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Human Development Summit Nairobi, Kenya September 29-30, 2009

Human Development Summit Nairobi, Kenya September 29-30, 2009. African Development and Investment in Agriculture Role of the African Development Bank. By Chiji Ojukwu Manager, Agriculture 1 Division Agriculture and Agro-Industry Department African Development Bank. Presentation Layout.

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Human Development Summit Nairobi, Kenya September 29-30, 2009

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  1. Human Development Summit Nairobi, Kenya September 29-30, 2009 African Development and Investment in Agriculture Role of the African Development Bank By Chiji Ojukwu Manager, Agriculture 1 Division Agriculture and Agro-Industry Department African Development Bank

  2. Presentation Layout • Agricultural Potential in Africa • Challenges and Constraints to Agricultural Development in Africa • Perspectives for Funding African Agriculture • Renewed Commitments to Funding Agriculture • The Role of African Governments • The AfDB funding for Agriculture • Bank’s Emergency and Humanitarian Assistance • Strategy Planning for Agriculture Recovery • The Bank’s Medium Term Strategy 2008 - 2012 • Current Bank Strategy and Programming Priorities • Bank’s Ongoing Agriculture Sector Portfolio: • Bank’s Agriculture Sector Lending Program 2009-2012 • Bank’s Other Existing and Proposed Special Initiativesin Agriculture • Climate Change- Climate for Development in Africa Program • Engaging the Private Sector for Agricultural Development 2

  3. Agricultural Potential in Africa • Good agro-climatic conditions for agricultural production • Imports of agricultural and food products can be locally produced • Large share of production is not fully exploited (low value addition) or lost (post-harvest losses) • Local, Regional, and International Markets • Urbanization: food diversification and increased demand • High Food Prices

  4. Challenges and Constraints to Agricultural Development in Africa Low agricultural productivity and high post-harvest losses Poor infrastructure (especially in rural areas) Lack of capacity building in agro-industry and market linkages Low access to technology Meeting market demands (standards and certification) especially for international markets Barriers to regional trade and integration in Africa Low access to financial services and non-conducive environment to attract investors and private sector New challenges: Climate Change and Bio-energy

  5. Perspectives for Funding African Agriculture • There are estimates from various institutions on the required financing for agriculture for Africa to achieve the MDGs, especially MDG 1. • Overall Needs: • UN (2001): USD 20 billion per year by 2015 • WB (2002): USD 54-62 billion per year by 2015 • Incremental needs: • IFPRI (2008): + USD 7-8 billion per year by 2015 • FAO (2008): + USD 8 billion per year by 2015

  6. Renewed Commitment to Funding Agriculture • Commitments to Financing Agriculture in Africa (among many others) • Monterrey 2002: ODA increase from USD 69 billion in 2003 to a record of USD 107 billion in 2005 • Maputo Declaration of 2003 and Launching of CAADP: RMCs to allocate 10% of their national budgets to agriculture • Gleneagles 2005: agricultural development is key to African development • Rome Summit 2008: New Pledges for Agriculture • UN HLTF on Food Security and Comprehensive Framework for Action • AU Sirte Summit on Financing Agriculture (2008) • Recent G8 meetings in 2008 and 2009 – Commitment to increasing financing to African Agriculture

  7. The Role of African Governments • This situation calls for all African Member Countries and partners to mobilize additional resources in support of agriculture with more results-based interventions within the framework of the Comprehensive African Agriculture Development Program (CAADP). • Most Importantly honouring their commitment to the Maputo Declaration to allocate >10% of national budgets to agricultural and rural development.

  8. ADB Funding for Agriculture Between 1967 and 2008 the Bank Group approved a total of 3,276 loans and grants, amounting to UA 44.75 billion; with the share of the agricultural sector being 16.1 per cent or UA 7.2 billion.

  9. Bank’s Emergency and Humanitarian Assistance • In terms of emergency and humanitarian assistance, the Bank continues to support victims of natural disasters across the continent whenever they occur. • Between 2004 and 2008 the Bank’s support to Emergency/Humanitarian Support totaled UA 20.3 million • In 2008 alone, the Bank Group provided record number of emergency humanitarian assistance totaling UA 2.97 million, including the control and eradication of Avian Flu in RMCs.

  10. Strategic Planning for Agricultural Recovery The development of agriculture should get the attention it deserves and a plan for agricultural recovery needs to be part and parcel of any plans for financial recovery. The critical role of Regional Financial Institutions including the Bank becomes imperative in this drive, and should be fully recognized and realized. The Bank’s Medium Term Strategy is focused to facilitating new initiatives for agricultural development.

  11. The Bank’s Medium Term Strategy 2008 - 2012 • Current Bank’s Financing to Agriculture is guided by the Bank’s Medium Term Strategy – 2008 to 2012. Operational focus on infrastructure, building capable States, private sector operations, and higher education The medium term support to agriculture is estimated at about USD 1.2 billion

  12. Current Bank Strategy and Programming Priorities • THE CORPORATE GOAL: INCREASED SELECTIVITY WITH OPERATIONAL FOCUS ON INFRASTRUCTURE, BUILDING CAPABLE STATES, PRIVATE SECTOR OPERATIONS AND HIGHER EDUCATION. • AGRICULTURE AND AGRO-INDUSTRY: THE SECTOR PRIORITIES ARE DRAWN FROM THE CORE CORPORATE PILLARS AND CURRENTLY, AGRICULTURE IS BEING IMPLEMENTED THROUGH MAINLY THE INFRASTRUCTURE PRIORITY AREAS: SPECIFICALLY THE PRIORITIES ARE ON:

  13. Current Bank Programming Priorities Contd. • EXPENDED AGRICULTURAL AND RURAL INFRASTRUCTURE, INCLUDING IRRIGATION AND WATER MOBILIZATION, RURAL AND FARM ACCESS ROADS, LIVESTOCK AND FISHERIES • POST-HARVEST TECHNOLOGIES, MARKETS, REDUCTION IN POST-HARVEST LOSSES; • NATURAL RESOURCE MANAGEMENT AND CLIMATE CHANGE ADAPTATION AND MITIGATION

  14. Other Current Bank Programming Priorities • WITH SPECIAL APPLICABILITY TO: • CAPACITY AND INSTITUTIONAL BUILDING OF RMCS MINISTRIES OF AGRICULTURE AND RURAL DEVELOPMENT, POLICY ADVICE FOR AGRICULTURAL GOVERNANCE AND TRADE; • STIMULATING PRIVATE SECTOR INVESTMENT AND PPP IN AGRICULTURE • PROMOTING TECHNOLOGY DEVELOPMENT AND RESEARCH

  15. Current Bank Programming Priorities Contd. AND MAINSTREAMING CROSS-CUTTING ISSUES: - GENDER MAINSTREAMING - CLIMATE CHANGE AND ENVIRONMENT; AND - BUILDING AND MANAGING KNOWLEDGE.

  16. Bank’s Ongoing Agriculture Sector Portfolio THE AGRICULTURE AND AGRO-INDUSTRY DEPARTMENT (OSAN) IS PART OF THE PUBLIC SECTOR OF THE BANK AND MANAGES A PORTFOLIO OF AROUND 230 OPERATIONS WITH ONGOING COMMITMENTS OF AROUND 3 BILLION USD IN 30 AFRICAN COUNTRIES. THESE EXCLUDE THOSE MANAGED BY ITS PRIVATE SECTOR DEPARTMENT.

  17. Bank’s Agric Sector Lending Program (2009-2012) • THERE ARE ABOUT 84 AGRICULTURAL AND RURAL INFRASTRUCTURE PROJECTS IN OSAN'S CURRENT PIPELINE AT DIFFERENT STAGES OF PREPARATION. THE TOTAL ESTIMATE OF BANK'S PIPELINE INVESTMENT SHARE, AS A LOAN OR A GRANT, IS ABOUT UA 2500.80 MILLION

  18. Bank’s Other Existing and Proposed Special Initiatives in Agriculture

  19. Africa Food Crisis Response; Short and M-L Term actions The AFCR provides a framework for accelerated support to Regional Member Countries affected by increased food prices. Interventions were designed to contribute to efforts to reduce the risks associated with the crisis in Africa. The projection was to inject into Africa’s Agriculture Sector, about UA 496.57 Million in the short Term and UA 1.4 Billion in the Medium to Long Term The Short Term responses consisted of: (i) Agricultural and non-agricultural Projects Realignment (ii) Budget and Balance of Payment Support; (iii) Allocations form the Bank’s Surplus Account; and (iv) Increased Dissemination of NERICA rice seeds. In addition to the above Short Term Measures, the Medium and Long Term Measures include: Improved rural infrastructure; Operationalising the African Fertiliser Financing Mechanism; Increasing NERICA rice production; Capacity building, policy dialogue and trade promotion; Scaling up private sector operations for food security; Promoting agriculture research, and Establishment of the Crisis Response Facility

  20. AFRICA FERTILISER FINANCING MECHANISM (AFFM) THE AFFM WILL ASSIST RMCs IN INCREASING AGRICULTURE PRODUCTIVITY WITHIN THE CONTEXT OF MDGs; AND CREATE AN ENABLING ENVIRONMENT FOR MOBILIZING INVESTMENT NEEDED TO INCREASE FERTILIZES USE FROM CURRENT AVERAGE OF 8 TO 50 Kg/Ha BY 2015, TARGET SET BY THE ABUJA SUMMIT, 2006. AFFM FOCUSES ON TWO TYPES OF ACTIVITIES: - FACILITATION FACILITATION ACTIVITIES WILL REMOVE POLICY AND STRUCTURAL OBSTACLES TO INVESTMENT IN FERTILIZER PRODUCTION, DISTRIBUTION, AND USE: - CAPITAL INVESTMENTS. AFFM WILL FINANCE CAPITAL INVESTMENTS THAT PROMOTE FERTILIZER SUPPLY AND USE.

  21. BUSINESS PLAN FOR AGRICULTURE WATER MANAGEMENT (2008 – 2013) • The total estimated investment requirements of the proposed BP is estimated at about UA 4.97 of which the Bank could finance a share of about 30-40%, in collaboration with other co-financing partners and governments depending on the level of ADF XII replenishment.. • Main Areas of Focus: • Agricultural Water Development: The development an area up to 500,000 ha including: (a) new areas under full control of water, (b) rehabilitation and modernization of existing schemes, (c) development of Community/Private driven Small-Scale Irrigation, and (d) development of areas under partial control of water in lowlands/Flood plains (UA 2.96 billion). • Water Storage Enhancement: Develop infrastructure to increase water storage capacity in Africa by at least 1% for multi-purpose use: to irrigate 760,000 ha and generate 1200 MW of hydro-power (UA 1.86 billion). • Institutional Support and Project Preparation Studies: including capacity building activities, policy formulation and the identification and preparation of operations in support of AWM and water storage enhancement (UA155 million).

  22. Agro-Industry Development ACTIONPLAN While the Bank has over the past decades accumulated a significant experience in public agricultural investment projects, its involvement in agro-industrial development has been limited. Agro-Industrial Development has been included within OSAN’s operational priorities for the period 2007-2012.

  23. CONGO BASIN FOREST FUND (CBFF) The CBFF, launched in London, June 2008, intends to: improve food security and the livelihoods of the population, alleviate poverty and address climate change challenges by reducing the rate of deforestation in the Congo Basin. The Congo Basin rainforest is currently under increasing threat due to illegal logging, shifting cultivation, population growth, as well as oil and mining industries. The Fund supported mainly by the UK and Norway (initial contribution of US$ 200 million) will be used over a ten-year agreement period up to 2018, to finance Central African Forests Commission (COMIFAC)’s Action-Plan in different strategic areas aimed at conserving the Congo Basin rainforest.

  24. Climate Change- Climate for Development in Africa Program (ClimDev-Africa) ClimDev-Africa aims to enhance economic growth and sustainable development (SD) by mitigating vagaries of climate variability through integration of Climate Risk and Adaptation Management (CRAM) into pertinent sectoral policy and decision processes throughout the continent. ClimDev-Africa will be implemented under the direction of the Joint AUC-ECA- AfDB Secretariat. Needs: • Support to ClimDev Trust Fund established to finance CC RMCs projects. ClimDev-Africa is a 3-phase program over a 12-year period with a targeted budget of US $ 135 m for 1rst phase.

  25. Engaging the Private Sector for Agricultural Dev. The Bank’s private sector window is supporting agriculture SMEs – as well as financing fertilizer plant projects across different regions. Meanwhile, the Bank, in collaboration with the Agence Francaise de Developpement (AFD), the Alliance for a Green Revolution in Africa (AGRA), International Fund for Agricultural Development (IFAD) and BMZ/KfW has established the African Agriculture Investment Fund. With a startup capital of 200 million Euros, this fund will focus on making available private capital for African agriculture along the value chain and work to improve its integration into the global market.

  26. As Africa’s leading development finance institution, the Bank is in a unique position to play the role of policy advocacy on the continent, given its location on the African landscape, its mandate and its expertise.

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