Lessons from North America: Investors say agroforestry isn’t just climate friendly — it’s also profitable
Traditional investment models with need for fast returns have been seen as a barrier to attracting capital to regenerative agriculture and agroforestry projects.
However, investors are increasingly waking up to the opportunities to not only positively impact food supply and climate change but to ensure a healthy return on investment by transitioning away from conventional agriculture. A 2019 report showed $47.5bn of investments had been made into 700 projects in the U.S alone. Startups such as Propogate Ventures are successfully raising seed capital to help farmers transition from conventional agriculture to agroforestry.
A subject we shall explore in more detail at AfricaLive; what lessons can we take from the sector's North American growth and apply to emerging markets?
AFC is an independent, majority private-sector owned, multi-lateral African financial institution providing project structuring expertise and risk capital to address Africa’s pressing infrastructure, capacity and economic development needs. With 27 member countries, and an investment footprint that has disbursed over US$7 billion across 30 countries in Africa in the power, transport, telecommunications, heavy industries and natural resources sectors, it is a truly Pan-African institution.
Putting up something like this that didn’t exist before is going to come with challenges anywhere. We have people who are resistant to change and don’t see the need for it. There is also a difference in plans and ambition with each country. We can, however, gain from the fact that West African countries are all firmly focused on improving their agricultural sectors. The onus is on us as countries to form synergies that will see us achieve our goals. There are foreseeable problems amongst countries when it comes to proprietary arguments and the need for ownership and self-preservation, but that shouldn’t deter us from the overall goal.
Perceptions are changing, and people appreciate the technology we have incorporated into the exchange. Farmers are thrilled by the fast payments, and those who aren’t comfortable using the technology are sending their children to be the floor traders for them. Opportunities exist for creating partnerships, but they must be constructed in a way that adds value to all parties involved.
The industry is growing steadily, but I acknowledge that penetration is still very low at less than 2 per cent. We must think of how we can boost this to about 5 per cent very soon. The National Insurance Commission has been in the frontlines of a campaign that seeks to improve penetration and see to it that more is done.
A draft bill to be debated in parliament will bring in changes that will fast track insurance penetration if the bill is passed. Compulsory insurance packages like professional indemnity for some categories like medical insurance, worker life insurance, and other packages will help our industry see a boom. The sub-region which boasts of hundreds of millions of people is full of promise for our industry. The Africa Continental Free Trade Area (AfCFTA) presents a scaling opportunity for insurance firms like us. Industries and companies that will do well under an AfCFTA setup are the ones that leverage technology properly to offer superior services.