September 8, 2017

The Bill and Melinda Gates Foundation, The Rockefeller Foundation, and the U.S. Agency for International Development (USAID) have joined forces to launch the US$280 million Partnership for Inclusive Agricultural Transformation in Africa (PIATA).

Officially announced at the 2017 African Green Revolution Forum (AGRF), the partnership and financing vehicle is designed to catalyze and drive inclusive agricultural transformation across Ghana, Nigeria, Mali, Burkina Faso, Rwanda, Uganda, Kenya, Ethiopia, Tanzania, Malawi, and Mozambique. Through the PIATA, the partners recognize that greater change and impact can be realized through a collaborative effort that can build upon what each partner has already achieved on the continent.

“We are pleased to be part of PIATA,” said Mamadou Biteye, managing director of the Rockefeller Foundation Africa Regional Office, at the launch.  “We see it as an opportunity to leverage even more from the partners and their huge networks, for greater impact. We are looking forward to deploying the technologies that we have helped develop over the years, together with our shared knowledge and grant support, to work with our esteemed partners.”

Through the aimed-for transformation, it is believed that PIATA will in turn increase incomes and improve food security for 30 million smallholder farmers through the continued support of these partners via direct support of continental agencies, government bodies, and in-country partners, investments in developing input systems, value chains, and policy reformation.

“Together we hope to catalyze Africa’s pursuit for prosperity through agriculture,” said Biteye. “PIATA is critical in our ongoing push to build the resilience of farmers and systems that affect them, especially in light of increasing challenges such as climate change, among others.”

The Promise Therein

Agriculture has seen waves of “revolution” that have advanced production methods, raised outputs, and increased yields over the past hundred years. However, Africa remains in need of a distinct agricultural revolution that links its smallholders to wider agribusiness, according to the 2017 Africa Agriculture Status Report.

Indeed, in “Ending Poverty and Hunger by 2030: An Agenda for the Global Food System” – another report issued in 2015, the World Bank states that food demand in sub-Saharan Africa is projected to climb by 60 percent over the next 15 years.

These shifts in demographics, consumer tastes, and urbanization are resulting in a projected increase in food imports from a value of US$35 billion in 2015 to US$110 billion by 2025.

This growing volume of imports not only indicates a strong and growing demand, but also is indicative of the potential for agricultural and agribusiness investment to transform Africa’s supply chain into a business model offering value addition while also creating wealth and providing greater food security.

The potential is there, but to bring it to bear, both the public and private sectors need to forge partnerships within new frameworks that can result in sustained growth.

Through PIATA, the financial partners have agreed to “delivering impact against a shared results framework”, and have also agreed to align operations to national agricultural plans. This reflects the first case where a vehicle of this scale has been launched in Africa with a cornerstone of a shared result framework, according to the Rockefeller Foundation.

“PIATA offers a new way of doing business across the many public and private actors working to ensure food security and economic growth as called for in country-owned visions and the goals laid out in the Malabo Declaration,” said Sean Jones, senior deputy assistant administrator, Bureau for Food Security, USAID.

“Agriculture is at its core a private sector enterprise, and one of the best bets for job creation and inclusive growth when the right policies and investments allow the private sector to flourish,” continued Jones. “This partnership offers an innovative mechanism to unlock this investment and realize many of the targets laid out in the Global Food Security Strategy approved by our Congress.”

Tapping into this dynamic, in August 2016, a consortium of European investors including Rabobank, Norway’s Norfund, and FMO partnered through the pooling of currently held stakes in several financial service providers (FSPs) in sub-Saharan Africa to create a new investment company called Arise.

With a presence in more than 20 African countries and $660 million in initial assets, Arise was scheduled to begin operations starting January 2017, allocating new capital investments to strengthen FSPs serving rural SMEs and those with no previous access to financial services, with an eventual goal of growing to a $1 billion institution.

The support of the expansion of the agribusiness sector requires not only investment in agricultural assets but also in production efficiency. Within this need, Africa is positioned to play a key role in increasing global agricultural output, according to the Africa Agribusiness Insights Survey 2016, released by Price Waterhouse Coopers (PwC). African countries are dedicating more resources to improving output within their agricultural supply chains through leveraging agricultural technologies, the development of irrigation schemes, storage infrastructure, transportation networks, and training programs.

Despite these advances, the African continent still spends $25 billion on food imports per year. However, given the continent’s projected population growth, calorie consumption gap, urbanization, vast arable land bank, available natural resources, remaining yield gap, and supply chain inefficiencies, there exists a significant but nascent potential for return on agricultural investment in the space.

-Lynda Kiernan