The African Development Bank slates $12.5 billion to train young agriculture entrepreneurs in Nigeria and 24 other African countries
| By Anayo Ezugwu | Sep 12, 2016 @ 01:00 GMT |
THE Africa Development Bank, AfDB, has earmarked $12.5 billon to train the next generation of agriculture entrepreneurs in Nigeria and 24 other African countries before 2025. Akinwumi Adesina, president, AfDB, said the money will be disbursed to 10,000 youths in each country through AfDB’s Empowering Novel Agric-Business-Led Employment for Youth in African Agriculture, ENABLED Youth.
The programme is aimed at promoting youth entrepreneurship in agriculture and agro-business, according to information published on the AfDB website as part of the resolutions from the just concluded Sasakawa symposium on contributing to social security and jobs through agriculture held at the 6th Tokyo international conference on African Development (TICAD VI) in Nairobi, Kenya.
“Under the Programme, AfDB will train the next generation of agriculture entrepreneurs, also referred to as agripreneurs. The investment required under the ENABLE Youth programme to provide 10,000 youth agribusinesses per country is US $0.5 billion, translating to about US $12.5 billion in 25 countries.”
Adesina said if each enterprise creates five additional employees, this would amount to a minimum of 2.5 million and up to 5 million jobs created within the period. According to him, governments in the continents can develop agro-business by developing agro-allied industrial zones and staple crop processing zones in rural areas.
The zones, supported with consolidated infrastructure, including roads, water, electricity, will drive down the cost of doing business for private food and agribusiness firms.
Such zones will create markets for farmers, boosting economic opportunities in rural areas, stimulating jobs and attracting higher domestic and foreign investments into the rural areas. They will also turn the rural areas into zones of economic prosperity.
According to Adesina, feed Africa, one of the bank’s priorities, aims to transform African agriculture into a globally competitive, inclusive and business-oriented sector that creates wealth, generates gainful employment, improves quality of life and secures the environment.
The AfDB had on August 4, approved a $9 million equity investment (approximately 12 percent of the fund’s capitalisation) in the Fund for Agricultural Finance in Nigeria, FAFIN, to provide expansion capital to agricultural small and medium-sized enterprises, SMEs. FAFIN is a first-generation private equity fund that provides financial, capacity-building and technical assistance to commercially viable SMEs in the Nigerian agribusiness sector, through a unique value chain-centric approach, and using a combination of equity, quasi-equity and convertible loan instruments.
FAFIN implements its strategy and constructs its portfolio through a bifocal lens consisting of the twin objectives of competitive financial returns and measurable positive social impact. The Fund is jointly sponsored by the German KfW Development Bank and the Government of Nigeria, through the federal ministry of agriculture and rural development, FMARD. The fund manager is Sahel Capital (Mauritius) Limited, a fund management firm incorporated in Mauritius in 2013.
The project is expected to deliver strong development outcomes from household benefits and employment through the creation of a large number of jobs and the provision of certain agricultural products; positive gender and social effects through the implementation of out-grower schemes and supporting rural development; and private sector development through alleviation of financial constraints faced by agribusinesses and enhancing agricultural value chains.
The project’s contribution to inclusive growth is expected to be significant, given the large numbers of jobs to be created and out-growers to be reached at the level of sub-projects. Its contribution to green growth is expected to be low because the Fund targets the agribusiness sector with some expected negative effects on the environment.
The Fund’s primary focus will be on SMEs across the agricultural value chain with crop value chain and geographic diversification. It aims at fixing broken value chains to increase efficiencies, reduce post-harvest loss, and increase smallholder farmer incomes and SME agribusiness profitability.
Investment instruments will be primarily quasi-equity (convertible bonds, preference shares and structured royalties) and direct equity. The ticket size ranges from $500, 000 to $5 million. The fund is aligned with the bank’s 10-year strategy focusing on inclusive growth, strengthening agriculture and food security, and access to local SME finance, which is encapsulated in its ‘High Five Development Agenda for Africa’, specifically Feed Africa and Industrialise Africa.
It is also in line with the bank’s Strategy for Agricultural Transformation in Africa (2016-2025), Strategy on Jobs for Youth in Africa (2016-2025) and the Bank’s Country Strategy Paper for Nigeria (2013-2017), which supports an enabling environment for agriculture.