Taking the theme Catalysing the diversification of the Nigeria economy through agricultural finance, the conference, which just concluded, has focused on West Africa's most populous nation, Nigeria, and opportunities for developing its agriculture sector. However, lessons learned have also been identified for other countries in the region, where effective rural and agricultural finance is needed to drive more efficient food production, processing and marketing. The event was organised by the African Rural And Agricultural Credit Association (AFRACA) and the Central Bank of Nigeria, with the support of the Technical Centre for Agricultural and Rural Cooperation (CTA) and the International Fund for Agricultural Development (IFAD).
A growing population coupled with large-scale migration from rural areas to towns is creating strong demand for food in West Africa, which is urbanising more rapidly than any other region on the continent. Spending on food in the region is expected to triple by 2022. Given that the average West African family spends 60 percent of household income on food, this trend creates valuable opportunities for farmers. But poor access to finance remains a major constraint for agriculture, despite the availability of adequate arable land that could be used for food production.
African food imports have reached alarming levels, with a total bill of US$22.4 billion for sub-Saharan Africa in 2014, dominated by foreign purchases of rice. The Economic Community of West African States (ECOWAS) region is by far the largest food importer on the continent, led by Nigeria. This huge country, whose economy is based on its oil reserves at the expense of other productive sectors, urgently needs to develop agriculture, to ensure sustainable economic growth and feed its growing population.
"West Africa depends largely on food imports, when all the evidence shows that it is perfectly capable of producing much of its own food," said Lamon Rutten, Manager of Policies, Markets and ICTs at CTA. "That would mean higher revenues for farmers and could help to stem the rural exodus, especially if young people can be persuaded that there is a future in farming. But for any of this to happen, it is essential to have the right rural and agricultural financial mechanisms in place."
With some 200 participants drawn from the public, private and development sectors, as well as from farmers' organisations, the meeting set out to examine positive rural and agricultural finance models, together with interventions that have proved less successful. It also discussed how best to harmonise the most promising agrifinance initiatives to ensure that investments are directed where they can be most effective.
Topics on the agenda included developing an inclusive finance sector, the role of government and central banks in improving rural and agricultural finance and innovative financial products for smallholder farmers and small and medium-sized enterprises, as well as innovations in financing agricultural value chains. Among cross-cutting issues explored during the sessions were access to finance for youth and women and challenges posed by climate change.
"Non-oil sectors such as agriculture have great potential of addressing social and economic challenges, not only in Nigeria but across the continent," said AFRACA Secretary General Saleh Usman Gashua. "Rural and agricultural finance therefore remain key drivers for unlocking the full potential of agriculture. The agricultural sector still is yet to attain its full potential in the continent."
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