How the private sector can catalyze innovations for feeding Africa

This week, as U.S. and African leaders convene in Washington, D.C. for the inaugural U.S.-Africa Leaders Summit, the 200 million Africans who still go to bed hungry feature prominently on the agenda.

The current U.S. administration has shown unprecedented commitment to food security through the Feed the Future, program which has already reached seven million farmers in 19 countries. This feat has been achieved, at least in part by embracing innovative partnerships with civil society, the research community and — crucially — the private sector.

As highly skilled leaders of innovation, the private sector holds knowledge and expertise that will be key for the development of Africa’s rural food sector. Agriculture is after all a business, and creating a robust agricultural value chain in Africa (that encompasses all stages of food production from “lab to fork”) will not only serve to feed Africa’s rapidly increasing population, but also generate wealth for the continent.

Initiatives like Grow Africa have shown the impact that the private sector can have on the smallholder farmers that are relied upon to produce 70 percent of the world’s food. Its 2013 report stated that over 33,000 jobs have been created through private sector investment and over 59,000 smallholder farmers have gained production contracts.

So where can the private sector have the biggest impact on the smallholder farmers that are so essential for feeding the world?

By linking up with the public sector, and forming public-private partnerships, the private sector can play a lead role in the training and skill development of farmers and workers along the agricultural supply chain. The term “agripreneurs” has been coined to describe the entrepreneurs making their business from agriculture. As the latest Montpellier Panel report “Small & Growing” has shown, adequate training schemes for these “agripreneurs” are currently lacking in Africa — a key area the private sector could focus on.

Taking Grow Africa projects as an example of this, global soft commodity supplier Armajaro has committed to reaching 400,000 smallholder farmers in 10 African countries with training. The company has established Farmer Development Centers to deliver training and other technical assistance including access to inputs and access to credit to improve the yields and livelihoods of the farmer communities. By training lead farmers, who then conduct training in their own communities, Armajaro has reached over 10,000 smallholder farmers in Ghana. In Tanzania, a partnership with Kenyan-based Coffee Management Services enabled Armajaro to train coffee farmers on good agricultural practices, leaving farmers better equipped to control costs and improve product quality, therefore improving their profit margins.

Reducing risk is another area where the private sector’s support is key. The technologies that African smallholders need to unlock their productivity potential require large-scale investment. But with large-scale investment comes large-scale risk. The increasing frequency and severity of extreme weather events associated with climate change have left millions of small-scale farmers in low-income countries with vulnerable livelihoods. The lack of access to formal risk management mechanisms means that most smallholders are forced to draw on their own savings when shocks — like drought or food price spikes — hit.

The private sector is well poised to step in and help implement weather-based index insurance. Following pilot schemes, this type of insurance has been considered as an attractive, inexpensive and transparent approach to managing weather risk, as it uses an index such as rainfall to determine pay-outs. These pay-outs can be made more quickly than is typical for conventional crop insurance, enabling farmers to better manage risk and make better decisions.

The index based livestock insurance developed by the International Livestock Research Institute has shown promise in helping smallholder farmers insure against the risk of investing in areas of regular drought. The scheme lowers transaction costs by allowing insurance companies to pay out based on predicted livestock mortality. NASA satellite images allow measurement of the health of the vegetation on which the livestock depend, allowing the prediction of livestock mortality based on data that has been collected monthly since 2000.

The enormous challenge of feeding the world cannot be met unless we harness the skills and expertise of the private sector. PPPs, which marry new technologies with local knowledge, can act as a catalyst for the promotion of innovative thinking and the scaling up of successful projects. Only through inclusive collaboration can we begin to reduce the number of hungry people on our planet.

Want to learn more? Check out Feeding Development's campaign site and tweet us using #FeedingDev.

Feeding Development is an online conversation hosted by Devex in partnership with ACDI/VOCA, Chemonics, Fintrac, GAIN, Nestlé and Tetra Tech to reimagine solutions for a food-secure future from seed and soil to a healthy meal.