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Eighth Annual USA-African Trade and Economic Cooperation Forum

This year, the forum tackles a crucial issue: How Africa can take full advantage of the export opportunities offered by trade with the world's largest economy.

For Africa's smallholder farmers - who dominate the agricultural sector - the challenge involves access to finance and to markets.

This week, business and policy leaders from the United States and Africa are in Nairobi for the eighth annual United States-African trade and economic cooperation forum, Agoa.

The solutions require public and private investments to transform Africa's small-holder-based subsistence agriculture into a highly-productive, efficient, sustainable and competitive system.

Agriculture represents a third of the gross national product of sub-Saharan African countries, and employs two thirds of its workers.

Most of these are smallholder farmers who cultivate a hectare or less of land, and produce one-quarter the average global yield.

Sound investments could quickly and sustainably double or triple this current low yield, and do so while protecting the environment.
The investments needed to trigger such changes have been calculated at up to $39 billion a year for all of sub-Saharan Africa.

The funds will come from a variety of sources: from African governments committed to allocating 10 per cent of their annual budgets to agriculture; from international partners; and from a range of private sector investors, including Africa's own commercial banks.

The latter represents a largely untapped source of funds for agriculture. Although farmers have long been considered "too risky" for lending, we have recently seen close to $200 million in market-based and low-interest loans made available to them from African banks.

This money is available to smallholder farmers, small-scale agricultural businesses, and African entrepreneurs across the value chain. The seeds of these partnerships are beginning to bear fruit in many parts of Africa.

In Kenya, Equity Bank's programme with AGRA and the International Fund for Agricultural Development, Kilimo Biashara, has provided nearly $10 million to thousands of farmers and agri-businesses. Rural agro-dealers and suppliers have used the loans to stock their shops with improved seeds and fertilisers.

Farmers have used them to purchase these inputs and increase their yields.

AGRA would like to leverage an additional $4 billion in financing for smallholder farmers and agricultural value chains over the next five years.

Such financing can help fill a large gap for cash-strapped farmers, who otherwise have little to invest in their farms, and whose unsustainable farming remains a poverty trap for millions.

Such financing is especially important to women farmers, who produce 60-80 per cent of Africa's food, yet receive less than 10 per cent of rural credit.

o unleash Africa's agricultural potential, women farmers need full and equal access to finance - as well as to land, technologies, extension services and markets.

Such access will enable farmers to produce an abundance of food. But raising productivity is not enough. Farmers must also be able to get that food to markets.

To link farmers to markets, investments are needed: in adequate storage to reduce post-harvest losses; market information systems; food processing and other forms of value addition; in strengthening farmers' associations and ability to negotiate; and in developing the underlying infrastructure.

The region must also develop a unified grading system for agricultural products that meets rigorous standards for trade.

Given the scale of investments needed, AGRA is focusing its efforts on directing resources and building partnerships in areas that have the best chances of success - the breadbasket regions of Africa.

Agoa can open up important market opportunities for agricultural produce from Africa. The challenge will be to produce enough, and to meet the standards required to qualify for market access.

If agricultural productivity remains low, food insecurity and hunger will remain the norm, and export opportunities will be lost.

The United States and Africa should invest in stimulating agricultural growth for millions of Africa's small-holders, enabling them to feed themselves and earn higher incomes from expanded markets.

Only then will the benefits of Agoa reach those who matter most - small-holder farmers, especially women.

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