FINANCE

The AFDB took to In­dia in May to raise funds and call for a long-over­due agri­cul­tural rev­o­lu­tion, turn­ing pro­cess­ing into a cash cow and sup­port­ing ’agripreneurs’

The Africa Report - - CONTENTS -

There’s gold in that dirt

When pres­i­dent of the African Devel­op­ment Bank (AFDB) Ak­in­wumi Adesina hits his stride, he has some­thing of the preacher ’s or­a­tory. “Think of a con­ti­nent that will have the same pop­u­la­tion as In­dia and China taken to­gether by 2050. Think of a con­ti­nent with a ris­ing mid­dle class, rapid ur­ban­i­sa­tion and that will have the youngest pop­u­la­tion on earth by 2050,” thun­dered Adesina at the AFDB’S an­nual meet­ing in May, which was held for the first time in In­dia. “Think of a con­ti­nent where con­sumer spend­ing is pro­jected to reach $1.4trn in the next three years and busi­ness-to-busi­ness spend­ing to reach $3.5trn in the next eight years. Think of the con­ti­nent that ac­counted for 30% of global busi­ness and reg­u­la­tory re­forms in 2016.” Speak­ing at the open­ing cer­e­mony of the AFDB an­nual gen­eral meet­ings in Ahmedabad in the In­dian state of Gu­jarat, Adesina was spell­ing out the stakes in or­der to drum up cash. Africa’s youth pop­u­la­tion will dou­ble to 840 mil­lion by 2050, and pri­vate sec­tor money is badly needed to fill the investment gap. More­over, Adesina wants a big­ger cap­i­tal base for the AFDB to meet its am­bi­tious fi­nanc­ing tar­gets. While growth on the con­ti­nent dipped to 2.2% in 2016 – a low un­seen since the turn of the cen­tury – it will rebound to 3.6% in 2017 and is set to reach that level again in 2018. The AFDB wants to be at the heart of African growth. It has had a record year in 2016, dis­burs­ing more than $11bn on projects and pro­grammes. Tak­ing the AFDB meet­ings to In­dia was no idle sa­fari, and next year’s meet­ings will be held in Bu­san, South Korea. There is a clear pivot to Asia in the AFDB think­ing, which per­haps be­gan in 2008, when the an­nual meet­ings were held in Shang­hai. In­dia’s Prime Min­is­ter Naren­dra Modi was keen to em­pha­sise the cul­tural and his­tor­i­cal links be­tween his coun­try and the con­ti­nent: from the many In­dian trad­ing fam­i­lies who set up on Africa’s east­ern seaboard to a com­mon her­itage of Bri­tish colo­nial­ism and to Gandhi’s first steps in the non-vi­o­lent protest move­ment, taken in South Africa. “Our part­ner­ship is not con­fined to govern­ment alone,” said Modi. “In­dia’s pri­vate sec­tor is at the fore­front of driv­ing this im­pe­tus. From 1996 to 2016, Africa ac­counted for nearly on e - f i f t h o f In d i a n ov er s e a s direct in­vest­ments. In­dia is the fifth-largest countr y in­vest­ing in the con­ti­nent, with in­vest­ments over the past 20 years amount­ing to $54bn.”

RICK­ETY BOATS

And In­dian-africa trade con­tin­ues to ac­cel­er­ate. Bi­lat­eral trade was at $1bn in 1995 and grew to $75bn by 2015. And while that rep­re­sents only half of the con­ti­nent’s trade with China, which was around $160bn in 2015, trade with In­dia should reach $100bn by 2018 ac­cord­ing to the AFDB. This may also have greater ‘mul­ti­plier ef­fects’ – eco­nomic jar­gon for investment that drives fur­ther investment – if that money hits pro­duc­tive sec­tors like agri­cul­ture, the ban­ner un­der which the AFDB meet­ings were held. “In Africa, for far too long the farm­ers have been aban­doned,” in­toned Adesina. “It’s like we are de­lib­er­ately putting them on rick­ety boats and send­ing them across the Mediter­ranean.”

Cer­tainly, there are a host of In­dian busi­nesses with trop­i­cal agri­cul­ture ex­per­tise to sell, from post-har­vest treat­ments for fruit and veg­eta­bles to spe­cialised seeds and fer­tilis­ers. The In­dian Dairy Ma­chin­ery Com­pany (IDMC), for ex­am­ple, which is part of In­dia’s Dairy Devel­op­ment Board, has built milk treat­ment equip­ment from “the cat­tle to the cus­tomer”, as its marketing blurb sug­gests. It al­ready sup­plies one of the com­pa­nies re­cently bought by Kenya’s Brook­side Dairy. For IDMC’S act­ing man­ag­ing di­rec­tor Ra­jesh Subra­ma­nian: “We are equal to the Euro­peans in qual­ity and just 60% of the price.”

CHOCS AWAY

But be­yond the push to get African coun­tries fo­cused on com­mer­cial agri­cul­ture, the AFDB is also try­ing to get them to climb out of the bot­tom rung of pri­mary prod­uct cre­ation. “Africa, which pro­duces 75% of the world’s co­coa, re­ceives only 2% of the $100bn an­nual choco­late mar­ket. African farm­ers sweat, while oth­ers eat sweets,” says Adesina. “While the price of co­coa has hit an all-time low, prof­its of global man­u­fac­tur­ers of cho­co­lates have hit an all-time high. It’s time to process Africa’s co­coa in Africa, for we must end Africa be­ing at the bot­tom of global value chains.” That will take some fresh think­ing about in­dus­trial pol­icy. The AFDB’S new chief econ­o­mist, Ce­lestin Monga, has re­leased a book de­tail­ing suc­cess sto­ries in build­ing spe­cial eco­nomic zones. The AFDB plans to launch a new fi­nanc­ing pro­gramme to sup­port the cre­ation of agri­cul­tural zones across the con­ti­nent, as well as new fi­nanc­ing mech­a­nisms for a new gen­er­a­tion of ‘agripreneurs’, sev­eral of whom were present dur­ing the meet­ings. That will take cash, so Adesina’s next fight is to con­vince the AFDB gov­er­nors that the har­vest is worth it and that they should sup­port a cap­i­tal in­crease in the bank. “There is gold in that dirt,” he prom­ises. Ni­cholas Nor­brook in Ahmedabad

A warm hand­shake be­tween AFDB pres­i­dent Adesina and Prime Min­is­ter Modi

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