Posted on November, 18, 2024 at 02:31 pm
“We can no longer produce the way we used to. It has become critical to invest in technology to truly transform this sector in order to produce more in terms of quantity and quality and achieve food security.” In making this appeal at the maiden edition of the ECOWAS Investment Forum (EIF 2024) last April, Dr George Agyekum Donkor, President of EBID and the Chairman of the Board of Directors, was zeroing in on a challenge that is fast becoming a regional emergency. Faced with an estimated 49.5 million people affected by food crisis in West Africa, further compounded by soaring food prices which, in some cases, reach 100% above five-year averages, EBID is stepping up its initiatives through targeted financing. The challenge, however, is of such magnitude that it calls for a far-reaching strategy, integrating infrastructure, agricultural innovation and climate resilience. “We need to structure sustainable resilience for the region by building an integrated agricultural sector that is resilient to shocks”, says an official of EBID. Over the past 5 years, EBID has devoted nearly 86% of its agricultural financing to strengthening food security.
For EBID, developing irrigation infrastructure is a priority. With a US$9.5 million investment in the Bani basin in Mali, the Bank has helped to transform arid land into arable land. More than 130,000 people in the Koulikoro, Ségou and Mopti regions stand to benefit directly from this infrastructure, which plays a key role in stabilising crop yields such as rice and maize. In Côte d’Ivoire, a US$43.6 million solar irrigation project covers 83,000 km² in the north. This project ensures year-round agricultural production, even during periods of low rainfall, and reduces the carbon footprint by cutting out the need for diesel pumps. For EBID, the aim is to guarantee food self-sufficiency by minimising dependency on costly imports and vulnerability to market fluctuations, as outlined by Dr. George Agyekum Donkor. “If we continue to export our agricultural products in a raw state and keep on importing, we will always come out losers. For, unless we work at processing our products, we risk always having low incomes, no matter how much we produce.”
EBID is also banking on local processing to reduce the region’s food dependency. The most significant example is the tomato processing plant in Loumbila, Burkina Faso, financed to the tune of US$15.1 million. The plant, located close to the capital Ouagadougou, has a dual objective: reduce post-harvest losses and boost the local economy. In Côte d’Ivoire, the 2PAI-Nord project, backed by a US$50 million investment, covers several regions and is designed to build storage and processing facilities. The project covers 26% of the country’s surface area and aims to stabilise prices while creating thousands of jobs in the processing chains.
By targeting local agricultural products for immediate local processing, EBID hopes to reduce food imports, strengthen local value chains and secure supply chains that are fragile in the face of international shocks.
Climate shocks remain a threat to agricultural systems in West Africa. Research in Burkina Faso and Mali has shown that productivity of staple crops such as maize and sorghum has dropped by 10-30% in some drought-affected areas. In the UEMOA region, productivity has fallen by 20% in recent years as a result of climate change. “The effects of climate change require an in-depth rethinking of agricultural practices”, says EBID.
In response, EBID supports “climate-smart” initiatives in all its projects. In Togo, the US$6.95 million Agricultural Development Support Project (PADAT) features modern techniques such as crop rotation and the use of drought-resistant seeds. The project is particularly focused on smallholders, who are often exposed to weather fluctuations, to enable them to improve yields while embracing sustainable practices.
The 2PAI-Bélier project in Côte d’Ivoire, in which EBID has invested US$22.4 million, also incorporates soil conservation and water resource management measures, which are designed to bring sustainable agricultural techniques to more than 700,000 inhabitants. The aim is to strengthen resilience in the face of climatic hazards, preserve the environment and boost productivity.
For small-scale farmers in the WAEMU, access to financing remains a major obstacle to modernisation. Banks in the region allocate only 3% to 4.4% of lending to the agricultural sector, a proportion that seems negligible compared to the importance of the sector, which contributes almost 30% of regional GDP. This persistent paradox is evidence of a structural reality: agricultural businesses are considered high-risk, often unable to provide solid guarantees.
For the development banks that grant large volumes of credit, this becomes an even more daunting task. These institutions are called upon to innovate in order to structure offers tailored to the specific needs of smallholders, while integrating risk-sharing or micro-insurance schemes. The economic and food resilience of the region is at stake, where agriculture, the backbone of the economy and employment, cannot be sustained with the current modest level of funding.
To overcome these obstacles, EBID has “developed tailor-made financial products, including flexible, low-interest loans designed to meet the specific needs of small-scale farmers and rural cooperatives”, “in partnership with local banks and RFAF”. The Regional Fund for Agriculture and Food (RFAF), an ECOWAS financing instrument created in 2011 to support agricultural and food initiatives in the West African region, has in recent months stepped up preparations to launch its activities, notably via financial intermediaries who will facilitate the management of funds and provide technical support to final beneficiaries.
According to the Bank, almost 50% of its agricultural financing is allocated to vulnerable rural areas, where the need for modernisation and infrastructure is critical.
In December 2023, EBID signed a FCFA 20 billion loan agreement with Mansa Bank in Côte d’Ivoire to finance agricultural SMEs, with a minimum of 15% reserved for women-led businesses, an initiative aimed at strengthening the agricultural value chain in the region, particularly for rural areas where modernisation needs are high.
In January 2024, EBID granted a €70 million financing facility to the Coris Bank Group, a strategic support for SMEs in five countries of the region: Togo, Burkina Faso, Benin, Côte d’Ivoire and Senegal. This line of credit targets companies active in the processing and distribution of agricultural products, with the aim of strengthening the local agri-food sector.
According to an official of the Bank these financial initiatives also include training programmes to build farmers’ capacities for more modern and productive practices.
In spite of these efforts, EBID acknowledges that there is still a long way to go to achieve sustainable food security. Despite significant progress, many challenges remain, including inadequate transport infrastructure, political instability and a lack of reliable data. The Bank is striving to overcome these challenges by stepping up public-private partnerships to raise funding and extend the impact of its large-scale projects. “Collaboration with the private sector and local governments is essential to support rural agriculture,” stresses a senior official of the Bank.
“We are intensifying our partnerships with other development banks to address these constraints and attract additional financing,” says Dr. Donkor, President of EBID. This collaboration extends to countries in the sub-region and beyond, with strategic alliances such as the “Africa Growing Together” fund, an initiative of the African Development Bank in partnership with the Central Bank of China. Under this fund, in October 2023, EBID signed an agreement with the African Development Bank for a US$ 50 million and EUR 50 million line of credit, targeting local businesses and agricultural cooperatives in the region.
Source: African Business