Financing African agriculture challenges and prospects

Abstract

This paper identifies and discusses some key issues and challenges in financing agriculture in Sub-Saharan Africa. The analysis first reviews recent trends in agricultural financing focusing on both external and domestic sources. The paper then discusses a number of issues and challenges that affect agricultural financing in SSA. The four areas, which show a certain degree of inter-relationship, are: government commitment to support agriculture; the role of public and private sector; emerging aid modalities to agriculture; and financing regional public goods. The paper stresses the importance of ensuring that agriculture is prioritized in the political processes of countries and that the government and the private sector play their rightful role in the financing of African agriculture. The paper notes that while the emerging agricultural financing mechanisms such as budget support and sector-wide approaches (SWAPs) present opportunities for enhancing the volume and effectiveness of agricultural support, they pose challenges to both donors and recipients. The paper also notes that the financing of regional public goods (RPGs) in agriculture, which has great potential in Africa, will require up-scaling and innovative financing.