Agribusiness in Africa

Agribusiness plays a vital role in economic development, contributing a major portion of GDP, employment, and foreign exchange earnings in many developing countries. This is particularly true in Sub-Saharan Africa, where many countries have low per capita incomes. In Tanzania, for example, agriculture accounts for 45 percent of GDP and 65 percent of employment.

Despite its importance, Sub-Saharan Africa’s agribusiness sector faces numerous challenges. In many countries, most crops are produced by small-sized farms with limited mechanization and capacity, leading to poor yields. Fragmented markets, price controls, and poor infrastructure also hamper production, while the current pressure on natural resources such as land and water is too strong to be sustainable. And many of the agricultural products produced in the region, such as maize, rice, and palm oil, are not competitive globally or have low profit margins. This means that Sub-Saharan Africa is ill equipped to meet its food requirements, which are set to double in the next 30 years or even sooner.

Boosting Investment

The goal is to commit approximately $100 million to the Agribusiness sector in Sub-Saharan Africa by FY10, compared with an annual average of about $18 million per year over the last decade.

To address these challenges, IFC supports projects across the food supply chain, including processing, logistics, and distribution. The goal is to support the development of an efficient and competitive private agribusiness sector. Achieving this will have a strong impact on reducing poverty and improving lives, since most of Sub-Saharan Africa’s poor live in rural areas that depend largely on agriculture.

An Increasing Commitment

Recognizing the strong development impact of agribusiness, IFC is sharply increasing its activity in the sector. To do this, IFC is developing new products, such as local currency financing, risk sharing facilities, and comprehensive support to farmers through intermediaries. IFC also aims to further integrate its advisory services with investments to provide more comprehensive support.

IFC is also stepping up efforts to modernize Africa’s agribusiness sector. Together with other stakeholders such as colleagues at the World Bank, governments, and private sector participants, IFC will identify key subsectors within agribusiness that have a particularly strong potential for developmental impact.

We will then work with partners to create the necessary conditions to promote investments. This will include efforts to improve infrastructure, such as water reservoirs and storage facilities and improving the business environment through administrative reforms.


Project Examples:


Karsten Farms


Ghana Oil Palm Development Company


Merec


For more information contact:
Houtan Bassiri
Communications Officer
Johannesburg, South Africa
Tel: +27-11-731-3179
Email: hbassiri@ifc.org