November 30, 2020

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COVID-19: Agribusiness CEOs in Africa express resilience to actualize investment plans — Report

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COVID-19: Agribusiness CEOs in Africa express resilience to actualize investment plans — Report

COVID-19: Agribusiness CEOs in Africa express resilience to actualize investment plans — Report

By Gabriel Ewepu – Abuja

Despite devastating impact caused by the novel Coronavirus, COVID-19 pandemic on economies across Africa, a new report, ‘Africa Agribusiness Outlook’, launched by the Alliance for a Green Revolution (AGRA) and KPMG East Africa, indicated that Agribusiness Chief Executive Officers, CEOs, in Africa, Wednesday, expressed resilience to actualize investment plans.

The report that was launched in Nairobi, the capital of Kenya showed that about 41 per cent of CEOs interviewed for the survey indicated resolve and optimism to go on with their pre-COVID-19 investment plans in the post-COVID-19 era.

The inaugural Africa Agribusiness Outlook is a survey that was conducted on agribusiness CEOs from early to mid-2020 by KPMG to gain insights into their top priorities, how they are addressing challenges and what they see as opportunities in these COVID-19 dominated times.

The survey covered 39 one-on-one interviews with CEOs and C-suite executives across eight African countries which currently are AGRA strategic priorities. These are Cote d’Ivoire, Ghana, Kenya, Nigeria, Mozambique, Rwanda, Tanzania and Zambia. An online survey was extended to the rest of the continent and completed by 182 executives across 16 countries in Africa.

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Top priorities for agribusiness CEOs identified by the survey include; more flexible financing structures; Increase productivity of smallholder farms; Reduce the cost of money; Increase advocacy for infrastructure; Deliver catalytic finance; Increase government spending on agriculture; Create more public private partnerships for infrastructure; Increase private sector investment in agriculture; Increase massively, financing across value chains; Develop affordable technologies for Africa.

The survey was focused on 10 key sub-sectors including Agriculture production, processing, trading, aquaculture, horticulture, financial services, livestock, poultry, input suppliers and IT& related.

However, according to the report 43 per cent of the companies reviewed, majority of them were small and medium sized enterprises, would be scaling down operations due to COVID-19 impact as revenues fell between 50- 80 per cent following lockdown enforcements, and added that managing cash-flow remains critical to surviving COVID-19 impact.

According to the report in spite of the worrisome impacts by COVID-19 pandemic CEOs grappled with there are prospects for agribusiness operators as it pointed that governments and players are to heed in terms of business opportunities.

However, the report identified several priorities for urgent action; Access to finance emerged as the greatest priority for businesses. It is important to note that this issue is not just about access to finance, it is about the cost of finance and availability of financial instruments that are adapted for the agricultural sector.

Technology has been a great enabler. It has enabled companies to respond and adapt their operating models after lockdown measures were imposed across the continent. Going forward, technology will be the lever that will help Africa leapfrog into the future.

According to the report the future of African agribusiness must include the smallholder farmer, and added that agribusinesses are incorporating more smallholder farmers into their business models as this is critical to sustainability.

The President, AGRA, Dr Agnes Kalibata, said: “We believe that there are opportunities for African agribusinesses during this period, which is unprecedented for many businesses.

“The collapse of global markets has led to the rise of the ‘buy local’ movement. There is a chance to optimise local value chains, thus helping mitigate the devastating effects of the pandemic on the economy.”

However, the AGRA boss said innovative financing solutions will help to optimise local value chains.

“But for this to happen, we need innovative financing solutions to support the agribusiness sector. Financing, specific to the agricultural sector, will help build resilience and enable them to seize the moment”, she stated.

The survey also showed that technology emerged Game-Changer for businesses in during COVID-19 crisis, which about 52 per cent of the companies said technology was crucial to achieving their business goals during the COVID-19 pandemic era.

According to the survey businesses switched not only to the use of e-commerce platforms to deliver products to consumers but also to deliver services to smallholders in their supply chain. Going forward, technology is expected to dominate operations, impacting costs, and business models.

The AGRA boss also acknowledged this and said that “For businesses to thrive, they need to operate in an environment that supports them. Creating the right enabling environment is the quickest way to get businesses to invest in agriculture.

“We have an opportunity that needs to be treated with the utmost priority by government and agencies such as AGRA working in the agricultural sector.”

Pringle, Partner at KPMG also noted that “It is about making agriculture attractive, viable and profitable rather than being looked at as a risky endeavour.”

Vanguard News Nigeria

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