Transcript African Development and Investment in Agriculture Role of the African Development Bank

Human Development Summit
Nairobi, Kenya
September 29-30, 2009
African Development and Investment in
Agriculture
Role of the African Development Bank
By
Chiji Ojukwu
Manager, Agriculture 1 Division
Agriculture and Agro-Industry Department
African Development Bank
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Presentation Layout

Agricultural Potential in Africa

Challenges and Constraints to Agricultural Development in Africa

Perspectives for Funding African Agriculture

Renewed Commitments to Funding Agriculture

The Role of African Governments

The AfDB funding for Agriculture

Bank’s Emergency and Humanitarian Assistance

Strategy Planning for Agriculture Recovery

The Bank’s Medium Term Strategy 2008 - 2012

Current Bank Strategy and Programming Priorities

Bank’s Ongoing Agriculture Sector Portfolio:

Bank’s Agriculture Sector Lending Program 2009-2012

Bank’s Other Existing and Proposed Special Initiatives in Agriculture

Climate Change- Climate for Development in Africa Program

Engaging the Private Sector for Agricultural Development
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Agricultural Potential in Africa
Good agro-climatic conditions
production
for
agricultural
Imports of agricultural and food products can be locally
produced
Large share of production is not fully exploited (low
value addition) or lost (post-harvest losses)
Local, Regional, and International Markets
Urbanization:
demand
food
diversification
and
increased
High Food Prices
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Challenges and Constraints to Agricultural
Development in Africa

Low agricultural productivity and high post-harvest losses

Poor infrastructure (especially in rural areas)

Lack of capacity building in agro-industry and market
linkages

Low access to technology

Meeting market demands (standards and certification)
especially for international markets

Barriers to regional trade and integration in Africa

Low access to financial services and non-conducive
environment to attract investors and private sector

New challenges: Climate Change and Bio-energy
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Perspectives for Funding African Agriculture
 There are estimates from various institutions on the
required financing for agriculture for Africa to
achieve the MDGs, especially MDG 1.
1. Overall Needs:
– UN (2001): USD 20 billion per year by 2015
– WB (2002): USD 54-62 billion per year by 2015
2. Incremental needs:
– IFPRI (2008): + USD 7-8 billion per year by
2015
– FAO (2008): + USD 8 billion per year by 2015
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Renewed Commitment to Funding Agriculture
 Commitments to Financing Agriculture in Africa (among many others)
1.
Monterrey 2002: ODA increase from USD 69 billion in 2003 to a
record of USD 107 billion in 2005
2.
Maputo Declaration of 2003 and Launching of CAADP: RMCs to
allocate 10% of their national budgets to agriculture
3.
Gleneagles 2005: agricultural development is key to African
development
4.
Rome Summit 2008: New Pledges for Agriculture
5.
UN HLTF on Food Security and Comprehensive Framework for
Action
6.
AU Sirte Summit on Financing Agriculture (2008)
7.
Recent G8 meetings in 2008 and 2009 – Commitment to increasing
financing to African Agriculture
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The Role of African Governments
 This situation calls for all African Member
Countries
and
partners
to
mobilize
additional resources in support of agriculture
with more results-based interventions within
the framework of the Comprehensive African
Agriculture Development Program (CAADP).
 Most Importantly honouring their commitment
to the Maputo Declaration to allocate >10% of
national budgets to agricultural and rural
development.
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ADB Funding for Agriculture
Between 1967 and 2008 the
Bank Group approved a total of
3,276
loans
and
grants,
amounting to UA 44.75 billion;
with the share of the agricultural
sector being 16.1 per cent or
UA 7.2 billion.
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Bank’s Emergency and Humanitarian Assistance
 In terms of emergency and humanitarian
assistance, the Bank continues to support victims
of natural disasters across the continent whenever
they occur.
 Between 2004 and 2008 the Bank’s support to
Emergency/Humanitarian Support totaled UA 20.3
million
 In 2008 alone, the Bank Group provided record
number of emergency humanitarian assistance
totaling UA 2.97 million, including the control and
eradication of Avian Flu in RMCs.
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Strategic Planning for Agricultural Recovery
The development of agriculture should get the
attention it deserves and a plan for agricultural
recovery needs to be part and parcel of any
plans for financial recovery. The critical role of
Regional Financial Institutions including the
Bank becomes imperative in this drive, and
should be fully recognized and realized. The
Bank’s Medium Term Strategy is focused to
facilitating new initiatives for agricultural
development.
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The Bank’s Medium Term Strategy 2008 - 2012
 Current Bank’s Financing to Agriculture is guided by the
Bank’s Medium Term Strategy – 2008 to 2012.
Operational focus on infrastructure, building capable
States, private sector operations, and higher education
The medium term support to agriculture is estimated at
about USD 1.2 billion
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Current Bank Strategy and Programming
Priorities
 THE
CORPORATE
GOAL:
INCREASED
SELECTIVITY WITH OPERATIONAL FOCUS ON
INFRASTRUCTURE, BUILDING CAPABLE STATES,
PRIVATE SECTOR OPERATIONS AND HIGHER
EDUCATION.
 AGRICULTURE AND AGRO-INDUSTRY: THE
SECTOR PRIORITIES ARE DRAWN FROM THE
CORE CORPORATE PILLARS AND CURRENTLY,
AGRICULTURE IS BEING IMPLEMENTED THROUGH
MAINLY THE INFRASTRUCTURE PRIORITY AREAS:
SPECIFICALLY THE PRIORITIES ARE ON:
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Current Bank Programming Priorities Contd.
 EXPENDED AGRICULTURAL AND RURAL
INFRASTRUCTURE, INCLUDING IRRIGATION
AND WATER MOBILIZATION, RURAL AND
FARM ACCESS ROADS, LIVESTOCK AND
FISHERIES
 POST-HARVEST TECHNOLOGIES, MARKETS,
REDUCTION IN POST-HARVEST LOSSES;
 NATURAL RESOURCE MANAGEMENT AND
CLIMATE
CHANGE
ADAPTATION
AND
MITIGATION
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Other Current Bank Programming Priorities
 WITH SPECIAL APPLICABILITY TO:
– CAPACITY AND INSTITUTIONAL BUILDING
OF RMCS MINISTRIES OF AGRICULTURE
AND RURAL DEVELOPMENT, POLICY
ADVICE
FOR
AGRICULTURAL
GOVERNANCE AND TRADE;
– STIMULATING
PRIVATE
SECTOR
INVESTMENT AND PPP IN AGRICULTURE
 PROMOTING TECHNOLOGY DEVELOPMENT
AND RESEARCH
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Current Bank Programming Priorities Contd.
AND MAINSTREAMING CROSSCUTTING ISSUES:
- GENDER MAINSTREAMING
- CLIMATE CHANGE AND
ENVIRONMENT; AND
- BUILDING AND MANAGING
KNOWLEDGE.
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Bank’s Ongoing Agriculture Sector Portfolio
THE AGRICULTURE AND AGRO-INDUSTRY
DEPARTMENT (OSAN) IS PART OF THE
PUBLIC SECTOR OF THE BANK AND
MANAGES A PORTFOLIO OF AROUND 230
OPERATIONS
WITH
ONGOING
COMMITMENTS OF AROUND 3 BILLION
USD IN 30 AFRICAN COUNTRIES. THESE
EXCLUDE THOSE MANAGED BY ITS
PRIVATE SECTOR DEPARTMENT.
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Bank’s Agric Sector Lending Program (2009-2012)
ADB Loans
(UA million)
MIC-Grants
(UA million)
ADF Loans
(UA million)
ADF Grants
(UA million)
Total
(UA million)
2011
80
255
81
8.5
1
1
253.3
43
662
74
17
107
335.8
316
851
2012
263
2
525
208
998
Total
679
12.5
1483.3
406
2500.80
Year
2009
2010
 THERE ARE ABOUT 84 AGRICULTURAL AND RURAL
INFRASTRUCTURE PROJECTS IN OSAN'S CURRENT PIPELINE AT
DIFFERENT STAGES OF PREPARATION. THE TOTAL ESTIMATE OF
BANK'S PIPELINE INVESTMENT SHARE, AS A LOAN OR A GRANT,
IS ABOUT UA 2500.80 MILLION
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Bank’s Other Existing and Proposed
Special Initiatives in Agriculture
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Africa Food Crisis Response; Short and M-L Term
actions





The AFCR provides a framework for accelerated support to Regional Member
Countries affected by increased food prices.
Interventions were designed to contribute to efforts to reduce the risks
associated with the crisis in Africa.
The projection was to inject into Africa’s Agriculture Sector, about UA 496.57
Million in the short Term and UA 1.4 Billion in the Medium to Long Term
The Short Term responses consisted of: (i) Agricultural and non-agricultural
Projects Realignment (ii) Budget and Balance of Payment Support; (iii)
Allocations form the Bank’s Surplus Account; and (iv) Increased Dissemination
of NERICA rice seeds.
In addition to the above Short Term Measures, the Medium and Long Term
Measures include:
– Improved rural infrastructure;
– Operationalising the African Fertiliser Financing Mechanism;
– Increasing NERICA rice production;
– Capacity building, policy dialogue and trade promotion;
– Scaling up private sector operations for food security;
– Promoting agriculture research, and
– Establishment of the Crisis Response Facility
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AFRICA FERTILISER FINANCING MECHANISM
(AFFM)
THE AFFM WILL
 ASSIST RMCs IN INCREASING AGRICULTURE PRODUCTIVITY
WITHIN THE CONTEXT OF MDGs; AND
 CREATE AN ENABLING ENVIRONMENT FOR MOBILIZING
INVESTMENT NEEDED TO INCREASE FERTILIZES USE FROM
CURRENT AVERAGE OF 8 TO 50 Kg/Ha BY 2015, TARGET SET BY
THE ABUJA SUMMIT, 2006.
 AFFM FOCUSES ON TWO TYPES OF ACTIVITIES:
- FACILITATION
FACILITATION ACTIVITIES WILL REMOVE POLICY AND
STRUCTURAL OBSTACLES TO INVESTMENT IN FERTILIZER
PRODUCTION, DISTRIBUTION, AND USE:
- CAPITAL INVESTMENTS.
AFFM WILL FINANCE CAPITAL INVESTMENTS THAT PROMOTE
FERTILIZER SUPPLY AND USE.
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BUSINESS PLAN FOR AGRICULTURE WATER
MANAGEMENT (2008 – 2013)

The total estimated investment requirements of the proposed BP is estimated at
about UA 4.97 of which the Bank could finance a share of about 30-40%, in
collaboration with other co-financing partners and governments depending on the
level of ADF XII replenishment..

Main Areas of Focus:
 Agricultural Water Development: The development an area up to 500,000 ha
including: (a) new areas under full control of water, (b) rehabilitation and
modernization of existing schemes, (c) development of Community/Private
driven Small-Scale Irrigation, and (d) development of areas under partial control
of water in lowlands/Flood plains (UA 2.96 billion).
 Water Storage Enhancement: Develop infrastructure to increase water storage
capacity in Africa by at least 1% for multi-purpose use: to irrigate 760,000 ha
and generate 1200 MW of hydro-power (UA 1.86 billion).
 Institutional Support and Project Preparation Studies: including capacity
building activities, policy formulation and the identification and preparation of
operations in support of AWM and water storage enhancement (UA155 million).
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Agro-Industry Development ACTIONPLAN
While the Bank has over the past decades accumulated a significant
experience in public agricultural investment projects, its involvement in agroindustrial development has been limited. Agro-Industrial Development has
been included within OSAN’s operational priorities for the period 2007-2012.
Causes
Lack of Resources
Project design
basically focused on
production
Actions
Build in-house
capacity
Value Chain approach
of new operations
Needs
Staff +Technical
Assistance
Outcomes
Lack of strategy in this
area
Agro-Industry Strategy
(encompassing PostHarvest Losses)
Cooperation with accredited partners in this area
(i.e. FAO/UNIDO)
Agro-Industry Strategy
Guidelines for agro-industrial development in the operations’ design
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CONGO BASIN FOREST FUND (CBFF)
The CBFF, launched in London, June 2008, intends to:
 improve food security and the livelihoods of the population,
alleviate poverty and address climate change challenges by
reducing the rate of deforestation in the Congo Basin. The
Congo Basin rainforest is currently under increasing threat
due to illegal logging, shifting cultivation, population growth,
as well as oil and mining industries.
 The Fund supported mainly by the UK and Norway (initial
contribution of US$ 200 million) will be used over a ten-year
agreement period up to 2018, to finance Central African
Forests Commission (COMIFAC)’s Action-Plan in different
strategic areas aimed at conserving the Congo Basin
rainforest.
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Climate Change- Climate for Development in
Africa Program (ClimDev-Africa)
ClimDev-Africa aims to enhance economic growth and
sustainable development (SD) by mitigating vagaries of
climate variability through integration of Climate Risk
and Adaptation Management (CRAM) into pertinent
sectoral policy and decision processes throughout the
continent.
ClimDev-Africa will be implemented under the direction of
the Joint AUC-ECA- AfDB Secretariat.
Needs:
 Support to ClimDev Trust Fund established to finance CC RMCs
projects. ClimDev-Africa is a 3-phase program over a 12-year period
with a targeted budget of US $ 135 m for 1rst phase.
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Engaging the Private Sector for Agricultural Dev.
The Bank’s private sector window is supporting
agriculture SMEs – as well as financing fertilizer plant
projects across different regions. Meanwhile, the
Bank, in collaboration with the Agence Francaise de
Developpement (AFD), the Alliance for a Green
Revolution in Africa (AGRA), International Fund for
Agricultural Development (IFAD) and BMZ/KfW has
established the African Agriculture Investment Fund.
With a startup capital of 200 million Euros, this fund
will focus on making available private capital for
African agriculture along the value chain and work to
improve its integration into the global market.
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As Africa’s leading development finance
institution, the Bank is in a unique position to
play the role of policy advocacy on the continent,
given its location on the African landscape, its
mandate and its expertise.
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