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 Africa, where agriculture accounts for 25 percent of the continent’s GDP, and 70 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. 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.
In the last four years, the World Bank Group has increased its annual agriculture investment from $4.1 billion to $6.1 billion.
In fiscal year 2012, IFC investments across the agriculture value chain in Africa reached $550 million.
IFC is embarking on a five-year program to increase its investments n in agribusiness in Africa to $2 billion.
To address these challenges, IFC supports projects across the food supply chain, including processing, logistics, and distribution.The goal is to develop 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 on agriculture.
An Increasing Commitment
IFC is stepping up efforts to support Africa’s agribusiness sector. We are 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.
Along with stakeholders such as the World Bank, governments, and private sector participants; IFC identifies key subsectors within agribusiness that have a strong potential for impact.
We work with partners to create the necessary conditions for investment. This includes efforts to improve infrastructure, such as water reservoirs and storage facilities, and improving the business environment through administrative reforms.
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