The huge challenge of funding food security in Africa

In Sub-saharan Africa, currently, an increasing number of countries are facing growing levels of acute food insecurity, particularly in rural areas, reversing years of developmental gains. With the number of food-insecure people worldwide projected to exceed 840 million by 2030, a relevant question for right now is how we might feed ourselves sustainably, especially in Africa. 

A quick review of the food systems on the continent reveals surges in food prices through the year, with food inflation being a going concern in a number of African cities. The disruptions in our food systems are the result of a mix of challenges. Key infrastructural challenges such as a lack of adequate storage and logistics infrastructure, for instance, increase incidences of post harvest losses. This exarcerbates the demand and supply gap that occurs as a result of low productivity on the continent due to such issues as low access to credit and capital as well as the strong dependence on rain fed agriculture which leaves production cycles susceptible to disruptions in weather patterns and climate change. 

Huge investments in Africa’s food systems are required to tackle these challenges head on. Specifically, there is a need for patient capital that can simultaneously address the listed issues; incentivizing both smallholder and commercial farmers to improve their efficiency and productivity, while strengthening the value chain, beyond production, to safeguard and distribute the food that is produced. At AFEX, we recently launched a US$100 million 10-year bond called the Food Security Fund (FSF) that will tackle some of the challenges above, eventually leading to the production of an additional three million MT of food on the the continent annually. 

A significant portion of the funding will be allocated to building storage infrastructure, alongside the financing of 250,000 hectares of land for commercial and smallholder farming, initially consisting of 30,000 hectares in the Nigerian states of Kano, Kaduna, Oyo, Ogun, Cross River and the Federal Capital Territory, before covering markets across East and West Africa. Currently, most food-secure countries across the world have the capacity to store 100 percent of their annual food production but in Africa, almost 50 percent of the food produced is wasted. According to the Food and Agricultural Organization of the United Nations (FAO), the amount of food wasted on the continent is enough to feed 300 million people. By shoring up the low storage capacity for food on the continent, the Food Security Fund will contribute a great deal to Africa’s food security future.

The fund will also focus on exploring and optimizing climate smart innovations and high yield agronomy protocols to ensure that more food is produced and that land is used efficiently. The utilization of improved seeds, quality inputs and the introduction of irrigation, in areas where geographic, hydrologic, agronomic, and economic factors allow will, enhance productivity year on year, also leading to an improved food security position for the continent.

Ensuring that Africans have access to safe, affordable and nutritious food is a huge task. Tackling the challenges that hinder that reality requires the crowding in of funds to innovate and close the gaps across the value chain from production to eventual consumption. Being able to build and deploy structures that attract funds from a variety of sources, both development and commercial capital, enables us to boost and maintain food security for the continent. 

Africa is at a crossroads. The inability of food production to keep pace with population growth has brought the food security crisis to the forefront. Africa cannot achieve food security with business as usual; food security cannot be addressed through the current system of borrowing, and food security cannot be achieved without large investments in initiatives that prioritize the health of people and the continent. Investments such as the food security fund that make nutritious, sustainably produced food more affordable than foods that are harmful to people’s and the environment’s health would provide a new start for food systems on their transformation journey.

By: Samirah Ade-Adebiyi, Managing Director at AFEX Investment.