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

By: Dr. B. O. Oramah

Executive Vice President (Business Development & Corporate Banking )

By: Dr. B. O. Oramah

Executive Vice President (Business Development & Corporate Banking )

INTERNATIONALIZATION OF AFRICA’S INTERNATIONALIZATION OF AFRICA’S AGRICULTURE AND IMPLICATIONS FOR FOOD AGRICULTURE AND IMPLICATIONS FOR FOOD

SECURITYSECURITY

at the IEFA (Organized by PBSF) at the IEFA (Organized by PBSF)

Palm Beach, Florida, USA, April 6-8, 2014Palm Beach, Florida, USA, April 6-8, 2014

INTRODUCTIONINTRODUCTION

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Thank you for the opportunity granted Thank you for the opportunity granted Afreximbank to participate in this year's Afreximbank to participate in this year's International Economic Forum of the International Economic Forum of the Americas. Americas.

We are happy to be associated with this We are happy to be associated with this event because it gives us the opportunity event because it gives us the opportunity to share our views on the impact of to share our views on the impact of globalization on Africa’s agriculture.globalization on Africa’s agriculture.

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AFREXIMBANK: WHO ARE WE?AFREXIMBANK: WHO ARE WE?

The Trade The Trade Finance Finance

Bank for Bank for AfricaAfrica

122SHAREHOLDERS comprising -African Gov’ts

and multilateral Institutions

-African Private Investors and Financial Institutions

-Non-African Investors

122SHAREHOLDERS comprising -African Gov’ts

and multilateral Institutions

-African Private Investors and Financial Institutions

-Non-African Investors

MANDATE: Promote and

FinanceIntra and Extra African Trade

MANDATE: Promote and

FinanceIntra and Extra African Trade

RATINGS:Baa2/BBB-/BBB-

(by Moody, Fitch/S&P )

RATINGS:Baa2/BBB-/BBB-

(by Moody, Fitch/S&P )

CREATED in 1993 under the auspices of the AfDB

CREATED in 1993 under the auspices of the AfDB

HEADQUARTERED in Cairo, EGYPT

HEADQUARTERED in Cairo, EGYPT

AUTHORISED CAPITAL USD5 BILLION

AUTHORISED CAPITAL USD5 BILLION

Abundant Labour;

Abundant Water (i.e. Surface, Underground and Rainfall)

Diverse Ecosystem – from Mangrove to Desert

Vast Arable Land

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AFRICA: AGRICULTURE RESOURCE

ENDOWMENTS

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CHARACTERISTICSSMALL 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

TRADITIONAL AFRICAN AGRICULTURETRADITIONAL AFRICAN AGRICULTURE 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

PAST ATTEMPTS AT RESOLVING THE AGRICULTURE PROBLEMS

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POLICY-BASEDPOLICY-BASED

MARKET-BASED

APPROACH

MARKET-BASED

APPROACH

INSTITUTIONAL

INSTITUTIONAL

E.g. Promotion of Cooperatives, Agriculture Credit Schemes, Government-Run

Mechanization Schemes, Farm Settlements

E.g. Promotion of Cooperatives, Agriculture Credit Schemes, Government-Run

Mechanization Schemes, Farm Settlements

E.g. Rural banking, Subsidy schemes (such as fertilizer, e.t.c)

E.g. Rural banking, Subsidy schemes (such as fertilizer, e.t.c)

E.g. Green Revolution, Commercialization schemes, e.t.c

E.g. Green Revolution, Commercialization schemes, e.t.c

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Governance IssuesGovernance Issues

Inherent weaknesses in

approach (e.g. in subsidy

Inherent weaknesses in

approach (e.g. in subsidy

Diverse nature of Ecosystems

Diverse nature of Ecosystems

InadequateFunding

InadequateFunding

Poor Conceptualization

Poor Conceptualization

REASONSREASONS

FAILURE OF PAST INTERVENTIONS

DID NOT PROVIDE

FOOD SECURITYAfrica could neither feed

itself nor generate enough

revenue to buy what it

needs to feed itself

DID NOT PROVIDE

FOOD SECURITYAfrica could neither feed

itself nor generate enough

revenue to buy what it

needs to feed itself

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GLOBALIZATION

ECONOMIC REFORMS

EMERGING TRENDSEMERGING TRENDS

Integration of Africa’s Agriculture into the

Global Supply Chain:Internationalizatio

n of Africa’s Agriculture

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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

CONSEQUENCES OF INTERNATIONALIZATIONCONSEQUENCES OF INTERNATIONALIZATION

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Worsening of the Food Situation in Africa

RISKSRISKS

Food Consumption Per Capita Per Day

1984-86 1997-99

2015

Sub-Saharan Africa 2057 2195 2360

Industrialized Countries

3206 3380 3440

World 2655 2803 2940

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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

RISKSRISKS

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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)

WAY FORWARDWAY FORWARD

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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

WAY FORWARDWAY FORWARD

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Pillar IV: Improving Agriculture Research and

Technology Dissemination and

Adoption

WAY FORWARDWAY FORWARD

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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.

WAY FORWARDWAY FORWARD

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Hortico - Zimbabwe

Farmapine - Ghana

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.

Thank You All

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