Roundup: Low financing hinders Africa agric growth: experts

Agriculture experts have blamed inadequate funds for being behind low agriculture productivity in African economies.

They made the remarks on Monday during an international conference on best practices in rural and agricultural finance in Kigali, Capital of Rwanda.

Rwanda hosts the high level meeting on Aug. 1-3 under the theme of "fast-tracking replicability of functional models in rural and agricultural finance."

The forum which focuses on deliberating ways to increase agriculture financing in developing countries has brought together more than 250 international, regional and local experts and stakeholders in rural and agricultural finance.

Saleh Usman Gashua, secretary general of Africa Rural and Agricultural Credit Association (AFRACA) said during the conference that inadequate funding for agricultural practices in most African countries has remained a threat to the growth of the sector.

"Investors in Africa are focusing on channelling their investments in mining, energy and infrastructure development, leaving agriculture sector behind. The financial institutions have also not helped farmers because the terms and conditions for accessing loans are not conducive for small-scale farmers," he added.

Gashua stated that any attempts to improve agriculture financing should take into account financial challenges facing small holder farmers and the lack of access to modern financial instruments.

Agriculturalists believe that the lack of a comprehensive agricultural financing policy as the major reason why all of the challenges have persisted despite government intervention in most developing countries.

The three-day meeting organised by AFRACA will also take into account the policy perspectives on scalable and replicable models in rural and agricultural finance and regional perspectives on inclusive finance models in agriculture.

AFRACA is a regional association of sub-Saharan financial institutions involved in providing financial services to the rural population of the region.

Gerardine Mukeshimana, Rwanda minister of agriculture and animal resources, said that change in mindset is needed, in which African agriculture is seen as a business opportunity.

"Efforts must be directed at fostering local private sector growth across the continent to foster private sector-led agricultural transformation. We have seen a shift towards agricultural development as an engine of economic growth," she said.

Mukeshimana stated that Rwanda is working with the African Development Bank on establishing agriculture risk sharing and financing mechanism to scale up agriculture financing by commercial banks.

Africa contributes only 10 percent of world agriculture produce, yet has most of arable land. In Sub-Saharan Africa, agriculture accounts for approximately 21 percent of the continent's GDP, according to the Food Agriculture Organization.

"In many African countries there is no policy on agriculture financing. If there is a policy, there often is no strategy," noted Rafael Gamboa Gonzales, director general of Mexico's leading agriculture finance institution-FIRA.

Gonzalez pointed out that collateral-related challenges, high interest rates and mistrust between banks and farmers pose a serious challenge to agriculture financing in Africa. Endit