Think and act for entrepreneurship in Africa

Agriculture

Financing African agriculture: how to break the deadlock?

Agriculture is at the heart of the issues of economic growth, political stability, and the fight against climate change in Africa, is an observation which is widely recognized. However, even…

Agriculture is at the heart of the issues of economic growth, political stability, and the fight against climate change in Africa, is an observation which is widely recognized. However, even today, the funds mobilized by African governments for food and agriculture fall short of the targets set. While the FAO estimates that 10% of African national budgets should be dedicated to these sectors in order to achieve economic and social development, in reality these sectors’ budgets are generally too low, poorly spent, and inefficient (FAO, 2021). The fact that such an essential sector remains a victim of chronic under-investment demonstrates the extreme complexity of the challenge facing Africa. The urgency of improving financing for African agriculture is widely recognized, but implementation has been stubbornly lacking.

So, the sector is still marked by the failure of the various state banks created in many African countries to finance the development of the agricultural sector. As for traditional banks, they are often reluctant to direct their financing products towards agricultural actors which are perceived as too risky, too informal, and too fragmented.

Yet, banks have an essential role to play in the future of African agriculture. How can we learn from the mistakes of the past and propose solutions adapted to the financing of African agriculture?

 

Participating in a learning and exchange process

The analysis of agricultural value chains makes it possible to understand the sectors in their entirety. Each flow can be analyzed at the different stages of the chain: production, collection, processing, transport, distribution, equipment, supply, etc, thus breaking the misconception that financing the agricultural sector means financing only the producers.

This value chain analysis approach is linked to necessary on-site visits to meet agricultural entrepreneurs, and deconstruct preconceived ideas. For example, one of the commonly accepted assumptions was that the main criterion for choosing a loan was its cost (price sensitivity of agricultural entrepreneurs). In interviews with entrepreneurs in the agricultural sector in Senegal, it was found that the main criterion for them was the responsiveness of the banking institution, rather than the interest rate, mainly because of seasonality constraints.

 

The importance of proximity and dedicated human resources

The first risk management lever is the training of human resources (business managers and credit managers): this involves putting the credit manager at the heart of the process of identifying the risks related to a sector or an actor.

In addition to this training, there must be closer geographic proximity to the agricultural production areas. A commercial presence in direct contact with the ecosystem of a sector allows a better assessment of the risks. For example, Cofina decided to open a branch in the Niayes region of Senegal in order to be close to the market gardening area: this allows both a better marketing approach and a better knowledge of the risks linked to the crops in the area.

 

Targeting actors better to “secure” funding

In order to manage risk, a financing institution may favor actors with the best quality image in the value chain. These are generally larger and more formal players: aggregators, traders, processors, etc. A bank can also “move down or up” the value chain towards actors perceived as riskier (less risky ??).

The bank can also identify financing instruments where the quality image of a dominant player acts as a security for the bank’ in order to finance the downstream or upstream part of the chain: for example via an advance on an invoice. In this “entry point approach,” risk management is embedded in different time phases: my customer’s business partners today are my customers tomorrow.

Finally, the mobilization of African banks towards the financing of local agriculture will be possible as long as they have access to long-term liquidity. In this context, international donors or impact funds have a key role to play in giving local banks the means to effectively finance agricultural sectors via “earmarked funds” for agriculture.

In addition to this catalytic role, donors can partly address the risks posed by weak collateral and poor-quality assets that characterize some actors in the agricultural value chains. This is made possible by mobilizing risk-sharing funds, concessional financing, or guarantee funds.

Through targeted grants, development agencies can also facilitate the process of analyzing value chains, identifying potential targets, and creating attractive pipelines.

 

Learning, proximity, and risk management

The hundreds of billions missing for the financing of African agriculture can be seen in two different ways: either it is a symptom of a sector that cannot be financed by banks, leaving this function to public programs, international donors or a few microfinance institutions… or it is a sign that there is a huge field of unexplored opportunities.

As committed supporters of the growth of African SMEs, Cofina and classM fully subscribe to the second option. We are convinced that an approach based on learning from past mistakes, proximity to the actors, and better risk management will allow the development of the potential of African agriculture.

 

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Innovative Investments Empower Women

This article was co-written by Ksapa and Investisseurs & Partenaires, and is also published on their website. The gender question is at the heart of the international debate. The eradication…

This article was co-written by Ksapa and Investisseurs & Partenaires, and is also published on their website.

The gender question is at the heart of the international debate. The eradication of discrimination against women and girls, the women’s empowerment and the parity between women and men are considered as key factors of development, respect of human rights, peace and world security. The Sustainable Development Goals have reaffirmed the key role of women’s empowerment in the democratic process, in order to take the necessary decisions on all aspects of sustainable development.

As such, Ksapa approached Investisseurs & Partenaires, a specialist in impact investing across the African continent, to discuss the implications of gender empowerment for the private sector. Together, we examine key figures on the challenges of gender empowerment, demonstrating its prevalence in rural areas of the African continent. Under the current conditions, how they can businesses and investors embed a solid gender perspective as part of their impact strategies to better address the challenges of the gender empowerment. Based on different initiatives led by Ksapa and I&P, we infer practical recommendations for mobilizing capital in favor of gender empowerment.

1. Key Issues in Gender Empowerment 

Gender empowerment implies, in essence, the equitable distribution of resources between men and women – as well as girls and boys. That is, in principle. In practice, gender empowerment may clash with deeply entrenched social attitudes – themselves translating into equally structural social, economic and cultural decisions.

  • Structural Disparities Between Men And Women

Men and women just like boys and girls are indeed not equal in the face of poverty and in their access to opportunities. Even less so in the context of interwoven climate, health and socioeconomic crises. Women account for less than a third of available human capital wealth in low and lower-middle-income countries. In South Asia, losses due to gender inequality are estimated at $9.1 trillion, compared to $6.7 trillion in Latin America and the Caribbean and $3.1 trillion in the Middle East and North Africa. In sub-Saharan Africa, they amount to $2.5 trillion. As such, the OECD publishes the social institutions and gender equality index, designed to measure, discrimination against women in social institutions at the international level. For example, in 2019, this index was 37.0 in Senegal, 42.8 in Côte d’Ivoire and 34.5 in Ghana.

  • Socio-Economic Impacts of Gender Empowerment

Despite heavy stigma, women now control 32% of the world’s wealth and generate an additional $5 trillion each year – at a much faster rate than in the past. In addition, for every dollar of investment raised, women-owned startups generate $0.78 in revenue, compared to $0.31 for male-led companies. As a result, gender parity in the workforce could generate a 26% increase in annual global GDP by 2025.

  • Zeroing in on Women in the African Agricultural Sector

Agriculture accounts for nearly 25% of Africa’s gross domestic product. In sub-Saharan Africa in particular, women make up nearly half of the workforce in this sector.

Across the continent, agriculture is the largest employer of women, accounting for 62% of the female workforce. In certain countries like Rwanda, Malawi and Burkina Faso, more than 90% of women work the land.

Female farmers’ work in Africa as elsewhere is subject to critical disparities – notably in terms of the division of labor and prevalence of informal work. In African agriculture, women tend to opt for specific crops and techniques and their work is not equally rewarded. When their work is in fact subject to a formal contract, the latter does not necessarily bear their name, often in favor of their husbands. Similarly, female farmers tend to be involved in local markets and retail trade, where men are generally more involved in wholesale trade, with a region-wide scope.

2. Embedding a Strong Robust Gender Perspective in Impact Investment Strategies 

Poverty alleviation and food security depend directly on the development of systematic solutions for gender empowerment. The African agricultural sector’s capacity to nurture stable livelihoods hinges on innovative measures designed to foster farmers’ access to land, capital and means of production – especially where women are concerned.

That is precisely why the World Bank developed a gender strategy for international project developers. The document lists 4 key levers to reduce gender gaps:

  • Awareness-Raising: Improve gender gaps by reducing access differentials in health, education and social protection (e.g. school/work transitions, gender stereotypes in the workplace, sexual and reproductive health rights…).
  • Opportunity: Remove barriers to further and better employment, boosting women’s participation, their opportunities to generate their own income and access to productive assets (keeping in mind key considerations of the burden of care, access to mobility and formal employment…).
  • Empowerment: Strengthen women’s voice and empower them by encouraging men and boys to share decision-making processes around delivering services, reducing gender-based violence and managing potentially conflictual situations.
  • Property: Remove barriers to women’s ownership and control of property, effectively improving their access to land, housing and technology.

Based on this strategy, investors – and development teams in particular – are encouraged to consider the means to engage with their potentially impacted stakeholders. That way, they may indeed better identify and assess concrete gender gaps; a series of efforts ultimately encompassed in a gender action plan.

3. Practical Examples of Capital Mobilization in Favour of Gender Empowerment 

  • Introducing 3 Agricultural Businesses Supported By I&P

For the last two decades, Investisseurs & Partenaires has committed to financing and supporting the emergence of African entrepreneurship champions. As an impact investor, I&P seeks a positive social and/or environmental return in addition to a significant financial performance, the impact of which is measured through a continuous evaluation process.

This approach is applied both in selecting potential investees and in the support afforded to the selected companies. It is also characterized by the Group’s emphasis on measuring investees’ social and/or environmental impact, based on priority objectives and progress monitoring methods against the projected positive impacts.

As part of its gender strategy in particular, I&P actively seeks to develop a pipeline of small and medium enterprises, either managed by women or with a major impact for women. I&P therefore systematically includes gender-specific action plans in its portfolio companies’ ESG action plans (with increase targets on the number of female employees, access to management positions, specific training, etc.). As such, 33% of the companies supported by I&P are managed by women.

Similarly, 79% of I&P’s portfolio meets at least one of the criteria of the 2X Challenge, an initiative of development banks to define what would be considered a women-friendly investment.

Within the I&P portfolio, the three following companies illustrate how a gender perspective can be developed and adapted to the agriculture sector:

    • Soafiary (Madagascar): Founded in 2006 by Malagasy promoter Malala Rabenoro, Soafiary specializes in the collection, processing and sale of cereals (corn, rice) and legumes (beans, cape peas, lentils, soybeans) on the local and international market.
    • Citrine (Côte d’Ivoire): Citrine Corporation processes and transforms cassava into fresh attiéké (cassava semolina) and placali (cassava paste) in southern Côte d’Ivoire and more specifically in Grand-Bassam.
    • Rose Eclat (Burkina Faso): Rose Eclat is a family business launched in 1999 by Rosemonde Touré. A fruit and vegetable processing company, the company markets nationally and internationally processed and/or dried fruits and vegetables. It produces mainly mango but also bananas, okra, strawberries and onions – which are certified organic and comply with the food safety management system (HACCP).
  • Commonalities and specificities of I&P Investees

Emblematic of I&P’s work on gender empowerment in the agriculture sector, all three companies are committed gender equality and empowerment. Soafiary in particular translated this policy into a roadmap that encapsulates its commitments to gender equality and empowerment. This written document indeed outlines the company’s gender policy, as a concrete tool to monitor– both internally and externally – progress made and measures implemented by the company to foster gender equality.

All three companies prioritize the recruitment of women for seasonal jobs and do not apply any form of gender discrimination in recruiting for permanent jobs. Women are also involved in the corporate decision-making processes and hold various positions of responsibility. As a result, men and women have equal opportunities for career advancement, either by tapping into permanent or seasonal employment – all of this with comparable pay. Women also benefit from on-the-job training. Rose Eclat additionally gives women the opportunity to train outside the company for career advancement or to become self-employed.

The three companies also emphasize women’s physical and moral integrity in and outside of the workplace, ensuring they can access healthcare and social protection. Soafiary also set up a financial inclusion and banking system specific to women. Access to financial products and services allows women to anticipate the financing of their long and medium-term goals or to face unexpected events. Moreover, savings begets credit and vice versa.

  • Shared Perspectives with Ksapa’s SUTTI Initiative

Echoing I&P’s focus on training, Ksapa launched the Scale-up Training, Traceability, Impact initiative (SUTTI) for the development of responsible agricultural supply chains. Through this new platform, smallholders can access technical and operational training and education. The goal is optimize their crop and agricultural economic production, improve the quality of their livelihoods by increasing their income, diversifying activities and reducing poverty. Not only does this foster gender parity, it is also key to retain young farmers in rural areas.

Through the development of our own digital application, we combine analysis and evaluation, coalition structuring and pilot calibration, program implementation and impact monitoring. That is indeed how Ksapa measures SUTTI impacts and its contributions to gender empowerment in particular, in the form of their inclusion into the program. Through training, SUTTI supports gender empowerment, opening up the conventional division of labor and women’s potential to sell and manage the product of their labor and operate diversified income activities.

Because women bear the brunt of lacking financial inclusion, literacy and digital literacy, the SUTTI solution targets optimal accessibility for women. The program indeed focuses on diversifying smallholders’ income, thereby developing additional leverage for gender empowerment in agricultural areas.

In short, this approach aims to unlock the following 4 key challenges:

CORE ISSUES  RELEVANT SOLUTIONS
Low productivity tied to lacking access to information and services as well as climate change, major weather variability and pest and disease outbreaks  Good Agricultural Practices (GAP) Awareness: Deliver face-to-face and digital sessions to support smallholders’ income generation through crop diversification, water efficiency and perhaps carbon credits. Through a digital application, videos and tutorials can indeed be shared that support practical tests and the direct implementation of GAPs across the farm. Decision support tools: digital apps can include a community chat feature that allows smallholders to share questions and decide how best to implement GAP. A marketplace function offers smallholders the opportunity to share price/volume information and decide just where and when to sell. Overcoming language and digital literacy barriers: Tailoring solutions to the needs of smallholders involves translating content into local languages and perhaps including a text-to-speech feature for the benefit of less literate farmers.
Lack of access  to appropriate financial/insurance products Develop financial solutions for smallholders, paid for example with tokens issued through a carbon offset system.
Women’s lacking access to digital services  Organize women-specific training groups (e.g., recruit 1 all-female cohort for every 3) to identify and meet the particular needs of female farmers. Adapt content accordingly (e.g., including gender perspectives, especially targeting on-farm health and safety training content).
Smallholders lacking access and ability to select markets and sales methods  Structure a supply of inputs to smallholders, paid for instance via  carbon offsets and revenue from a gamification tool – encouraging them to regularly fill-out impact monitoring questionnaires. Boost market access by supporting year-round crop diversification outside the production cycle of farmers’ main crop. Strengthen decision support tools – allowing smallholders to identify new marketing channels, track their transactions and identify the best options for buying/selling their crops

Conclusion

At the helm of their respective impact programs, I&P and Ksapa outline the following commonalities in their integration of a robust strong gender perspective as part of the impact investment strategies:

  • Prioritize gender empowerment in designing agricultural development projects; 
  • Identify the agricultural sector’s direct and indirect contributions to gender dynamics;  
  • Clarify the roles and responsibilities in developing a robust gender perspective; 
  • Allocate specific resources to empowering female farmers; 
  • Develop stakeholder engagement and grievance mechanisms specific to female farmers. 
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In Madagascar, what future for vanilla? The black gold at risk!

Vanilla is now the second most expensive spice in the world after saffron, and is an important issue in Madagascar, where more than 80% of the vanilla produced worldwide comes…

Vanilla is now the second most expensive spice in the world after saffron, and is an important issue in Madagascar, where more than 80% of the vanilla produced worldwide comes from. Grown mainly in the SAVA region, in the northeast of the country, the vanilla orchid has become real black gold and  provides a living for between 80,000 and 100,000 farmers. A short-lived Eldorado? For several years, the vanilla sector has been surrounded by difficulties: corruption, soaring prices, deteriorating quality, insecurity, natural risks, and competition from synthetic vanilla.

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Matthieu Lougarre: « More than synthetic vanillin, it is the legislation on product labelling that is problematic »

INTERVIEW. Matthieu Lougarre, Director of Agri Resources Madagascar, believes in the future of vanilla and its region of origin, SAVA. Provided that the quality of Madagascan vanilla is recognized and…

INTERVIEW. Matthieu Lougarre, Director of Agri Resources Madagascar, believes in the future of vanilla and its region of origin, SAVA. Provided that the quality of Madagascan vanilla is recognized and protected.

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Voices of African women entrepreneurs (1/2): Patricia Zoundi Yao and Catherine Krobo-Edusei

65% of the wealth of the African continent is produced by women entrepreneurs according to the latest study published by the Roland Berger consulting firm at the end of September…

65% of the wealth of the African continent is produced by women entrepreneurs according to the latest study published by the Roland Berger consulting firm at the end of September 2018. In sub-Saharan Africa, women produce 80% of the continent’s agricultural commodities and represent 70% of the continent’s agricultural force. 24% of African women aged 18 to 64 have started a business (compared to 17% in Latin America, 12% in North America, and 8% in Europe and Central Asia).

Despite these facts, African women still face many inequalities, particularly in terms of access to employment, remuneration and overall access to economic resources. What a contradictory situation… On International Women’s Day, the blog offers you 4 portraits of African women with inspiring stories!

 

Patricia Zoundi Yao

 

Patricia, who are you?

I am Patricia Zoundi Yao, an entrepreneur at heart as I like to define it. I head three structures, operating in different sectors of activity but all targeting people at the bottom of the pyramid. In 2009, I founded Quickcash, a money transfer service for the rural world. We are now transforming ourselves into an Agency Bank considering the needs and competition observed on the ground. This will allow us to dematerialize traditional banking services in rural villages. I also created Digital Hub, which offers digital services to young and connected customers. Finally, I work since 2014 in a structure dedicated to the agricultural sector, Canaanland. Since 2014, I have also been working in an agricultural sector structure, Canaanland, which provides support for women farmers (70%) and young people (30%). We train them to sustainable farming techniques and organic farming, and we support them in the marketing phase. Within 3 years, we plan to launch 5 franchises in Côte d’Ivoire and Liberia, which will follow three key principles: 0 deforestation, 0 pesticides and 100% inclusive. Small producers in particular are systematically included in our value chain.

 

Why did you choose the rural sector?

I myself come from the rural world. My parents are farmers, and I worked very early in the village-based business run by my mother. I only discovered Abidjan after my baccalaureate: I found it too modern and it has been difficult to find my place. In my entrepreneurial activities, I naturally turned to what I knew best. When I started my activities, I had not heard of the concept of “social entrepreneurship”. I learned about it for the first time around 2013-2014. I was doing something I loved, period. I have always been immersed in this environment, where people are actually sincere: they are not restricted, they are real.  You see the effort, the energy they give out, even if they are extremely poor.

 

What difficulties did you face as a woman?

Honestly, I didn’t have any problems related to my status as a woman. For me, being a woman is not a problem, it’s even an asset. I consider that this has given me essential skills and qualities to succeed in entrepreneurship: perseverance, the fact that you are the one who gets up a little early, who goes to bed a little late…

Of course, I faced difficulties throughout my career, but they are related to the business, not to the fact I’m a woman. Once again, I think it has rather helped me. Women can handle many things at the same time: the house, the kids. That’s why rural women are my role models: they manage to work in the field, take care of the children, the kitchen, the household… I’ve also heard that women are more passionate and dedicated than men… I don’t know if that’s true, but at least I am a passionate person! What drives me is to offer opportunities to women and young people, especially in rural areas, where there is not much going on. Sometimes we feel that success models are only found in urban areas.

 

An advice to give to (future) women entrepreneurs?

My advice is to get started, because we will never be “fully ready”. There is never a “good time”. We don’t know in 5 years what the new focus will be, but these days you can find training and financing opportunities fully dedicated to women. It is also important to focus on the solutions and not the problems. It’s very valuable to see things in a new perspective and take the leadership. Believe me, you have the skills and resources to get started and succeed!

 

 

Catherine Krobo Edusei

 

Who are you?

I am Ms. Catherine Krobo Edusei, I am 57 years old and I am a managing Director at Eden Tree Limited. Eden Tree is a leading producer and distributor of high-end fresh vegetables, fruits and herbs in Ghana.

 

Did you experience any difficulties because you are a woman? If yes, can you give us some examples?

It was difficult getting finance facility from the banks and venture capital funds at the beginning, for which if I had been a man it would have been possible. I also experienced difficulties working with men from certain tribes due to their outlook on what a Woman’s place should be.

 

Who are / are your model (s)? Why?

Oprah Winfry, Mia Angelou, Yaa Asantewa, Mrs Clinton were and are very strong women not afraid to shatter the glass ceiling. It is true that a woman has to fight twice as much as a man, cause men network in their various clubs, where opportunities are scooped up. So far Women do not do too well regarding networking and sharing opportunities amongst themselves.

 

An advice to (future) women entrepreneurs?

They should give it their all, focus, work hard, believe in themselves and they will not regret it.

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La Laiterie du Berger, the trajectory of a social enterprise in Senegal

Jérémy Hajdenberg reviews the history of the Senegalese company La Laiterie du Berger and its founder Bagoré-Xavier Bathily. Valuing local dairy production, the main objective pursued by La Laiterie du…

Jérémy Hajdenberg reviews the history of the Senegalese company La Laiterie du Berger and its founder Bagoré-Xavier Bathily. Valuing local dairy production, the main objective pursued by La Laiterie du Berger, has proved to be a difficult choice in the Senegalese context, but the company has been able to adapt and evolve, to become a major reference on certain agro-industrial issues in Senegal.

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