Access to financing crucial for the future of agriculture in West Africa

In many countries in West Africa, agriculture remains one of the main economic drivers, ensuring the livelihoods of millions of people as a primary source of employment.

According to the International Fund for Agricultural Development, the African agrifood sector is estimated to reach $1 trillion by 2030. However, despite its importance, this sector faces considerable challenges that hinder its potential to contribute significantly to the region’s socio-economic development. The general reliance on this sector for a living can also become an obstacle when farmers face challenges such as variable yields and economic vulnerabilities.

Agriculture in West Africa still largely consists of small-scale farms. These enterprises remain at the heart of the food system, representing 70 percent of the food produced in Africa. Therefore, one of the sub-region’s challenges is transitioning from subsistence farming to industrial agriculture and eventually sustainable agro-industry. With many small-scale farms, subsistence farming predominates and remains limited in its ability to adopt modern practices that would increase yields, facilitate local processing, and simplify market access. However, many agricultural entrepreneurs, especially young people, face obstacles such as limited access to financing or a lack of necessary expertise.

This observation underscores the urgent need for a significant transformation of agricultural sectors to offer real opportunities for improving living conditions by providing sustainable employment that can reduce poverty.

Unlocking the Potential of Agro-Industry to Stimulate Opportunities for Youth

It is essential to remember that Africa has enormous potential to feed its population and even the world. A lever for growth that, to be realized, must rely on the development of the agro-industry. The real value creation for young people comes from agricultural processing. It is, therefore, essential for Africa to transform its goods locally.

We must change our paradigm. Africa possesses, according to estimates, between 50 percent and 60 percent of the arable land still not exploited in the world. However, the continent imports 80 percent of the food products consumed locally. Only a structured agro-industry, through local mastery of the entire value chain of agricultural sectors, will become the engine of the continent’s growth, enabling sustainable development and a source of creating permanent jobs.

Successful examples exist and show that agro-industry is a strategic solution. For instance, in 2017, Côte d’Ivoire set itself the goal of locally processing 50 percent of its cashew nut production by 2030. At the halfway point, Côte d’Ivoire already processes 260,000 tons of cashews on-site, representing 20 percent of its harvest. The country has also encouraged the installation of processing plants by increasing production. In 2023, around 30 processing plants were already in operation, and more than a dozen others are expected to be established in 2024.

Investments are essential to unlocking the potential of African agro-industry. Infrastructure, innovation, and skills must be invested in to structure agricultural sectors from production to processing and marketing. While agricultural development initiatives have been launched to address these challenges, much remains to be done to strengthen legislative and financial incentive mechanisms at both the state and international levels to promote a significant improvement in the African agro-industry.

Private Sector in Action

The private sector can play a central role in transforming the agricultural sector, establishing relationships with innovative financing mechanisms to adopt new technologies, digitization, training, and mechanization of farms. By collaborating with farmers and entrepreneurs, the private sector can help stimulate innovation, strengthen technical capacities, and create stable jobs.

Among the emerging solutions, the Mastercard Foundation’s “Fork to Farm” approach appears as a strategic opportunity and a true change in perspective. This approach starts from consumer demand to transform and structure the agricultural sector into a source of attractive and diversified jobs for young people in Africa, thus enabling 6.2 million young people in the WAEMU region, 70 percent of whom are women, to access dignified and fulfilling work by 2030.

The private sector can establish a sustainable Agrifood system through education, technical training, and the creation of entrepreneurial ecosystems to change perceptions and equip young people with the necessary skills. When well supported, agro-entrepreneurs can adopt sustainable practices and access financing, whereas previously, they were excluded from traditional financing mechanisms.

We appeal to the private sector to fully play its role and, in collaboration with public, governmental, and supranational actors, adopt a new approach to contribute more actively to the socio-economic development of West Africa. By focusing on a local approach, the private sector can promote the enrichment of society, thereby contributing to a more prosperous future for the region.

With innovative solutions and increased commitment from the private sector, agricultural development in West Africa can be transformed into a powerful engine of progress and prosperity for its inhabitants. The time has come to take action and realize the untapped potential of the agricultural sector in the region – and beyond.

This article was initially published by Mastercard Foundation.