High Level Conference on the Development of Agribusiness and Agro-Industries in Africa

The African Agribusiness and Agro-industries Development

Initiative (3ADI)

Executive Summary

• The 3ADI presentation is delivered in 3 ModulesFirst, is the introduction and contextSecond, is the Program Framework: 4 main areasThird, is the Program Approach: building on other initiatives in Africa and means to build alliances .

• Main Messages: 1.We are not re-inventing the efforts in Africa but

rather build on them2.Great opportunities exist in agro-industries for

serious interventions and building of capacity: HR and Technology

Overture

What makes 3ADI different• Developed by Africans• Proposed, written, and presented by

Africans. • It’s about financially and commercially viable

interventions• It’s about adding value• It links with the private sector, especially

small producers and processors

what we are aiming at

• A programme for the promotion of agribusiness and agro-industries development endorsed by African Heads of State and Government (HOS).

• Agreement to establishment financial modalities for agri-business and agro-industry investment endorsed by HOS.

• Action plan for programme implementation and financial mechanisms endorsed by HOS.

• Launching of the African Agribusiness and Agro-industries Development Initiative (3ADI)

3ADI Expectations

3ADI How did we get here?• Global Agro-industries Forum (GAIF), New Delhi, India, April 2008

– Hosted by the Government of India– Event jointly organized by FAO, UNIDO and IFAD– Participation from 110 countries; 500 senior level delegates

• Representatives of 44 African countries recommended the organization of a regional forum– need to consider specific issues and priorities for agro-industries and

agribusiness development in Africa• Consultations with African leaders and organizations led to the decision to

hold this High Level Conference on the Development of Agribusiness and Agro-industries in Africa – HLCD-3A

www.gaif08.org

3ADI HLCD-3A Co-organizers

• Government of the Federal Republic of Nigeria (Hosts)

• African Union Commission (AUC)

• African Development Bank (AfDB)

• Food and Agriculture Organization of the United Nations (FAO)

• International Fund for Agricultural Development (IFAD)

• United Nations Economic Commission for Africa (UNECA)

• United Nations Industrial Development Organization (UNIDO)

3ADI Consultative Process

1. Concept Note Developed by UNIDO and FAO

2. Background document commissioned by UNIDO/FAO; “Accelerating Agribusiness & Agro-industries Dev. in Africa”

3. Expert Group Meeting on Development of Agribusiness & Agro-industries in Africa: Constraints & Opportunities. 27-29 April 2009 – Vienna

4. UNIDO/FAO/ Executive Secretariat meetings with the Government of Nigeria on administrative & logistic matters. 4-7 May 2009, Abuja - Nigeria

5. Writers workshop - 26-30 May 2009 – Rome

6. CAADP: private sector convening on CAADP implementation, 17-18 June, 2009 - Dakar, Senegal

7. UNECA Expert Group Meeting on Promoting Agro-industry & Agribusiness Development in African Countries, 22-24 July 2009 - Addis Ababa

8. Periodical Meetings of the Joint Organizing Committee; Vienna, Rome, Abuja & Tunis

9. Meeting on Financial mechanisms in Support of Agro-industries & Agribusiness Development in Africa; hosted by AfDB in Tunis, Jan. 2010

10. 3ADI document - African Agribusiness & Agro-industries Development Initiative: A Programme Framework

3ADI Consultative process- II

3ADI Needed Investment (I)1. Capitalizes on renewed impetus for growth & development for

Africa through increased agricultural investment

2. Recognizes the need for increased agro-based investments in order to meet food security goals

ITEM Sub-Saharan Africa1. Primary Production (including mechanization & other power sources) 496

2. Downstream Support Services (storage; markets & first stage processing) 444

TOTAL 940Source: Capital Requirements for Agriculture in Developing Countries to 2050, FAO, Rome, 2009

US$ 15 billion/year in additional investment needed

Cumulative Investments over 2005/07 in billion US$

3ADI Needed Investment (II)

3. Recognizes urgent need to increasing profitability (i.e., strengthening effective demand for finance) of agribusiness & agro-industries.

4. Focuses on ways to unlock local capital to meet agribusiness & agro-industry investment needs, especially in short run until public sector investments take hold.

PROGRAMME FRAMEWORK

The African Agribusiness and Agro-Industries Development Initiative

The goal of the 3ADI is to have an agriculture sector in Africa which, by the year 2020, is made up of highly

productive & profitable agricultural value chains that:

3ADI GOAL & 2020 Targets

1. effectively link SMS agricultural producers to markets;2. contribute effectively to increasing farmers’ incomes through

value-addition processes;3. supply higher-valued & differentiated food, fibre, feed and fuel

products to consumers at local, regional & global markets;4. lead to retention of a higher proportion of the consumer price in

the communities or countries where the primary production takes place;

5. utilize natural resources in an overall sustainable manner; and6. act as an effective basis for industrialization & generation of

increased & high quality employment

Main Objective

– To increase private sector investment flows going into the agriculture sector in Africa by mobilizing resources for agribusiness & agro-industrial development from domestic, regional & international financial systems

3ADI Main Objective

3ADI What the Initiative will do?

• Specifically the Initiative will:

1. Leverage current attention to agriculture in Africa to accelerate the development of agribusiness & agro-industries sectors that ensure value-addition to Africa’s agricultural products;

2. Support a well coordinated effort to share knowledge & harmonize programmes in ways that capture synergies, avoid fragmented efforts, & enhance developmental impacts;

3. Support an investment programme that will significantly increase proportion of agricultural produce in Africa that is transformed into differentiated high-value products.

3ADI Expected Results (I)

• Four main areas of support essential for agribusiness & agro-industries devmt:

1. Enabling policies & public goods;

2. Value chain skills & technologies;

3. Post-production institutions & services;

4. Reinforced financing & risk mitigation mechanisms

3ADI Expected Results (II)

1. Enactment of enabling policies & provision of public goods:

(i) Sector Strategies & Plans;

(ii) Legal and Regulatory Frameworks;

(iii) Grades & Standards;

(iv) Agricultural Mechanization;

(v) Markets & Trade Infrastructure;

(vi) National & Regional Trade Policies

3ADI Expected Results (III)

2. Development of skills & technologies needed for post-production segments of agricultural value chains:

(i) Producer, Commodity & Industry Associations;

(ii) Value Chains Facilitation;

(iii) Producer & SME Skills Building;

(iv) Technology Development & Transfer;

(v) Vocational, Business & University Training

3ADI Expected Results (IV)

3. Innovative Institutions & Public Services:

(i) Contract Farming & Out-grower Schemes;

(ii) Business Incubators, Hubs & Clusters;

(iii) Research, Technology & Agro-Food Parks;

(iv) Product Labelling & Certification Schemes;

(v) Commodity Exchanges & Market Information

3ADI Expected Results (V)

4. Finance & Risk Mitigation:

(i) Public-Private Partnerships;

(ii) Loan Guarantees;

(iii) Investment Funds;

(iv) Value Chain Finance;

(v) Risk Mitigation Products;

PROGRAMME APPROACH

The African Agribusiness and Agro-Industries Development Initiative

…the bulk of world food production is still concentrated in few regions…

315

2 4

5

55

35

Edaphoclimatic Conditions

Subsidies: US$ 350 billion/yr

Larger gains (Trade Balance improving by more than 0.2 percent of GDP)Small impacts (Trade balance changing between -0.2 percent and 0.2 percent of GDP )Smaller losses (Trade balance worsening by less than 1 percent of GDP and more than 0.2 percent of GDP)Large losses (Trade balance worsening by more than 1 percent of GDP)

No data

...during the food crisis (food security) among the most affected areas, Africa is included & the food import bill of the region have been

of US$254 billion in (2007), 33% higher than in 2006...

Source: IMF, 2008

Source: UNIDO, 2006; MVA – Manufactured Value Added

…although the share of MVA of developing countries has increased in the last 25 years it still responds to a limited amount of the world MVA…

Distribution of World MVA (%) (2005)

26

4

70

020406080

100

1980 1985 1990 1995 2000 2005

Developing countries Transition economiesDeveloped market economies

30

Sour

ce: U

NID

O, 2

006

Dist. of MVA by Developing Country Groups (%) 2005

Africa

LAC

S., E. & S-E. Asia

ChinaW. Asia & Europe

0

20

40

60

80

100

1980 1985 1990 1995 2000 2005

…and Africa, besides having the lowest share within developing countries’ MVA has even experienced a decreased from 06 to 03%…

5

41

20

31

36

47

12

3ADI Programme Approach (I)

1. CAADP Pillar II as overarching Institutional Framework;

2. Integrating into RECs;

3. Priority focus on domestic & regional markets;

4. Public support for engaging the private sector;

5. Synergistic & complementary financial mechanisms;

6. Preliminary ideas on innovative financial facility

3ADI

• 3ADI contributes to overall objectives of CAADP while addressing primarily its Pillar II

– Improving rural infrastructure & trade-related capacities for market access

CAADP, particularly Pillar II, is the overarching institutional framework

Programme Approach (II)

3ADI

• An African owned initiative– it will work closely with African Regional Organizations &

Regional Economic Communities throughout all stages of its design, inception & implementation;

– it should benefit from & be complementary to ongoing initiatives;

– it will ensure stakeholder involvement through engagement with existing entities that represent agribusiness and agro-industries in Africa

Integrated into African Regional Organizations, Alliances & Initiatives

Programme Approach (III)

3ADI

1. Domestic food staples in Africa, roughly a US$50 billion industry, will double by 2015;

2. Growing potential of domestic agri-food markets in Africa, fuelled by rapid urbanization rates & income growth;

3. Increased trade in domestic & cross-border markets alone expected to reach US$30 billion by 2030;

4. Focus is consistent with priorities identified & pursued by African organizations and policy makers

Priority to Domestic & Regional Markets

Programme Approach (IV)

3ADI

1. Engagement & cooperation of actors from both the public & private spheres of the African agri-food economy essential for success of 3ADI;

2. Public-private cooperation will be instrumental to implementation (also essential in mgt & oversight)

Public Support for Engaging the Private Sector

Programme Approach (V)

3ADI

• Designed to complement & act in synergy with the existing financial facilities, bridging the known gaps & unleashing newer financial opportunities, primarily those that can be supported by the African financial system itself

• Unique features– focus on downstream segments of value chains– the strategic emphasis on leveraging financial resources from African banks – wider geographical coverage, when compared to existing programs and financial

facilities that cover the agri-food sector in Africa.

• African multilateral organizations & financial institutions will need to play an active role in any governance structure to be established for the 3ADI & its financial modalities

Synergistic and Complementary Financial Mechanisms

Programme Approach (VI)

3ADI

• Consultations in progress1. Parallel meeting of financial professionals is currently being held in

another room to consider a concept and framework for financial modalities in support of 3ADI;

2. Concept tabled for discussion envisages a financing mechanism with two windows / channels that will deal respectively with public & private sector type funding;

3. After the outcome of the financial modalities in support of the 3ADI further consultations expected

Financial Mechanisms of 3ADI

3ADI

• What we expect from your deliberations:

– Discuss & refine the programme framework;

– Advise on the development of the financing modalities;

– Provide guidance on moving forward;

– Commit to its implementation.

The Way Forward

3ADI

THANK YOU!

For more information & follow-up, please check

WWW.HLCD-3A.ORG