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INNOVATIVE FINANCING AND INVESTMENT IN

AGRICULTURE: AFRICA’S EXPERIENCE

Professor Victor O. Okoruwa

Department of Agricultural Economics,

University of Ibadan

Paper presented at

The 6th Africa Agricultural Science week, International Conference Centre,

Accra, Ghana. 15th to 20

th July 2013

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INNOVATIVE FINANCING AND INVESTMENT IN AGRICULTURE: AFRICA’S

EXPERIENCE

1.0 Introduction

Key importance of agriculture and the need to finance it

The role of agriculture in an economy is a major factor in determining the economy‟s state of

development (Hazell and Diano, 2005). Most African countries are mainly agrarian since

agriculture contributes immensely to their economies. Agriculture‟s contribution to GDP in the

Africa is between 30% and 40% on the average. The sector accounts for almost 60% of total

export earnings in the continent, provides the dominant occupation for about 65% of Africa‟s

population and has been growing on the average at about 3.3% each year since 2000 (IFPRI,

2009). Despite this impressive contribution of agriculture to Africa‟s economy, the sector

remains largely under-developed. Most farmers are still at the subsistence level and small scale,

having less than 2ha of land. The level of technology is also low, production remains weather-

dependent and consequently, farmers‟ incomes are low. Poor market access, weak infrastructure

and limited ability to influence government policy also characterize the sector (Quartey et al,

2012). Majority of Africa's agricultural population live in rural areas and the rural population

comprises over 60% of the entire population. Further, over 600 million people in sub-Saharan

Africa are youths under the age of 30 years and about 65% of this number, work in subsistence

agriculture. Rural agricultural workers are among the poorest in Africa with poverty rate

averaged at about 50% (UN/ECA, 2010).

Agriculture has the potential to serve as a strong driver of growth and poverty reduction in Africa

(Nin-Pratt et al, 2011). Agricultural investment is the most important and effective strategy for

poverty reduction in rural areas (World Bank, 2008). Investing in agriculture reduces poverty

and hunger through multiple pathways. Farmers‟ productivity and incomes are enhanced, thus

generating demand for other rural goods and services, creating employment and incomes for the

landless rural poor. In addition, there is increased availability of food in the market which leads

to lower consumer prices thus, making food more accessible to rural and urban consumers. These

benefits ripple from the village to the broader economy (Alston et al. 2000).

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African agriculture has however, been greatly impeded by lack of adequate investments, funds

and credit (Sogo-Temi and Olubiyo, 2004). Inadequate access to finance has been a prevalent

feature of agriculture and a key impediment to improving the efficiency of African farmers in

production and adopting better technologies. Farmers typically face seasonal income, long

maturation periods and are exposed to considerable risks. The seasonal nature of agriculture

arising from temperature or variable rainfall, causes price fluctuations of inputs and products and

crop failure due to pests and diseases. Credit constraints have adverse effects on farm output,

profit, investment and efficiency thus, lowering farmers‟ risk bearing ability which results in

under-investment and consequently, inability to break out of poverty (Guirkinger and Boucher

2008). More importantly, women and youths in agriculture have been more disadvantaged as a

result of poor access to and or insufficient finance (Okpupara, 2010). Okpupara, (2010) observed

that women were likely to have less credit than men since they have fewer assets than men while

older farmers are more likely to have credit than younger ones. This has implications for

agricultural development since women and youths make up the larger proportion of the

agricultural labour force. Therefore, if agriculture is to become a chief player in eradication of

hunger and poverty, the issue of agricultural finance is pertinent.

African governments have been the main source of agricultural finance over the years although;

the supply of official finance to the sector has been found to be only about 5% (FAO, 2013)

despite the 2003 Maputo declaration of 10% government allocation to the sector. The restricted

and unpredictable nature of public funding, especially in times of crisis, indicates that new ways

of financing (i.e. innovative financing) which are specifically tailored to suit the prevailing

conditions are required for agricultural development (Quartey et al, 2012). This paper therefore

sets out to discuss the concept of innovative financing, the need for it and to examine areas

around the world where it has been used and to look at success stories from around Africa in this

respect. Thus, section two gives a global perspective of innovative financing, section three

highlights some case studies of innovative financing from around Africa while section four

concludes the paper and advises on the way forward.

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2.0 Innovative Financing in Agriculture: A Global Perspective

Agricultural development cannot be possible without innovation. It is a major source of

improved productivity, competitiveness, and economic growth throughout advanced and

emerging economies (IFM, 2012). The inherent risks associated with agriculture, such as

dependence of output and prices on weather patterns and other external factors; underscore the

need for innovative approaches in financing agriculture for development. Further, since

economic growth alone cannot accelerate the reduction of hunger and malnutrition (FAO,

2012b), the world will depend on primary economies, to satisfy global food demand as they have

the greatest potential for food production. Africa will require the most efforts because of the low

level development of agriculture and high agricultural risks that characterize the small holder

production systems (Kimathi et al, 2008). The limited access to finance for agricultural

development with the attendant negative effects thus, emphasizes the need for innovative

thinking in financing the sector. This has given rise to what is called “Innovative financing”.

Innovative financing in agriculture, refers to new ways of raising funds, often from extra-official

sources, to foster development in the sector. Innovative financing can be a catalyst for private

sources, which have been far below their potential in developing countries, to contribute to

development through public-private and private innovations. It could be said to rely on new

partnerships between a wide range of stakeholders: countries of diverse levels of development,

local authorities and private sectors. However, it must be sustainable and based on a supportive

policy environment. Innovative financing in agriculture must be innovative in source i.e., raising

capital from new funders or existing funders in new ways, or leveraging private capital, and

mobilizing public resources. Again, innovative financing must be innovative in use, i.e.,

changing the way in which existing capital is deployed or spent, and introducing financial

solutions to increase efficiency, effectiveness and overall impact within both the public and

private sector (IFM, 2012).

2.1 Rational for innovative financing and investment in Agriculture

Figures from International Expert Report (2012) reveals global food supply is expected to

increase dramatically in order to meet the world demand. By 2050 the world‟s population will

reach 9.1 billion, 34 percent higher than today, in particular in developing countries. This

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population growth, combined with increasing per capita meat consumption, will require a 60

percent increase in global food and feed production. Among developing countries, Africa is the

world region where the challenge will require most efforts. Africa lags behind as concerns

productivity gains on major crops and food dependency. The region is facing severe threats as

concerns the maintenance of soil fertility, (already low to start with, because of the nature of the

soil) because of a fragile environment, increasing land pressure and very low adoption of

effective soil conservation practices. Fertilizer consumption is only 9 kg/ha/year (in nutrient

content), against 140 kg in average in developed countries. Meanwhile, Sub-Saharan Africa is

the region where population growth will be highest, where hunger index is alarming and which

will be most likely the most affected by climate change. In addition, challenges from climate

change represent major risks for long-term food security and nutrition especially for the African

continent where agricultural output up to 2080-2100 could be between 15 and 30 percent if

required efforts to adapt agriculture to climate change are not made in due time.

Meeting these challenges will require a considerable scaling-up of investment in Africa‟s

agriculture. Estimates emanating from the FAO‟s report (How to feed the world by 2050)

suggests developing countries will need to invest USD 83 billion per year (net of the renewal

cost of existing equipment) or USD 209 billion including this cost, as compared to a current level

of investment of USD 142 billion in order to cope with the challenge. Considering the

enormousity of the challenge and the existing budget constraints, it is of necessity to find

innovative ways of sourcing funds to help meet the challenge confronting the continent.

Recent innovations taking place around the world in the field of agricultural finance and

investments have been in the areas of rural leasing, providing financial education for farmers,

providing non-financial services, providing market linkages, innovations in marketing,

technology adoption and risk management (Kloeppinger-Todd and Sharma, 2010).

Rural leasing: Rural leasing is a form of credit that provides a means to acquire productive

assets. It is increasingly being used to fill the void of medium term capital investment needs of

farmers, especially landless or marginal farmers who often do not have access to capital and

hence, unable to offer security against loans. Rural leasing also accommodates farmers with

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medium or large sized holdings to assess productive capital to access higher technologies

without the availability of such forms of sustainable financing. This new model of agricultural

finances operates through the use of intermediated agents. These are primarily for financing

working capital needs of farmers (individual liability loans), and there is no peer monitoring or

savings requirement, which is how the program differentiates from a traditional microcredit

program. The loan intermediaries are incentivized with commission on loan requirement.

A 2006 World Bank case study of three profitable providers of leasing in rural areas showed that

in all three cases, the rural portfolios were as profitable as their urban portfolios. For instance,

Amendadora John Deere, the largest provider of farm machinery leases in Mexico, had nearly

US$63 million in farm equipment leases. Networking Leasing Corporation Limited, a leading

micro-leasing provider in Pakistan, had a lease portfolio of more than US$2.4 million in rural

areas. Low lease losses, strong client demand for asset financing, and a favourable legal and

policy environment made rural leasing a profitable business for these companies. For clients,

access to finance at a reasonable cost, low or no collateral requirements, quick processing, and

easy access to the provider appear to be significant benefits.

Financial education for farmers: Most small farmers in developing countries have little

education and limited exposure to modern financial instruments. Additionally, many small

farmers in developing countries live in remote rural settings, where urban-based retail banking is

unavailable. As rural banking takes hold in developing countries, it has also attracted the

attention of institutions in developed countries that have traditionally served farmers. The

Netherlands-based Rabo bank, for example, made investments in countries as varied as China,

Paraguay, and Zambia and successfully provided access to financial services in the rural areas of

these countries. Rabo Development (RD), which is an offspring of the Rabo Bank, participates in

financial institutions and provides management services and technical assistance in these

countries. It works with cooperative “enterprises” and financial institutions that want to increase

their own access to financial services.

In 2010, a recent research linking financial education to behavior changes among low-income

microfinance clients in Bolivia and Sri Lanka, provides insights into a successful innovative

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finance approach. Two years after receiving financial education, clients increased their

knowledge of loan products and debt capacity. Positive changes in savings behaviours included

reducing expenses as well as recognizing the value of saving three times the amount of monthly

income for emergency purposes. Those given budgeting training identified the primary function

and different parts of a budget and were able to work within their own budgets.

Bundling financial and non financial services: In addition to financial constraints, small

farmers in developing countries also face market constraints in acquiring needed inputs (such as

fertilizer, seeds, and extension services). Returns to financial services are thus highly conditional

on access to other nonfinancial services. For instance, Bhartiya Samruddhi Investment (BASIX)

in India, provides services such as soil testing and health monitoring of livestock, along with

credit, to farmers in a way that maximizes returns to credit services. This innovative approach, as

was observed by Mahajan and Vasumathi (2012), helped farmers to access fertilizer adequately

and also apply it appropriately and this helped to improve agricultural yield and made repayment

possible.

There is also the case of a local Argentinian bank BICE. The bank established a fund for both

individual farmers and cooperatives, with the help of the government in charge of the province of

Charco and Sancor Seguros. The fund is based on two principles: Firstly, the producers sell their

crops to the fund under a contract specifying the date of delivery and price. The crops are insured

against climate risks. This future production serves as collateral for the fund, to borrow on the

capital markets and bonds are insured against the risk of non-delivery of the crop or default

buyers. Funds are lent to farmers for the purchase of inputs such as seeds and fertilizers for the

next growing season. Producers pay back their loans either by selling their crops to a third party

and then using the proceeds to pay back the credit (this occurs when the current price is higher

than the contract price) or by selling their produce to the fund which in turn, sells to a pre-

identified buyer.

Risk Management: Covariant risks, such as droughts, floods, and large scale collapses in price

affect a large number of people at the same time. On the other hand, individual or idiosyncratic

risks may affect one farmer, or a small group, and the effects are not large scale. Managing

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different types of risks requires appropriate tools, in the absence of which, farmers usually rely

on traditional informal coping strategies and mitigation techniques, many of which are inefficient

and unsuitable. For instance, a study on the determinants of purchasing a rainfall insurance

product offered to smallholder farmers in rural India, revealed that insurance take-up decreases

with basic risk between insurance payouts and income fluctuations, increases with household

wealth and decreases with binding credit constraints. However, surprisingly, it was found that

risk-averse households are less likely to purchase insurance.

The major question is: which of these innovative approaches can contribute meaningfully to

financing rural and agricultural sector? In other words, which models and institutional types are

suited for rural areas? The answer is that each model has its strength and weaknesses for offering

adapted financial services for agricultural and rural needs.

3.0 Innovative Financing and Investment in Africa: Success Stories

Despite the myriad of problems facing agricultural financing in the continent concerted efforts

are being put in place not only by the governments but also the private individuals in agriculture,

local and foreign investors. The contribution of the some governments in the provision of basic

infrastructure and ensuring security of life and property is highly commendable but more still

needs to be done in the area of electricity, security in the sub region so that more foreign and

local investors can be encouraged. Many of the regional governments are also adopting market-

friendly policies and committing more resources to the sector. Government‟s role in the

innovative financing and investment in the continent has been dual. For example,, direct

government financing with examples in Nigeria, Kenya, Ghana and Uganda, Ethiopia etc and

government partnership with private investor. In either case (public or public-private

partnership), the aim of the governments remain the same: creation of employment opportunity,

enhance revenue (which sustains economy of most countries in the continent) and ensuring food

security. A strong indication that the rest of the world is appreciating current efforts and

achievement is investors‟ wake up to Africa‟s potential. Figures from Info agra and McKinsey

(2010) indicate forty-five private equity firms plan to invest $2 billion in the region‟s agriculture

in the next three to five years. Consequently the continent‟s agricultural output could treble from

the current $280 billion a year to $880 billion by 2030.

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On the farmers‟ part, resources are also being pulled together through cooperatives to assist one

another and great achievements have been recorded in terms of number of beneficiaries and loan

repayment. Kenya, Ghana, Tanzania and Uganda are examples of countries where this is well

established. Local and foreign investors in the continent are involved in production, processing,

marketing and provision of improved farm inputs to farms. Examples are found in Ghana,

Nigeria, Ethiopia, Uganda and Tanzania. Case studies of successes as well as challenges of

innovative financing and investment in Africa are highlighted as follows:

3.1 Public Financing and Investment

The Youth Enterprise with Innovation (tagged YouWin) is a successful youth empowerment

government initiative in Nigeria. The modus operandi involves equipping aspiring young

entrepreneurs with necessary managerial skills by attaching them to well established business

organisation in Nigeria. Fund is made available to the trainee after the completion of training for

establishment of small scale enterprises with potential for growth. The motive is to generate jobs

by encouraging and supporting aspiring entrepreneurial youth in Nigeria to develop and execute

business ideas that will lead to job creation. Although the programme is young, the potential to

create jobs for unemployed Nigerian youths is not doubtful. The programme is projected to

generate 80,000 – 110,000 new jobs for currently unemployed Nigerian youths in the first three

years of its existence.

The cocoa industry in Ghana is dominated by the state-owned marketing monopoly, Cocobod.

Through Cocobod, Ghanaian cocoa raises over a USD 1bn per year in short-term finance on

international markets. It distributes some of this finance through an extensive network of private

sector buyers, who extend seasonal credit and provide a significant degree of organisation to the

value chain. Cocobod also heavily subsidises long-term investment into the industry, specifically

through replantation, and also has strategic arrangements with processors which has resulted in a

significant local processing capacity. The replanting is an important programme in cocoa

business because the yield from the old trees is dwindling over the years and for Ghana to remain

relevant in cocoa business, new high yield cultivars is required to replace the old trees.

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The Kenya Tea Development Authority (KTDA) is another success story of public financing and

investment in agriculture. Kenya currently produces about 16 percent of the world's black tea. It

ranks second after Sri Lanka in tea exports and third after India and Sri Lanka in production.

There has been rapid growth both in acreage and production, with the major expansion coming

from the smallholder sector whose share of total output rose from a mere 2 percent in 1963 to 62

percent in 2000. This remarkable growth is attributable to a number of factors including

favourable investment policies, institutional support, attractive world-market prices and the land

redistribution policy adopted by the government at independence, which was completed in the

mid-1970s. The government bought land from large-scale settler farmers, subdivided it and re-

allocated it to smallholders. The previous policy, which had restricted Africans from growing

cash crops, was abolished, paving the way for smallholder tea production. In terms of

institutional support, smallholder tea growers are provided with extension services and inputs;

they are also helped to collect, process and market green leaf tea.

The Ethiopian Commodity Exchange (ECX) is an initiative sponsored by the Ethiopian

government to better regulate and more efficiently trade major agricultural commodities. The

exchange is currently trading a number of commodities (of which coffee is only the most

important) and hopes to move into sesame in due course. The government has mandated that all

trade in certain commodities must be directed through the exchange so it is effectively a

monopoly. Buying and selling members buy a seat on the exchange, and the exchange also takes

a margin on all trade, which underpins operating costs. The ECX has a network of warehouses

throughout the country where produce can be stored securely, and correctly measured and

graded. On the basis of a receipt from the issuing warehouse, a seller can then instruct his agent

to make a deal in the open outcry market. The buyer can then collect the specific produce from

the warehouse on production of the required paperwork. The company has ensured ready market

for coffee farmers. The reward for coffee by farmers can be improved if the coffee market is

deregulated to allow the forces of demand and supply to determine the price of coffee.

3.2 Public-Private Partnership

The resuscitation of Nigeria Fertilizer Industry through government partnership with Mitsubishi -

Notore has not only conserved the foreign exchange expended on importation of fertilizer but

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also the input is made available to farmers at reasonable price. Production has continued to

experience significant increase since 2009 from 13.5MT of urea to 235 and 402MT in 2011 and

2012 respectively. Private sector is allowed to sells fertilizer to farmers at market price “minus”

the fertilizer voucher discount provided by government. States and Federal Governments ensure

the distribution of fertilizer vouchers to targeted farmers. The need for government to avoid

undue interference in the day to day management of the industry and ensure that the sale of

fertilizer is not for political jobbers is imperative for its sustainability.

3.3 Private Financing and Investment

Maendeleo Agricultural Enterprise Fund (MAEF)

Farm Africa's Maendeleo Agricultural Enterprise Fund (MAEF) is a grant-making fund that aims

to sustainably improve the livelihoods of smallholder farmers in East Africa by investing in

innovative agri-business enterprises that seek to either create or adapt technologies for improving

agricultural productivity, increasing profitability and linking smallholder farmers to viable,

profitable and sustainable markets. The MAEF invests in innovative ideas with recognised

potential at an early stage. It helps grantees to refine and strengthen their ideas and, where

appropriate test their modifications/adaptations at a limited scale (a few farmers groups with

about 100 farmers). The fund has particularly been helpful to women farmers in eastern Africa

trying new ways of working, setting up businesses and finding profitable new markets. Since

2002 more than 150,000 households across Kenya (e.g. Mango jam-making in Kenya), Uganda

(e.g. sorghum for beer brewing in Uganda) and Tanzania (e.g. seaweed farming in Zanzibar)

have been reaping the rewards of MAEF projects which has substantially boost agricultural

productivity by investing in innovative technologies that can be replicate by other farmers, add-

value to harvest by farmers turning crops into more finished products, take farmers products to

more profitable markets and generate income, enabling ryral families to trade themselves out of

povert into a better life.

Savannah Integrated Export Processing Farms (SIEPF)

Savannah Integrated Export Processing Farms (SIEPF) located in Bornu state operates a scheme;

SIEPF scheme for tomato farmers. SIEPF lends land to farmers to produce tomatoes for its

processing plant. The company works with twenty two registered commodity groups and does

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not deal with individual farmers directly. The company also supports the farmers by providing

seeds and extension advice in addition to mechanized land preparation. It provides a guarantee to

farmers to buy the products of a certain quality at a fixed price. This has helped to increase

output for the company when compared with their own past efforts to grow the crop. However,

financing agrochemical inputs such as fertilizers and herbicides still remains a challenge to the

company as farmers have little or no collateral to provide.

OLAM

OLAM, a rice processing mill, started a scheme to multiply rice in Nigeria. It provided inputs

such as seeds and fertilizers to farmers on loan in return for procurement of high quality rice

from the farmers in order to compete with imported rice. The loan does not usually exceed 10%

of the product value. OLAM started with 250 rice farmers but the number grew to 22,000 by

2008 after which the company could not cope with the risks and rigors of managing so many

farmers, hence, it switched to collecting cash payments for inputs to farmers.

Gatsby

Gatsby (African Agricultural Capital) provides access to markets for smallholder farmers in East

Africa by stimulating new value chains, adding value to agricultural products and connecting

smallholders with buyers and customers. AAC provides farmers with higher prices for their

produce and also open up new categories of product for which no market previously existed,

examples are avocado and honey business. Gatsby has attracted over 350,000 additional

smallholder farmers who have benefited. AAC‟s original investment has had a positive impact

on 1.4m smallholder farmers across Kenya, Tanzania and Uganda, mostly through sales of

improved seed and fertilizer. Like other foreign investors in African agriculture, they often

dictate the choice of crops (cash crops) to farmers at the expense of staple crops that will

enhance food security in the continent. The major complain of Gatsby is low return to capital

invested.

Weinco Maize Project

Weinco Maize Project is an input supply company in Ghana. The company supplies small

farmers in groups/associations with technical support, quality seeds and fertilizer that allow

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yields up to 5 tons/ha instead of the traditional 2 tons/ha. The input supply project is funded by a

bank credit guaranteed by the company. After harvest and the farmers have removed the

proportion for own consumption, „Weinco‟ collects the grains at a minimum price that has been

set in the contract. Through hedging on the future market, „Weinco‟ eliminates the risk in the fall

in the world price of maize. The repayment of the input credit is done by reduction on the

proceeds of the sales paid on the farmers‟ bank account. The project allows producers to more

than double their maize production and therefore their income. „Weinco‟ also makes a profit on

the distribution of agricultural inputs (its core business) and on the processing and sale of maize

to feed producers.

Blue Skies

Blue Skies is a major processor and exporter of fresh cut fruit which it exports by air from Ghana

to Europe. This organisation has been of assistance to farmers Ghana through buying of fruits,

thus reducing postharvest loss of farmers due to lack of storage facilities. Blue Skies operates

directly with individual farmers, helping pre-finance production and providing technical

assistance. The company stresses it is not an out-grower scheme though, and does not have

formal arrangements with suppliers. Farmers generally bring their fruits to the factory gate where

it is graded and a potential deal struck. Payment is made in 14 days. There is no gainsaying that

farmers have benefitted from this company, but the price paid to farmers is nothing to write

home about.

4.0 Conclusion

Innovative financing, whatever the form it takes, must be sustainable and based on a supportive

policy environment. The success of innovative financing and investment in agriculture rests on

private investment, public private partnership venture and free market economy where the forces

of demand and supply dictate the prices of tradable commodities. Government is expected to

provide enabling environment in terms of security of life and property as well as provision of

basic infrastructures (electricity, good road network among others) for both local and foreign

investors who expect reasonable returns on their investment. The success in innovative financing

and investment in agriculture witnessed in the developed economies compared to what obtains in

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sub-Saharan Africa may be attributed to provision of basic infrastructure by government and the

operation of free market economy couple with other incentives for local and foreign investors.

The most imperative factor for sustainability of innovative finances particularly in the private

sector type, is the ability of the group to get borrowers to repay their loans in a timely way

(Kloeppinger-Todd and Sharma, 2010). In addition, the principles of social cohesion among

farmers and financing through the supply-chain must be strengthened to ensure success and

sustainability of innovative finance and investments.

The Way forward for Africa

The continent still has a lot to do in order to make agriculture play its statutory roles effectively.

We should not be carried away by the moderate successes recorded by few countries in the

continent through innovative financing and investment in agriculture. Many farmers are still poor

and agriculture is still regarded as harbinger of poverty in the continent. The gravest risks to

sustainable agricultural financing often come not from inherent business risks or the inability of

financial institutions to design profitable financial products for the rural population, but rather

from misguided government interventions such as lack of or non-enforcement of appropriate

rules and regulations.

A lot still needs to be done by the individual country and the continent in general to be able to

rub shoulders with Brazil, India, Indonesia, Malaysia, and Argentina in terms of their

achievements in agricultural development through financing and investment. It is pertinent to

know that these aforementioned countries share almost the same agro ecological characteristics

with many countries in Africa. Using these successful countries as models, the following are

suggested for the African countries in order to surpass the present achievement from innovative

financing and investment in agriculture:

Promote and encourage voluntary contribution from consumers, firms and employees

and/or by food and nutrition correlated industries. Lotteries can also be considered

Promote the use of migrant remittance which can be considered both as new and renewable

sources of financing as well as existing private capital that may be channeled into

agriculture. It is estimated that about USD 400 billion annually flows from the

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industrialized to developing countries. Such fund could be mobilized through financial

institutions and diasporas bonds, which corresponds to mobilizing new financing for

governments

Seek ways of accessing funds generated by carbon emission allowances auctions in the

European Union Emission Trading Systems (EU ETS)

Improved provision of basic infrastructure and security of life and property is germane to

encourage investment in agriculture.

Encourage private participation on insurance programmes which are specifically tailored to

suit the peculiarities of African farmers particularly the vagaries of weather.

Encourage the participation of more local and foreign investors in innovative agricultural

financing that develops into successful, sustainable, scalable, replicable and viable

commercial businesses that leads to profitable and improved livelihoods of smallholder

farmers in Africa

ACKNOWLEDGEMENT - I wish to acknowledge my PhD students, Fatai A. Sowunmi, Cecilia

Nwigwe and Ogheneruemu Obi-Egbedi; in the Department of Agricultural Economics,

University of Ibadan for their contributions to this paper.

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