cited the urgent need for improvement in this area over any other aspect of the enabling environment.”
“This is also the area in which least improvement was reported. Only 14 per cent of respondents said access to finance has improved over the last 12 months.”
According to the survey, only 36 per cent of companies feel their investment is supported by effective national policies for trade, agriculture and investment, with only 16 per cent of respondents reporting an improvement in the situation over 2013.
Cartridge said, both the public and private sectors have made strides in identifying effective models of engaging that encourage investment.
“African governments are developing skills, capacity and organisational structures to develop investment plans with the private sector in support of the national agricultural agenda,” Cartridge said.
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“Public and private sector organisations have worked with donors to generate considerable innovation in financial and risk mitigation instruments.”
Cartridge warned that progress was too incremental to enable real transformation.
“Much of this innovation is not reaching Africa’s small to medium-sized agribusinesses and smallholder farmers, without whom the long-term economic growth of the sector is not tenable.”