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By: Dr. B. O. Oramah Executive Vice President (Business Development & Corporate Banking )

INTERNATIONALIZATION OF AFRICA’S AGRICULTURE AND IMPLICATIONS FOR FOOD SECURITY. at the IEFA (Organized by PBSF) Palm Beach, Florida, USA, April 6-8, 2014. By: Dr. B. O. Oramah Executive Vice President (Business Development & Corporate Banking ).

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By: Dr. B. O. Oramah Executive Vice President (Business Development & Corporate Banking )

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  1. INTERNATIONALIZATION OF AFRICA’S AGRICULTURE AND IMPLICATIONS FOR FOOD SECURITY at the IEFA (Organized by PBSF) Palm Beach, Florida, USA, April 6-8, 2014 By: Dr. B. O. Oramah Executive Vice President (Business Development & Corporate Banking )

  2. Thank you for the opportunity granted Afreximbank to participate in this year's International Economic Forum of the Americas. We are happy to be associated with this event because it gives us the opportunity to share our views on the impact of globalization on Africa’s agriculture. INTRODUCTION

  3. AFREXIMBANK: WHO ARE WE? CREATED in 1993 under the auspices of the AfDB RATINGS: Baa2/BBB-/BBB- (by Moody, Fitch/S&P ) MANDATE: Promote and Finance Intra and Extra African Trade 122 SHAREHOLDERS comprising -African Gov’ts and multilateral Institutions -African Private Investors and Financial Institutions -Non-African Investors HEADQUARTERED in Cairo, EGYPT The Trade Finance Bank for Africa AUTHORISED CAPITAL USD5 BILLION (3)

  4. AFRICA: AGRICULTURE RESOURCE ENDOWMENTS • Abundant Labour; • Abundant Water (i.e. Surface, Underground and Rainfall) • Diverse Ecosystem – from Mangrove to Desert • Vast Arable Land

  5. TRADITIONAL AFRICAN AGRICULTURE • CHARACTERISTICS • SMALL HOLDINGS • With Size of 0.2 – 1 hectare per • farmer • FRAGMENTED FARMS • Due to Land Tenure System • LIMITED USE OF TECHNOLOGY (Rainfed, Low Mechanization, Chemicals, Seeds, e.t.c) • LABOUR INTENSIVE • LARGELY SUBSISTENCE • POOR CREDIT DELIVERY • OUTCOME • LOW YIELDS • LIMITED PRODUCTION FOR • THE MARKET • LIMITED OR NO SUPPORT • FOR AGRO-BASED • INDUSTRIALIZATION • MALNUTRITION ESPECIALLY IN THE RURAL AREAS • POOR ANTHROPOMETRIC • INDICATORS (5)

  6. PAST ATTEMPTS AT RESOLVING THE AGRICULTURE PROBLEMS INSTITUTIONAL E.g. Promotion of Cooperatives, Agriculture Credit Schemes, Government-Run Mechanization Schemes, Farm Settlements POLICY-BASED E.g. Rural banking, Subsidy schemes (such as fertilizer, e.t.c) MARKET-BASED APPROACH E.g. Green Revolution, Commercialization schemes, e.t.c

  7. FAILURE OF PAST INTERVENTIONS Poor Conceptualization DID NOT PROVIDE FOOD SECURITY Africa could neither feed itself nor generate enough revenue to buy what it needs to feed itself Inadequate Funding Governance Issues REASONS Diverse nature of Ecosystems Inherent weaknesses in approach (e.g. in subsidy

  8. EMERGING TRENDS GLOBALIZATION Integration of Africa’s Agriculture into the Global Supply Chain: Internationalization of Africa’s Agriculture ECONOMIC REFORMS

  9. CONSEQUENCES OF INTERNATIONALIZATION • Challenges of Resource Fixity and Allocation: Production for Food vs Production for Export • Massive Land Purchases by Foreign Entities: Export of Africa’s Land Water and Labour • Rising Non-Equity Modes e.g. Contract Farming • Changing Taste as Imports replace traditional food items

  10. RISKS • Worsening of the Food Situation in Africa

  11. RISKS • Malnutrition especially for the most vulnerable (Women and Children) • E.g. African Malnutrition Population • 2010 175 Million • 2012 239 Million • Turning Land Owners into Labourers • Possible Political Instability from Social Unrest

  12. WAY FORWARD • Adoption of a MODEL that brings BENEFITS of COMMERCIALIZATION while ENSURING FOOD SECURITY – SUSTAINABLE INTENSIFICATION • Adopt Pillars I-IV of African Union’s Comprehensive Agriculture Development Programme (CAADP)

  13. WAY FORWARD • Pillar I: Extending Area Under Sustainable Land Management and Reliable Water Control Systems • Pillar II: Improving Rural Infrastructure and Trade Related Capacities for Market Access • Pillar III: Increasing Food Supply, Reducing Hunger and Improving Responses to Food Emergency Crises

  14. WAY FORWARD • Pillar IV: Improving Agriculture Research and Technology Dissemination and Adoption

  15. WAY FORWARD • Focus on Sustainable Contract farming as an optimal approach that meets market needs while guaranteeing food security. E.g. Hortico in Zimbabwe and Farmapine in Ghana.

  16. ................... Hortico - Zimbabwe Involves 3000 Smallholders; 60% being Women; Restriction of Quantity of Export Crop to free Land for Other Food Crops A Cooperative Market Strategy and Market Based Development Approach with Support from the World Bank. Enabled farmers to earn an average income of US$5,000 compared to GDP per capita of US$320 in 2004 allowing farmers to buy needed food for consumption. Farmapine - Ghana

  17. Thank You All

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