With the global spread of the COVID-19, and gradual lockdowns in cities and countries across Africa, I have new fears – that starvation and hunger are mounting threats for people across continent. These fears are hinged on the realization that it is planting season in most parts of the Continent, and yet farmers are being asked to sit at home, the movement of seasonal workers is restricted, research institutes that provide seeds, fertilizer blending companies and agrodealers, processors and markets are all being shut down. Our regional and national borders are closed, and trading is being restricted. These realities, if pro-longed and not urgently addressed, will lead to short term consequences of food shortages, price hikes, and medium to long term consequences of under-nutrition, mass starvation and eventually death, especially among our most vulnerable populations.
We have to act with urgency to stem the virus through social distancing and lock downs. At the same time, we must recognize that farmers and workers in the food industry are essential to the fight against the pandemicand desperately need to be protected and supported. Indeed, without nutritious food, the sick cannot recover, and the healthy will eventually become unwell.
My fears are shared by a few stakeholders on the Continent and around the world. The EU Farmer’s organization – COPA-COGECAearlier this week actively advocated for support to ensure minimal disruptions to the food supply chain, worker protection and contingency plans. The United Kingdom and the United States have already outlined comprehensive plans to provide intervention grants, loans, and tax holidays, for stakeholders in the food industry, including restaurant owners and retailers affected by the economic fallout of the pandemic. In Mexico, farmers who continue to plough their fields are being celebrated as heroes.
Sadly, there has been no coordinated action from industry groups, the private sector, civil society, or the public sector to raise awareness about the looming food crises on the African Continent, linked to COVID-19.
Thankfully, it is not too late to act! We must take decisive and proactive steps to ensure that our people have access to affordable nutritious food in both our urban and rural communities. This will require that;
- Our governments at the federal, state, and local levels recognize key stakeholders in the food and agricultural landscape as essential workers and provide them with the protection and support that they need to continue to work, following pre-stipulated safety and health protocols. We must keep food markets and factories open, with clear guidelines around limiting crowds, and widely publicized schedules for who can enter during what periods of time. We can also learn from China’s example over the last few months, where government officials, especially the Ministry of Agriculture and Rural Affairs (MARA) and Ministry of Human Resources and Social Security and National Health Commission repeatedly issued comprehensive notes to farmers on the control and prevention of the virus in rural areas, as well recommendations and protocols for preparing for their planting season and sustaining the livestock and poultry sectors.
Beyond guidance and protocols, our governments must urgently partner with the financial services sector to develop comprehensive loan packages for farmers, and entrepreneurs who are committed to working during the crises and can demonstrate their capacity to fill critical gaps in the food ecosystem. These interventions must actively engage women, who play a critical role in the sector. In addition, our governments must assess thenational strategic and emergency grain reserves to gauge what is available and how to effectively manage and deploy these reserves in a transparent and accountable manner to minimize price hikes and widespread shortages.
- Our industry associations, fast moving consumer goods companies, international trading companies, aggregators, wholesalers, and retailers must work together seamlessly to ensure the efficient and effective provision of affordable food to the masses of people. Leveraging technology, raw material suppliers and processors can actively partner with logisticsproviders and retailers to ensure that food is moved to where it is needed most, and no community is left behind.
This is not a period for hoarding and price gouging, with a focus on profits and growth at all costs. Companies must rise to the higher ideal of shared corporate values, where they put the needs of their customers and the African people ahead of their own requirements for profits and shareholder value. To ensure that this occurs, consumer protection and anti-competition agencies must closely monitor the activities of the largest actors in the food industry to ensure a level playing field.
In addition, the private sector can facilitate the introduction ofdrones, sensors and other precision agriculture andinnovative technology solutions, which will allow for active monitoring of commercial farm activity from a distance. Companies such as Atlas AI have demonstrated the power of technology to manage farms and assess impact, without direct human contact.
Our nonprofit organizations and media organizations must provide thought-leadership, monitoring and guidance to the entire ecosystem. Organizations such as GAIN are already providing critical guidance during this period.
- Finally, average citizens must invest in their own backyard and community gardens, while ensuring social distancing, manage their food budgets judiciously and share with their neighbors. Faith based organizations must open soup kitchens, offering free meals and partner with logistics providers to coordinate drop-offs. We must rebuild trust in our communities by caring for the most vulnerable at this exceedingly challenging time in our history as humanity!
As an eternal optimist, I am hopeful that as a people we will survive the COVID-19 pandemic, emerging with some critical lessons and a more resilient, united,and efficient food ecosystem. Now is the time for governments, stakeholders in the food ecosystem and citizens to act! Every minute counts!
Article By: Ndidi Okonkwo Nwuneli is the managing partner of Sahel Consulting Agriculture & Nutrition and the Co-Founder of AACE Foods. She is a 2018 Aspen New Voices Fellow and is currently writing a book titled “African Entrepreneurs Nourishing the World,” as a research fellow at the MR-CBG at the Harvard Kennedy School.
Visit: Sahel Consult
AFEX Raises $50Million for Agri-SMEs, Africa’s First Warehouse Receipt Backed Commercial Paper
AFEX CEO, Ayodeji Balogun (Source: AFEX)
AFEX Commodities Exchange Limited (AFEX), Nigeria’s leading private commodities exchange company, has announced the first Warehouse Receipt Backed Commercial Paper in Africa, with tech-enabled operations and a 24-hour fast cash turnaround for borrowers. With over $50 million raised for Agri-SMEs, this bridges the funding gap between lenders and borrowers in the Nigerian agricultural sector with a commodity-backed instrument – for the first time.
The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the Food and Beverage, Trading Poultry and Animal Feed segments in Nigeria. The receiving companies are top 10 players in their respective segments. They have now been enabled access to a tool for managing price volatility, enabling up to 30% direct savings on prices.
“With our vision to reach a cumulative total of over $5 Billion in investment to the agriculture sector over the next five years, this financing deal is right on track to achieve this goal’’ – said Ayodeji Balogun, CEO, AFEX Commodities Exchange. “As we move towards building a derivatives market in Africa, we want to be able to reduce exposure to price risk for stakeholders, by enabling them to hedge their positions and trade in commodity derivatives.”
The warehouse receipts, which can then be transferred from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a sustainable funding structure and address underfunding in the Nigerian agricultural sector. With the warehouse receipt system linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.
“Our mission is to provide low-risk working capital facility for stakeholders in the Agro sector, in a way that is transparent and has a very high viable investment return’’ – said Akinyinka Akintunde, VP Financial Markets at AFEX. “As a licensed commodities exchange and warehouse receipt system operator, we deploy a warehouse receipt system and collateral management infrastructure to increase market confidence for both lenders and borrower.”With AFEX’s goal to support Africa’s food security while promoting a fair exchange of value among players in commodity value chains, this deal’s social impact is delivered through market access for farmers and reduced post-harvest losses. AFEX continues to contribute to the United Nations Sustainable Development Goals 1, 2, 5 and 8; no
poverty, zero hunger, gender equality, decent work, and economic growth.
SunCulture secures $11m debt facility from SunFunder syndicate to expand solar irrigation in Africa
SunCulture CEO and co-Founder, Samir Ibrahim (Source: YouTube)
SunCulture, a solar irrigation company headquartered in Nairobi, Kenya, today received the first disbursement from a new $11m syndicated debt facility to expand its operations in sub-Saharan Africa.
The new loan is groundbreaking for the “productive use” solar sector due to its size and its innovative combination of working capital and end-user financing.
Arranged by SunFunder, the co-investors in the facility are Nordic Development Fund; Triodos Investment Management, through its Hivos-Triodos Fund; SunFunder through its Solar Energy Transformation Fund; AlphaMundi through both its SocialAlpha and AlphaJiri Investment Funds; and the AfDB’s FEI OGEF managed by Lion’s Head.
This will enable SunCulture to scale up renewable energy installations at smallholder farms and households that will mitigate over 20,000 tons of CO2 annually – as farmers replace diesel pumps with solar ones – whilst facilitating income growth and job opportunities in rural communities.
SunCulture has pioneered a “Pay-As-You-Grow” business model to make solar-powered irrigation affordable for smallholder farmers in sub-Saharan Africa, combining end-user finance, value-added services, modern climate technology, and access to improve productivity. A recent report developed by Dalberg Research shows that irrigation systems and solar-powered water pumps can increase farmers’ production between 2 and 4 times, and their income between 2 and 6 times.
Samir Ibrahim, Chief Executive Officer at SunCulture, said, “The past year was devastating for the millions of smallholder farmers in Kenya; 87% are in a worse financial position due to the pandemic. 81% of SunCulture farmers, however, were able to increase their revenue from farming in 2020. Solar irrigation helps create food security and sovereignty, and it also helps lift people out of poverty. This facility further enables our efforts to support farmers by
providing them with more of our solar solutions, and faster.”
Jemimah Kwakye-Fosu, Investment Officer, who led the transaction for SunFunder, said: “We are delighted to have led this syndicate of proactive lenders who worked well together for a common goal: to help SunCulture reach many more farmers. It shows how working capital can be combined with end user financing, which is essential for making productive use technologies affordable.”
Surabhi Mathur Visser, Head of Investments at SunFunder, said: “This is a pioneering transaction that demonstrates how productive use technologies like solar irrigation can be scaled up. SunFunder arranged this facility with a similar-minded group of lenders to support an innovative product and business model. We look forward to seeing SunCulture grow in Kenya and new markets.”
Karin Isaksson, Managing Director at NDF, said: “This loan to SunCulture is the second e[tended to a company graduating from the EEP Trust Fund managed by NDF. It is a clear demonstration that we can deliver on the new NDF Strategy and its commitment to provide flexible and scalable financing as well as catalytic impact. It has all the ingredients that define NDF’s added value in the climate financing landscape. It demonstrates our capability to convene and mobilise additional financing, as well as our unique mix of financing instruments to match the needs of our partners, public or private. We are proud to be standing with our partners and supporting the emergence of a greener economy, precisely at this time of COVID-19.”
“Since our first investment in 2019, SunCulture has made huge strides to unlock the potential of smallholder agriculture through innovative products and consumer credit. FEI-OGEF is happy to be able to refinance our inventory loan into this new working capital facility and continue that growth alongside a committed and constructive group of lenders,´ noted Harry Guinness from Lion’s Head.
Judith Santbergen, Senior Investment Manager at AlphaMundi, said: “Since 2018, AlphaMundi has successively provided support to SunCulture through a combination of technical assistance and debt investment. We are e[cited to continue and increase our investment in the company via this new, innovative working capital facility.”
Sjoerd Melsert, Senior Investment Manager at Triodos Investment Management, said: “SunCulture is a great e[ample of an innovative company that is active on the nexus of renewable energy and agriculture, using solar energy to increase farmers’ incomes. Our facility supports the further growth of SunCulture’s pay-as-you-go solar portfolio, leading to a more sustainable and higher production for smallholder farmers, which is fully aligned with the
mission, ambition and activities of Hivos-Triodos Fund.”
Cocoa Pricing: Why Public-Private Sector Partnerships are Key to Sustaining the Livelihood of Smallholders Farmers in Africa
Pricing is a debating point in the cocoa sector, dominating contemporary stakeholder conversations; especially African cocoa producers. This is a result of the historically low cocoa prices that do not provide a fair income to farmers involved in cocoa production. Despite the announcement of the Living Income Differential (LID) by both Cote d’Ivoire and the Ghana Cocoa Boards, there still exist questions on the sustainability of this intervention – to take farmers out of poverty. Stakeholders in the African Cocoa industry need to rethink its strategy to improving farmers’ livelihood, by increasing their earning potential through value chain efficiency, facilitated by public-private sector partnership.
Interventions aimed at income enhancement and lifting farmers out of poverty are often based on the assumption that the said interventions, alone, are enough for the solution being pursued. On the surface, the decision to increase the farmgate price of cocoa and LID by an additional $400 a tonne on all cocoa contracts, appear to be a solution to lifting farmers out of poverty. However, even if farmers’ incomes were to increase – through increased farm gate prices – other structural issues like small farm sizes and low productivity levels will still keep these farmers below the poverty line.
For Cocoa farmers to earn a fair wage from their input, issues like ageing plantations, lack of adequate training and financing as well as direct access to the market, need to be addressed. These structural issues pose a more significant threat on the livelihood of cocoa producers in Africa. Price increases on their own are not enough to lift the poorest farmers out of poverty. Price interventions like the LID must go hand in hand with other policies and programme, implemented to increase the volume and quality of beans produced. Achieving this will require a multi-stakeholder collaboration involving both the private and public sector aimed at not only improving the quality of lives of farmers but ensuring that the cocoa value chain is optimized.
To enable smallholder farmers benefit in an egalitarian way from the cocoa industry, the focus should be towards improving value chain efficiency while addressing structural challenges in the sector. This is achievable through a public-private collaboration that will drive private sector operations to deepen financial markets, scale-up infrastructure investments and enhance productivity and quality through training and input supply.
Through collaborating with Cocoa Cooperative Societies –providing training, input financing and market access, AFEX has enabled smallholder farmers to increase their productivity, while producing to international standards. With technology like AFEX Workbench – a value chain management platform which facilitates input sourcing, loan administration, sales, a transparent and efficiently executed cocoa process is achieved.
A public-private sector-driven model will create a sustainable approach which will revitalize and boost cocoa production in Africa – creating jobs and improving the living standard of the farmers. While the government takes the driver seat to develop policies and the infrastructure to catalyze this growth across the cocoa ecosystem, private sector organizations will ensure value chain efficiency – increasing the benefits stakeholders gain from the industry.
AFEX is committed to providing the support and technology to improve the quality of life for African cocoa farmers and their communities.