KEPSA, represented by Faith Ngige, Climate Business Information Network, Kenya, Coordinator and the Kenya National P4G Platform- Private Sector Focal Point, participated in the P4G-related side event that took place on December 3, 2023, on the margins of COP 28 in Dubai, at the South African Pavilion, organized by the National Business Initiative (NBI). The session aimed at identifying ways the financial sector can empower farmers, enhance climate resilience, and foster inclusive growth.

To drive transformative change across the agriculture sector in Africa, there is a pressing need to explore innovative and inclusive financial solutions. The session, was moderated by the NBI Head of Environment and Energy - Ms Reitumetse Molotsoane and the key panelists, included: Dr. Haile Menghestab, Country Director, World Food Program; Mr. Wandile Sihlobo, Chief Economist, Agricultural Business Chamber of South Africa; Ms. Robyn McGuckin, Executive Director, Partnering for Green Growth and Global Goals; and Ms.  Mbombo Luhembe- Group Head of Sustainability Analytics (ABSA Group).

Agriculture is an important part of an economy in not only providing the physiological needs of man, food, and nutrition, but also in supporting livelihoods and securing biodiversity. Agricultural transformation that secures inclusive, sufficient, and resilient economies is a significant part of the transition to low-carbon economies. The event, co-hosted by ABSA Bank, has invested over $10 billion in linked loans to the agricultural sector and is targeting to invest over $100 billion by 2025, a demonstration of the bank’s commitment to ensuring financial sustainability, inclusive, and innovative to meet the sector's needs, as reiterated Ms. Punki Modise, the Group Chief Sustainability and Strategy Officer.

The partnership for green growth provides a platform to catalyse start-ups in climate-smart agriculture by providing early state financing for innovative ideas to assist early startups in overcoming the valley of death phase of startups, which is often the first three years of their existence. P4G nurtures the ideas by supporting secure climate finance to enhance market access and test bankability to a level of growth where agri-preneurs can access blended finance in terms of equity and debt.

Dr. Haile highlighted that the agricultural sector faces significant challenges of vulnerable food systems, high dependency on rain-fed agriculture, smaller-holder farmers who practice traditional farming systems and hence cannot secure food security, a high rate of unemployment; the paradox that unemployed youth do not like to be engaged in agriculture, and a lack of evidence and data to support transformative decisions for the sector. Low productivity in the sector in most African countries leads to a great need for land, leading to deforestation and the loss of biodiversity.

Mr. Wandile Shihlobo shared insights into what it would take to make the sector competitive and resilient while reducing the social orientation of the sector to analyse and intervene in the economics and competitiveness of the sector. It is imperative to reposition agriculture and give it an economic lens in order to address key competitive challenges facing the sector. Food losses are high because of fragile value chains, a lack of infrastructure, an unattractive sector, large-impact financing, and the need to adopt not only technological but also biological innovation in the sector, such as improved seed varieties.

Ms Luhembe, indicated that ABSA had adopted, not only, the financing strategy for the agriculture sector but also a value chain approach with clear indicators to support measuring risks and performance. The bank has a technology-based system to track the farmers inputs, such as water and energy; the physical changes and impacts brought about by climate change, automation of systems and processes, market linkages, and social impacts of agriculture, as well as organize exchange programs for farmers to learn best practices across the globe. By integrating the value chain approach to support the sector, this has seen South Africa improve the quality of production, the quality of products, and fostered inter-relatedness with the broader supply chains.

The session concluded noting that Africa has the potential to be the breadbasket of the world, if Africans work to improve the agricultural sector to be inclusive, have sufficient financing, including blended financing as opposed to a pure subsidy program, and farmer empowerment, that allows the farmer to be a decision-maker about the inputs that they require. Trade policies also affect agriculture, and it is key to also look at them when devising the competitiveness of the sector.

Smallholder farmers are the drivers of the transformation we are looking for, not just the victims. It’s important that they are empowered to make decisions for the sector rather than being considered passive players. Working together in partnership and with collaborative approaches is key to transforming the sector.