AfDB, among other initiatives, invests in projects supporting a new generation of agripreneurs. Which projects have had the greatest impact and why?
Africa should be a global power house in food and agriculture because 65% of the cultivatable arable land left in the world is in Africa. And so we want to turn that into real wealth to help Africa benefit. But for that to happen, we have got to make agriculture cool and that is why AfDB launched the ENABLE youth initiative – to initially help young graduates get into agriculture as a business and create a new young dynamic in the agriculture and agribusiness sector in Africa to replace the rapidly ageing population. As a bank, we are committed to investing roughly €12.75 billion in these projects over the next 10 years, and our goal is to help start up at least 300,000 agribusinesses through this effort and create about 1.5 million jobs.
Last year we invested close to €680 million to kick off the ENABLE youth programme in six countries – Cameroon, Democratic Republic of Congo, Malawi, Nigeria, Sudan and Zambia. We also launched another initiative to help young entrepreneurs in particular, but not necessarily in agriculture, called Boost Africa. This is a joint programme that we launched with the European Investment Bank and invested roughly €200 million to help support about 2,000 young entrepreneurs in various sectors, but mostly small and medium enterprises.
You oversaw the introduction of the first electronic wallet system in Nigeria in 2012. Which technologies do you think have been or will be the most important for connecting farmers with banks and financial services?
The electronic wallet system was a huge success in Nigeria. We tried to address 40 years of corruption in the fertiliser and seed sector as a result of the very corrupt government procurement systems that were in place. We used the power of mobile phones to do that, and farmers were sent electronic vouchers on their mobiles which they used to buy inputs from rural agricultural input traders. We were able to register farmers digitally and, over a 4 year period, we were able to reach well over 15 million farmers. It was a huge success in the sense that it put farmers in the middle of public policy, and there was a significant increase in public property accountability and transparency in terms of how government resources are used to target smallholder farmers. This allowed Nigeria to increase food production by an additional 21 million t over 4 years.
The power of mobile phone technology is so critical, so AfDB is really pushing the frontier with regard to the use of mobile phone technology. When you look at technology in terms of financial services, a great example is Kenya and the use of M-Pesa – a mobile money transfer system. In Kenya today, about €20 billion goes through the M-Pesa system every year and so, at AfDB, we are working to help improve aspects of digital finance for millions across West and Central Africa in collaboration with the Bill and Melinda Gates Foundation. I think mobile phone and digital technology is transforming the lives of poor people. It has opened up opportunities to connect farmers to markets, and get market price information, insurance, and access to farm inputs and financial services. It is a very transformative technology.
Following the World Food Prize award, how do you intend to continue to drive change in African agriculture and alter the mindset towards farming so that it is conceived as a business?
First and foremost, I feel tremendously honoured to have been awarded the World Food Prize. But what is important to me is what we do from here. For me, the work is not yet complete. Today, we have 243 million Africans that are malnourished. We’ve got 58 million African children under the age of 5 years old that are stunted, which is the highest rate in the world. You have got 10 million young children in Africa that are obese. So the challenge is to rapidly eliminate food insecurity and malnutrition on the continent to make sure that we eliminate the wasting and the stunting of our children in Africa.
We must also turn all of the rural areas of Africa from what I call zones of economic misery to zones of economic prosperity, and that can only happen when we get agriculture working. And so the work ahead of me is to get countries to understand that agriculture is not a way of life, agriculture is not a development activity, agriculture is a straight line business.
Africa today produces 75% of cocoa beans in the world, but Africa accounts for only 2% of the €85 billion global chocolate market. Africa produces a lot of cotton but all of it is exported as raw cotton fibre. And the same thing goes for coffee. African countries are in the top 10 major coffee bean producing countries in the world, but we export them abroad as coffee beans. Now taking a look at chocolate, the price of cocoa will always decline, but never the price of chocolate or any derivatives of cocoa. And the price of coffee beans may go down, but not the price people pay at Starbucks for drinking coffee. So what Africa must do is get to the top of the global value chains in the things that it produces, in other words agricultural industrialisation, to add value to everything that Africa produces to be able to be competitive in the global market.
Today, Africa is spending €30 billion a year importing food. If nothing is done, that is going to reach €93.5 billion by 2030. And so, when Africa manages to feed itself, this will be important for the general market and economic stability of African countries, preservation of foreign exchange, transformation of rural areas, and creation of jobs for millions and millions of people. Therefore, agriculture must be at the centre of the economic diversification strategy and wealth creation in Africa. I believe that the future millionaires and billionaires of Africa will come out of the food and agriculture industry – not out of oil and gas sector – because nobody eats oil and gas.
What is the significance of public private partnerships (PPPs) in transforming smallholder farms into productive and profitable businesses?
If you take a look at Thailand’s smallholder farmers, they produce the bulk of the rice we eat globally. Smallholders in India are the ones that produce rice and some of the pulses we eat globally. That tells me there is nothing wrong with smallholder farmers. What we must do is make sure that smallholder farmers are provided with the support systems that they need. They need access to finance, information, markets, the best technologies in the world (including mechanisation), and rural infrastructure to transform the rural economy.
I think this is where the role of the private and public sector needs to be clear. You need smallholder farmers, medium-scale commercial farms and large-scale farms. The key is being able to connect them all, with the large and medium-scale commercial farms providing access to markets and supporting the infrastructure for farmers. So the role of PPPs here will be making sure, on the private sector side, that private agribusinesses are located in rural areas. The problem in Africa today is that private agribusinesses, especially food processing companies, are all located in urban areas. They are selling very close to the ports where they bring in the raw materials, process them, and send products back. That is not creating any jobs in Africa at all.
At AfDB, we are pushing for a new PPP arrangement and infrastructure that we call ‘staple crop processing zones’ or ‘agricultural industrial development zones’. These are going to be vast areas located rurally where private businesses in agriculture will be encouraged to locate their food processing companies. That way they are closer to the farmers, can create markets for farmers, process and add value to all the agricultural commodities in place, review the massive amount of raw materials coming out of the rural economy and create a massive amount of jobs there. These areas are going to be enabled by governments with support from AfDB and others, with enabling infrastructure – power, water, roads and ICTs – that will drive down the cost of doing business. So these would transform all of the rural areas into what I would call zones of economic prosperity.