THE World Bank recently estimated that the value of food and agricultural markets in Africa may rise to US$1 trillion a year by 2030.
But, on current trends, spending on food imports in the continent will triple by 2022, which pose the question: Will African farmers tap into this huge market or will the continent simply continue to be a net food-importing region?
To take advantage of the fast-growing regional agricultural markets, African countries must invest in modernising their agricultural sectors, as pointed out by Akinwumi Adesina, president of the African Development Bank in 2016, while recognizing that the involvement of central banks is crucial in this process.
These financial institutions are taking up developmental mandates and directly intervening to facilitate access to credit for priority sectors such as agriculture as was recognized at the 4th AFRACA (African Rural and Agricultural Credit Association) Central Banks Forum 2016, 13-14 October 2016 in Ghana, where around 150 African central bankers and agricultural sector stakeholders gathered to agree on a radical new direction for banks involvement in agricultural finance.
Bringing the observation to Tanzania, the Deputy Minister for Agriculture, Hussein Bashe while in Simiyu at NMB bank’s pavilion at the ongoing Nanenane Exhibition, recently noted that financial institutions’ role in contributing towards development of the sector should not be taken for granted.
This is because majority of rural economy depends on agriculture, which is also considered as the life-blood of the country’s economy, but lack financial powers to modernize the industry.
Rural house-holds need credit for investing in agriculture and smoothening out their seasonal fluctuations in earnings. Since cash flows and savings in rural areas for the majority of households are small, many rural households typically tend to rely on credit for other consumption needs like education, food, housing and household functions.
They need access to financial institutions to provide them with credit at lower rates and at reasonable terms than the traditional moneylender(s) and thereby help them avoid debt-traps , which are setbacks in their developments.
The cause of more rapid rural development can only be enhanced by a more general adoption of a policy in close co-operation with government.
Once they would be fully involved in agriculture as can be seen by NMB bank spearheading in training farmers and educating them on how to use/spend loans in their activities, such people at the grassroots’ economy would be boosted.
This can also be seen in the light that financial institutions can risk sharing mechanisms and other forms of alternative collaterals to help farmers.
Equally, financial institutions should be noted that because of their financial positions and capability if amicably tapped; it would be possible to achieve a lot in the development sector.