More than 20 African countries were represented at a rural and agricultural finance conference held in Harare, Zimbabwe from 10 to 12 June 2015. A fundamental question that grabbed all participants is: How can we use existing knowledge to improve rural and agricultural financing? Tons of publications and suggestions have been produced and continue to be produced on issues affecting African agriculture. Everyone knows that agriculture is central to African economies yet the sector receives less finance from banks. About 500 million smallholder farming families (more than 2 billion people) rely on agricultural production. About 75% of the population in Africa reside in rural areas and depend on agriculture for their livelihoods. In the SADC region, agriculture contributes between 4% and 27% of GDP and approximately 13% of overall export earnings in the member countries. It is estimated that the continent’s agricultural output could more than triple from USD 280 billion to USD 880 billion by 2030 if farmers were able to access finance they need to expand both the quality and quantity of their produce. Yet even in countries where non – performing loans are below 10%, financial institutions are reluctant to finance agriculture. In the face of existing evidence, why can’t we find solutions to obvious challenges?
Fighting perceptions with evidence
Since there seems to be a perception problem around rural and agricultural financing, how do we use evidence to correct all these perceptions? It looks like all the knowledge in Africa is not helping us in solving some of these key challenges. While social media is supposed to make the invisible more visible, at individual level we seem to be drowning in too much information such that we can’t assist each other. Building awareness has to be complemented with exploration of alternatives. For how long are we going to continue answering research questions with more research?
One of the myths uncovered during the Harare conference is the perception that rural communities do not save money. The power of rural communities to save is revealed by how they continue participating in agriculture markets. Participants concurred that fixing the market is an alternative route to ensuring rural and agricultural financing in African countries. While formal banks tend to move money from communities or markets to the stock market, community savings groups have smart ways of locking money in the communities leading to growth.
Evidence from the market
All participants in the conference concurred about the supreme role of agriculture markets in stimulating and sustaining rural and agriculture finance. The analysis below is a solid testimony to the power of agriculture markets:
Mbare, Harare wholesale market analysis – April 2015
A total of twelve agricultural commodities were supplied to Mbare wholesale market during the month of April 2015 generating an estimated revenue (ER) of $ 1,475,657.00 an increase from March’s figure of $ 987,460.00 by 49.43%.
Graph 1: produce supplied in tons.
Chart 1: E R share by province
Table 3: Estimated Revenue (E R) by district
All the districts mentioned above would not have received such respective incomes if there was no market. More farmers and rural people can benefit if markets are improved.
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