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Young Africans create new roads for agriculture

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Jean Bosco Nzeyimana’s company, Habona Ltd, employs 25 young people who collect garbage, separate out the plastic and metal, and use the organic waste to produce fuel briquettes for cooking. With the remains from the briquette process, they make organic fertiliser, which is sold to farmers. This according to Pius Sawa, Reuters.

Young Africans seeking to transform agriculture

“This is a very smart agricultural technology because this is the place where farmers can get compost that helps them restore the soil quality lost through applying chemical fertilisers,” said Nzeyimana, adding that Habona is producing 50 tonnes of fuel a month. Managing the waste also reduces the greenhouse gasses that would be emitted into the atmosphere if the garbage were destroyed by burning it on an open fire, as often happens around markets.

The Rwandan entrepreneur is just one example of young Africans seeking to transform agriculture by using new technologies while contributing to food security and employment.

Their innovations were showcased at the MasterCard Foundation’s Young Africa Works Summit 2017, held in Kigali in February, aimed at putting young people at the centre of a “green revolution” for Africa that can help equip agriculture to thrive amid climate change.

“The increasing severity of climate change is already amplifying existing stress on water availability and food security in many African countries,” said Anne Miles, the foundation’s director for youth livelihoods and financial inclusion. “A growing youth population means this group will be particularly vulnerable,” she added. At the same time, young people are uniquely poised to understand the problem and to use new methods to make farming sustainable, efficient and profitable even as the planet warms, the foundation believes.

Help for women farmers

Pilirani Khoza founded the Bunda Female Students Organisation in 2014 to help pay fees for disadvantaged women students on science courses at Lilongwe University of Agriculture and Natural Resources in Malawi. In return, the sponsored students act as agricultural extension workers, training poor women farmers to survive harsh climatic conditions. The students are sent to rural counties, where they each train around 30 women farmers for a month.

They provide the farmers with the inputs and knowledge they need to implement relatively simple methods, such as using small plastic bottles filled with water and pierced at both ends which are tied onto the crop, irrigating it for six months.

So far the project has reached 360 rural farmers, who are making progress in planting trees, growing vegetables and crops that are tolerant of drought and floods, and conserving water in the soil, said Khoza.

In Kenya, meanwhile, 23-year-old Brian Bosire is the brain behind UjuziKilimo, which means “knowledge farming” in Swahili. Having seen farmers in his village suffer from poor yields due to droughts, floods, and erratic rains, Bosire developed a handheld electronic sensor that gathers data on soil quality and helps farmers decide what to grow. “My first dream was to have some device that any farmer – like my mother or a village woman – could just stick into the ground, and within a few minutes get the precise information about what kind of inputs they need, what kinds of crops will do well, and where can they get those inputs,” he said.

The service is operated by extension agents who test the soil and send information and advice to farmers on their mobile phones, which they also use to pay for their subscription.

In 2015, Bosire’s company won an award from the American Society of Mechanical Engineers, recognising its work in developing technology to improve the livelihoods and yields of small-scale farmers. “One of the 250 farmers who were getting 10 bags of maize from one acre is now earning $300 per month from vegetable farming,” said Bosire. “We are proud that at least the farmer is getting the right knowledge to drive him to profitability.” In the next two years, the company aims to reach 200,000 Kenyan farmers, he added.

Ending hunger

Bosire said climate change is one of the biggest challenges facing Africa, because its agriculture is mainly rain-fed. One of the best ways to make farmers more resilient is to create solutions that are tailored to smallholders, he said.

Nzeyimana said climate change is “for real”. “Young people, because of the skills they have, have to take a lead in trying to make sure that we mitigate the climate change risks before they hit us the hard way,” he emphasised.

Currently, the fuel briquettes his company produces are sold only in southern Rwanda but it is planning to build a bigger plant to be able to supply the whole country. Khoza said young Africans are the drivers of agricultural transformation. “We give hope to other youth that without them, we cannot (meet) the Sustainable Development Goals of ending hunger and poverty,” she told the Thomson Reuters Foundation.

New jobs

Richard Munang, regional climate change coordinator with the UN Environment Programme, said agriculture is key to tackling poverty in Africa. He cited World Bank figures showing that a 10 percent increase in agricultural productivity on the continent translates into a seven percent reduction in poverty.

Agriculture has the potential to reduce African poverty two to four times faster than any other sector, he noted. That is because it employs nearly two-thirds of the population on average, with women producing up to 80 percent of the food. Through the agricultural value and supply chains, the sector interacts with technology, logistics, and energy – where it can create new income opportunities, Munang said by email. The best way to achieve this is to consider the full supply chain, not just on-farm production, he said. For example, information and communications technologies can be used to link producers with markets, and clean energy deployed to power food processing, adding value and employment on both sides.

“This is the sector youth need to engage in to create jobs for themselves and future generations,” said Munang.

Thomson Reuters Foundation is the charitable arm of Thomson Reuters and covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit news.trust.org/climate

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Agriculture

AFEX Raises $50Million for Agri-SMEs, Africa’s First Warehouse Receipt Backed Commercial Paper

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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.

Also Read Cocoa Pricing: Why Public-Private Sector Partnerships are Key to Sustaining the Livelihood of Smallholders Farmers in Africa

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SunCulture secures $11m debt facility from SunFunder syndicate to expand solar irrigation in Africa

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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.”

SunCulture

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Cocoa Pricing: Why Public-Private Sector Partnerships are Key to Sustaining the Livelihood of Smallholders Farmers in Africa

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AFEX Commodities Exchange Limited (AFEX) CEO, Ayodeji Balogun (Source: AFEX)

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.

Author: Ayodeji Balogun is the CEO of AFEX Commodities Exchange Limited (AFEX)

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