Theme 1: Synthesis

Harnessing private sector financing to generate effective agricultural investment

Hosted by: CAADP Joint Action Group for Private Sector Initiatives

Presented by Michael SudarkasaUNDP AFIM

Many Private Sector Initiatives are now aligned to CAADP

AGRICULTURE FASTTRACK FACILITY

Agvance Africa

We are learning how to reduce risks and unlock private sector finance.Risk analysis identifies value chain weaknesses that prevent banks and investors from releasing capital. De-risking and risk sharing initiatives related to agriculture finance are proliferating.

Risk can be overcome through:• Public-private collaboration e.g. SAADP• Public sector intervention focused on promoting favourable policy and

public goods such as farmer training, infrastructure.• Catalytic finance for pioneering companies• Innovative instruments e.g. loan guarantees, insurance, smart

subsidies, warehouse receipt systems• Organising smallholders semi-formally e.g. Savings Clubs or formally

e.g. Depot Companies for coffee.

Special attention and innovation need to ensure that women, youth and the very rural are reached e.g. financial literacy training, ICT and dedicated financial bodies.

A strong, well-organised value chain then attracts banks and investors.

Action to unlock private sector finance, now needs to go to scale.

• Appetite for innovation and action on private sector finance, justifies more time and focus by CAADP at the 10th PP and elsewhere.

• Future Partnership Platforms should have greater participation by the private sector, lead firms, agro-dealers - as well as farmers.

• Ministers of Finance and Heads of State should understand the opportunity for impact at scale, and demonstrate leadership. Agricultural private sector finance should be raised at upcoming Summits.

• The Joint Action Group must coordinate a collective effort to disseminate good practices and to scale-up support for countries in unlocking finance.

Grow Africa ~ accelerating investment for sustainable growth in African agriculture

Grow Africa – AUC/ NEPAD / WEF convening support for CAADP countries to:• Increase private sector investment: US$3.5 billion planned to date• Enable multi-stakeholder partnerships: 8 countries engaged to date• Share lessons and best practice

Lessons from experience in 2012:• Government leadership is essential to provide enabling environment• The interest in agricultural public-private partnership is so high, it requires

dedicated in-country capacity to coordinate.• Trust needs rebuilding between companies and farmers and government.• Companies are pioneering inclusive models but need support to succeed.• Pilots are working but need scaling aggressively to achieve meaningful

impact.

Making Finance Work for Africa ~ mainstreaming work on agricultural financial services into CAADP Framework

MFW4A is a multi-donor, multi-themed forum housed at the AfDB focused on promoting financial sector development in Africa. Following a seminal conference in Kampala which ended with the adoption of the “Kampala Principles”, a 2012 study was commissioned to explore how to align MFW4A activity with the CAADP program.

Recommendations of the exercise included:• Appointing a finance specialist to sit within CAADP to support multi-stakeholder

platforms at the country level.

• Appointing another finance specialist within Grow Africa to support NAIP focused investment and finance attraction initiatives. Within the Grow Africa program the aim would also be to initiate pilots in 2-3 countries to mobilize financial sector to support prospective investors.

• To support the African Rural and Agriculture Credit Association (AFRACA) and its network of Central Banks, Agric Banks, Savings Organizations etc. To become a relevant partner for CAADP to gather and disseminate examples of innovative agricultural finance models.