Stories tagged: agribusiness

Conserving Africa’s Precious Resource Base While Fighting Hunger

As part of our agroecology in action series, Kalongo Chitengi, Zambia Country Director, Self Help Africa speaks to Farm Africa about the importance of sustainable agriculture and responsible farming for preserving Africa’s environment and ecosystems.

Rosemary Chate’s seven children gather around the table inside their home in Malela, a village in Zambia’s remote Northern Province. They dig their spoons into bowls of food prepared by their mother – for the second time that day.

Not long ago, Rosemary Chate’s family would assemble to eat just once a day – their resources, for many months each year, were so thin that they needed to ration their food supplies to just a single family meal.

This is the reality for millions of African farmers like Rosemary. Many challenges are keeping yields on the continent low. Farmers lack access to inputs that farmers in developed countries have utilized for decades, from quality seeds and herbicides, to the right type of fertilizer for their undernourished soils. The hand hoe – even in this century – is still the main tool for smallholder families. Migration to urban areas and the impact of AIDS have left many rural homesteads with a labour shortage.

75% of Africa’s soil is degraded, costing African countries up to 10% of their GDP. Yet Africa has almost 50% of the world’s uncultivated land (Source: IFPRI)

Climate change has also emerged as another challenge, and rural families grapple with adaption. Changes in the climate have brought with them not only drought and flooding, but new plant diseases and insect attacks. The fall armyworm in sub-Saharan Africa has caused tremendous damage. This unpredictable reality has made crop management very difficult, and indigenous knowledge alone can no longer suffice.

African farmers need scientific innovation – from low to high tech – to face these challenges.

Testing vitally important to ensure that farmers are using the right tools and innovations to make sure soils are healthy (Credit: Georgina Smith/CIAT)

Yet preserving Africa’s environment, its most precious resources after its people, is also a high priority. This is one of the fundamental concerns of agroecology – ensuring farmers can produce food and earn a good living, while keeping the natural resource base intact.

With the right approaches that blend traditional knowledge with scientific innovation, this can be achieved.

At Self Help Africa, we are working with farmers to achieve this through the implementation of conservation agriculture. In Zambia alone, we have reached over 80,000 farmers  in the last five years.

Conservation farming involves a combination of approaches. First, farmers are encouraged to intercrop a variety of species, such as groundnuts, which can naturally fix nitrogen to the soil, and cassava, for example. This ensures maximum use of a piece of land that has been cleared – producing more food with less resources.

Crop rotation and mulching, along with an integrated use of mineral and organic fertilizers are also part conservation agriculture.

59-year old Felister Namfukwe has seen the benefits of this farming approach. Not only are her soils healthier, but her income is as well. With the help of her sons and her profits from groundnuts, she is building a new home made of brick, replacing her previous mud home.

“Being part of this (Self Help Africa) project has lightened my burden,” she told us.

We also work with local farmers to build their capacity to grow good quality seed, and to strengthen community based seed systems. Recycling seed is a common practice in Africa, when access to better seed is scarce. However, recycled seed loses its efficacy.

We are currently working with 300 seed growers across the country, who are multiplying seeds that are more able to cope with climate extremes, are higher yielding and more resistant to pests and disease.

In Zambia’s remote Western Province, the Kamasika Seed Growers Association illustrates how effective community-based seed multiplication is assisting local food production in the face of climate change.

The group received training and support in seed multiplication techniques from Self Help Africa and government advisors on the technical requirements for producing certifiable seed. The farmers were then linked to a new state-run seed testing laboratory, established with support from Self Help Africa in nearby Mongu town, to ensure that the seed being produced met the requisite germination, moisture content and other standards required to attain certification.

The group has since opened several retail shops where they sell farm inputs, including certified groundnut, bean, sorghum, maize and vegetable seed that they are producing, and supply to several thousand smallholder farmers across the Province.

African farmers are most at risk from rising temperatures and persistent hunger. We must ensure they have access to all the tools and technologies necessary to thrive in the face of these threats.

 Featured photo credit: WFO

Dennis Odera: Providing Information, The Cornerstone of Agribusiness

In this guest post, Dennis Odera, Africa Business Coordinator for WeFarm, outlines the importance of getting agricultural information to rural entrepreneurs and how WeFarm delivers on this.

At face value, food security and unemployment are words that have very little in common. If you look at the words through an agricultural lens, however, similarities start to pop up.

Africa currently has two resources that are available in abundance – land and people. With the rise in world population, there is a steady high demand for a certain commodity – food. How then can Africa make the most out of its abundant resources to fulfil a world need? Continue reading

Ivan Mbowa: The Tech Bridging the Farmer Finance Gap

In this guest post, Ivan Mbowa, co-founder of Umati Capital discusses the financing challenges agribusiness SMEs are experiencing in Kenya, and how his team has arrived at a solution.

With commercial lending to agriculture representing just one per cent of all lending in Africa, many agribusiness SMEs (small-and-medium sized enterprises) have limited options for financing or even worse, are excluded from financing entirely. One main obstacle, for example, is the onerous requirement for collateral. In Kenya, the time and cost of registering a building as loan collateral in Nairobi for an amount of KES 10 million would take a minimum of 2 months with fees around 6 per cent of the amount.

Compared to other players across the agricultural value chain, smallholder farmers face an even higher obstacle. Even though financial institutions have attempted to provide financial services, farmers’ financing needs are not well understood. This leads to poorly defined financial products based largely on the same restrictions as those put on SMEs. Given that smallholder farmers usually live in difficult-to-reach areas and lack “viable” collateral, they unfortunately must deal with informal lenders at exorbitant rates that inhibit their growth.

Umati Capital strives to revolutionize access to finance for the underbanked and unbanked in Africa through the consistent and innovative use of technology. Our motto, “Access to capital should be guided by transparent access to information”, drives our team to increase financial inclusion for the Kenyan SMEs and agribusinesses in the broad agricultural sector who need more than USD $3.6 billion in financing to grow their businesses.

With our financing, Umati Capital offers simple and transparent pricing without the hefty collateral requirements. With our technology solution, Umati Capital offers a customized web platform and mobile application to collect data, conduct data analytics, and make payments easily to suppliers in remote areas.

Although Umati Capital is relatively new to the market, we have learned that there are several things that financial institutions need to understand to access underserved communities.

First, Umati Capital recognized the need to develop strong and deep relationships with our clients. Although this need is typical of any organization targeting businesses, relationships in markets like Kenya are critical to understanding how to continuously evaluate and meet our client’s needs as well as collaborate to identify issues and define solutions. For example, one of our clients is a food processor who collects agricultural produce including raw milk and fruits from agricultural suppliers consisting mainly of farmer cooperatives and smallholder farmers. The client was facing a challenge: they were not receiving enough produce from the suppliers.

Umati Capital then visited the client’s premises and the collection centers in remote areas to better understand their operations. Upon further inspection, Umati Capital learned that producers were side-selling: selling their produce to informal buyers (brokers) that offer cash immediately but at a much reduced price to address their immediate needs such as paying for school fees. For example, brokers offered a “cash now” price at times less than half of the price offered by a formal buyer. Therefore, the supplier or farmer receives a lower price and consequently a lower income. These same brokers turn around and sell the same produce to the same buyers at a higher price thereby decreasing the buyer’s margins.

With this deep understanding of our client’s challenge, Umati Capital provided our Supply Chain Financing product enabled by our technology solution so that the client could pay their suppliers on time. With money upfront, suppliers received up to twice as much income comparatively while the buyers gained more satisfied and loyal suppliers.

Second, we realized the need to develop and consistently deliver a minimum viable product (MVP). Initially, we were presented with various, seemingly lucrative opportunities from partners and even our clients. However, these opportunities would divert our team beyond our core strengths. For example, our clients in the agricultural sector have various business needs that translate to different financing products from asset financing to working capital financing. At first, we explored various financing products to meet the many business needs of our clients. However, designing a workable, scalable model for each financing product became unwieldy.

With that, we decided to create a niche for ourselves: addressing the working capital financing challenge for our clients. Although we could not meet all the financing needs, we decided to excel in one area and completely satisfy our clients. By focusing on a MVP, we learned the power of saying no and the power of committing to a product that provided clear benefits for our clients.

 

Alex Simuyandi: Providing Working Capital for African Agribusinesses

In this guest post, Alex Simuyandi of AgDevCo discusses approaches for financing the “missing middle” of African agribusinesses, and tells us more about the new Lending for African Farming Company.

There are many challenges that agribusiness in Africa face. Skilled and experienced management is a resource in short supply, as is access to affordable finance. With the latest UN numbers suggesting that more than 200 million individuals in Africa are chronically undernourished, and the FAO estimating that investment in sub-Saharan Africa is 11 times more effective in reducing poverty than investment in any other sector, there is a great demand for financers to take a frontline position to combat poverty and increase food security.

As one of the most active investors in small and medium agribusinesses in Africa today, we provide innovative financing to help these businesses grow and mature. At AgDevCo, we also work with each of its investees to develop their management capacity, and provide its portfolio companies with hands-on commercial agricultural and financial management support. Continue reading

OCT62013
The Agri-Food Sector – A Catalyst for Sustainable and Inclusive Growth in Africa

Hosted by the Government of Rwanda, in collaboration with the FAO and Rabobank, the AgriBusiness Forum is the largest pan-African AgriBusiness Forum held on African soil annually which aims at strengthening the Agri-Food sector in Africa, by encouraging partnerships, exchanging best practices and attracting investments. From October 6 – 9 the event will provide a platform to discuss and present successful projects and business models. This year, the Forum will focus on “The Agri-Food Sector: A Catalyst for Sustainable and Inclusive Growth in Africa”.

For more information visit: http://www.emrc.be/en/events/agribus2013/registration.aspx

Agribusiness programme lays the groundwork for economic development in Africa

Agribusiness managers in Africa are being trained under a new project, which delivers a range of agribusiness management training programmes backed by contextual research. The knowledge and skills gained can then be used to help farmers increase their agricultural productivity, quality of produce and profit margin, in turn improving their livelihoods.

The Agribusiness management programmes are led by the Association of African Business Schools (AABS), a non-profit association of leading business schools throughout Africa, and funded through a $1.5 million grant from the Bill and Melinda Gates Foundation.  

As agriculture is at the core of Africa’s economic development the programme aims to develop new insights into African agriculture, enabling future leaders of Agribusiness to understand the way smallholder farmers operate.

The AABS says:

The Agribusiness management programmes will impart business, management and leadership skills to a range of stakeholders including development organizations, government agencies, agribusiness entities, farmer cooperatives and small and medium sized enterprise owners.

The objective is to produce a scalable model for leadership and management training for smallholder agribusiness entrepreneurs and goals for entrepreneurs are to increase turnover by at least 50% and improve consumer access.

The programme educates students through case studies and a variety of modules such as ICT innovation and financial management. It also benefits from a strong strategic advisory board which includes representation from key agricultural value chains and the Ministry of Agriculture.

Past alumni praise the scheme’s ability to transform smallholders into small businesses. One alumni says:

I’m no longer running a kitchen garden but in the business of making money. This programme changed our mindsets and the ballgame of how we operate.

The AABS currently has 29 alumni and is developing a network of innovative entrepreneurs to strengthen supply chains in Africa. The challenge ahead will be in increasing awareness of the opportunities that come from working for agricultural cooperatives.

 Graduates are primarily interested in the big NGO’s and companies, yet the assets of dairy farmers are greater than the Nairobi Stock Exchange. There is a need for entrepreneurial leaders, not just entrepreneurs

The $1.5 million two-year grant from the Bill and Melinda Gates Foundation will help to develop the training programmes by enabling them to initiate an Agribusiness consortium of African business schools. The AABS Agribusiness Consortium now includes Universities in Tanzania, Ghana, Nigeria, Kenya and South Africa.

 

More information on the Association of African Business schools can be found at: http://www.aabschools.com/

 

More information on Agribusiness Management Education in Africa can be found at: http://www.aagri.net/