Friday, July 11, 2014

Entrepreneurship opportunities in climate change adaptation and mitigation

By Busani Bafana

A new report by The Montpellier Panel, says Africa can achieve food and nutrition security through investment in entrepreneurship in the rural and food sectors to spur rural and urban economic growth on the continent.
The Montpellier Panel - a group of 12 experts in the fields of agriculture, policy, sustainable development, policy, trade and global development - in a June 2014 report, Small and Growing: Entrepreneurship in African Agriculture, says developing entrepreneurship from the farm will transform Africa's agriculture. The World Bank estimates that by 2030 African agriculture and agribusiness in Africa could be worth 1 trillion dollars.

Busani Bafana spoke with the Chair of the Montpellier Panel Chair, Professor Sir Gordon Conway about the report prospects for entrepreneurship in African agriculture, increasingly threatened by climate change. Excerpts:

Agriculture entrepreneurship is linked to market access and financing, at least, start up for farmers. In your research and in this report, what are your recommendations to getting these two elements in?
African governments, donors and NGOs have to ensure the availability of credit, inputs and extension services. In particular, finance needs to be made available to perceived high-risk groups, such as women and young people. Micro finance is essential for starting up an enterprise, however, many young businesses also require the provision of bridging financial products that help them to grow from the micro to medium size, at which stage they will be eligible for commercial bank loans.

What is new that your report is offering that has not been tried before?
A 3-fold approach:
·         Utilise the fact that Africa’s urbanisation not only means that young people are migrating to the capitals but that also towns and villages in the peri-urban area are developing; this means new market opportunities for farmers in remote areas.
·         The need to provide not only higher education but invest in vocational training and business management training that prepares young people for setting up and growing successful enterprises along the agribusiness value chain. Junior Achievement Africa, mentioned in the report, is a good example for this.
·         Focus on providing financial products to the perceived high risk groups (women and young people) and ensure that access to finance is not only available at the microfinance stage but also throughout the development and growth of an enterprise until it reaches the stage at which it is eligible for commercial bank loans. To minimise risk, approaches such as value chain finance should be considered.

What is not happening in African agriculture you feel should happen to spur this entrepreneurship you recommend?
Currently, there is a mismatch between young people’s education and skills and what the market bears. Currently 26 percent of students in higher education study social sciences and humanities while only 2 percent of students are enrolled in agricultural programmes. This group also accounts for the largest proportion of unemployment which could be reversed with greater interest in the agricultural sciences and agribusiness value chains. There is also need for vocational training for young people in rural areas who cannot afford higher education and business management training that equips the youth with the skills they need to set up and grow an enterprise. These skills include for example, financial literacy and how to develop a bankable business plan.

Are you convinced agriculture in Africa has the potential to grow and surpass mineral wealth in terms of contribution to GDP?
For the sake of poor people and poor farmers who already spend the majority of their income on food, I should hope that food prices don’t require as much foreign exchange as extractive resources. However, I do believe that with the right mix of investments, strong political will and good economic policies, agriculture in Africa has the potential to achieve sustainable food and nutrition security for the continent as well as create jobs, wealth and robust livelihoods.

The IPCC report has indicated climate change will affect agriculture in Africa in a big way. What bearing does it have on entrepreneurship in agriculture and are entrepreneurs thinking about it or even adapting their farming businesses to its impacts?
Of course, in fact, there will be entrepreneurial activities as a result of a changing climate and its effects on the agriculture sector. There will be opportunities for entrepreneurship and climate adaptation and mitigation all along the agribusiness value chain, from “lab to fork”. This means that new climate-smart techniques, technologies and crops will be developed through research and development while ICT enterprises may focus their efforts on developing mobile phone apps that warn farmers of weather extremes or droughts. As much as it is crucial for large, multinational companies to factor in the risks of climate change and its effects on their supply chain, small rural and food sector enterprises are equally going to be dependent on considering it in their business plans. This is again however, is linked to the necessity of the right training and education.

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