AfDB invests Shs82 trillion in agriculture across Africa

The president of the African Development Bank Group Dr Akinwumi Adesina, said Africa must feed itself and must become a global powerhouse in food and agriculture. DW/T photo

What you need to know:

  • Mr Akinwumi said Intra-Africa trade is still low accounting for only 15 per cent of total trade in Africa, which must be developed through regional integration.
  • To borrow from the international capital, a country has to have good credit rating by global rating agencies.

KAMPALA - The African Development Bank Group has announced that it will invest $24 billion (about Shs82 trillion) in the agriculture sector over the next 10 years in its member state countries to increase food production for human consumption and for industrial development.

Evidence from around the world shows that agriculture has already made a significant contribution to the economic prosperity of advanced countries and its role in the economic development of less developed countries is of vital importance.
Addressing Financial Times 2016 Africa Summit, in London on Monday, the president of the African Development Bank Group Dr Akinwumi Adesina, said Africa must feed itself and must become a global powerhouse in food and agriculture.
Mr Akinwumi said with 65 per cent of all the arable land left in the world to feed 9 billion people by 2050, Africa will have to feed the world and Africa must take agriculture as a business.

“To help unlock Africa’s potential in agriculture, the African Development Bank (AfDB) will invest $ 24 billion in the agriculture sector over the next 10 years. That is 440 per cent above our current level of investment in the sector. We will focus our support on promoting agro-allied industrialisation, value-addition and export diversification,” he said.
The AfDB through its soft window of African Development Bank Fund is one of the main funders of agricultural sector in Uganda. Currently, Uganda’s total portfolio from AfDB stands at approximately $1 billion (Shs3.4 trillion) which is running up to 2020.

To borrow from the international capital, a country has to have good credit rating by global rating agencies. This creates confidence in investors’ mind of the country’s ability to pay its debt.
Mr Akinwumi said the number of countries with sovereign credit rating from Moody’s, Fitch or Standard & Poor increased from 10 in 2013 to 21 by 2014. Uganda is among these countries.
“During 2013-2015, African countries issued a total of about $21 billion (Shs72 trillion) worth of sovereign bonds. That is much higher than $5.9 billion (Shs20 trillion) in 2009-2012. Many were oversubscribed, showing investor confidence in African economies,” he said.
He observed that there has been a slowdown of recent in terms of issuances of Eurobonds, especially due to rising interest rates and currency depreciation that raise the cost of debt service.

Besides broadening the tax base, Mr Akinwuni said African countries will need to tap into the growing pools of funds in domestic capital markets, with pension funds estimated at $334 billion (Shs1142 trillion), sovereign wealth funds of $162 billion (Shs554 trillion) and remittances worth over $62 billion (Shs211 trillion).
In Uganda it is estimated that pension is currently Shs7 trillion which is being invested by the National Social Security Fund in government securities, equities and real estates.

Mr Akinwumi said Intra-Africa trade is still low accounting for only 15 per cent of total trade in Africa, which must be developed through regional integration.
He stressed that greater regional trade will open up huge opportunities for industrial specialisation and in turn investments in regional infrastructure will go a long way boost trade and economic activities.
“For Africa must not always look outside: it must look increasingly within itself to build wealth,” he said.