Conversation 11: Inspiring the Next Generation of Agricultural Entrepreneur

GES 2015 in Nairobi

Conversation 11: Inspiring the Next Generation of Agricultural Entrepreneur

Sunday, July 26, 2015

 

Moderator: Don Gips, Blackstone

 Panelists:

-          Alloysius Attah, Farmerline

-          Solomon Asamoah, African Development Bank

-          Eric Muthomi, Stawi Foods and Fruits

-          Rohit Singh, Equity Bank

-          Agnes Klibata, president of AGRA

Estimate the number of people in the room: Approximately 35-40

 Introduction:

Agriculture is the heart of Kenya GDP growth.  Why does agriculture lag behind?

  • Rohit: Rain-fed agriculture is a critical factor, need to start with irrigation.  Agriculture needs to be run as profitable businesses.  There are logistics issues.  The main point is agriculture is not just thinking about the farm, and Equity wants to be part of this side of the financing
  • Solomon: Lack of investment, technology and ‘sexiness.’ Farming not done as it used to be, need to modernize tools, accompanying infrastructure—roads, cold storage
  • Agnes: We have a tendency to think the private sector will just grow on its own…we need the right policies
  • Alloysius: Access to information from both sides: farmers and investors
  • Eric: Consumers need to buy locally manufactured projects:  buy Africa, build africa, local costs are far too high, inputs and packaging
  • Solomon: Access to info is but one part of a larger issue, value creation and sharing is key, farmers not getting value has hurt investment in the end farmer, need to value added once the farmer has increased capacity and profit sharing

Value added sector challenges, how do we overcome?

  • Rohit: New Equity technology for lower-end phones for farmer information, other technologies.  Macadamia nut example: bought a technically insolvent company and now a million dollar company
  • Solomon: More financing in the sector, has long been unbankable.  Need institutions that can understand the sector and can then get backed by longer term AfDB financing, and push it into the main sector, use of tech is also attracting youth
  • Eric: Started as lawyer then moved to agribusiness, where could have more impact.  The next Safaricom, Equity
  • Alloysius: Started as a means of survival, finishing college and entered competition.  Will never make money in agriculture unless you create value for the farmer.  What can government do?  Allow company not to pay tax in the beginning, need constant power supply
  • Eric.  Got a break from Nakumatt, good to take that chance.  USAID support—TA, equipment, helped leap-frog some start up challenges
  • Solomon: Need a stable macro environment, will allow money to flow into ag, also get the basics right, power, roads, water
  • Alloysius: Governments need to listen, but often feel challenged.  Because it is hard to get in at the top, need to work with field offices and get a ton of valuable information, which helps them do their jobs.
  • Rohit: Default rate is better at bottom of the pyramid, or at least there are more dependable and easier clients.  Equity has done a lot to work with the financially marginalized
  • Agnes: Other tools, guarantee facilities and appropriate TA to support through the process and encouraging banks to join that process.

 Is there a skills gap on production or business side?

  • Agnes: Yes, agriculture revolution is about science, new science will take training and capacity building
  • Alloysius: Also need to understand the farmer and their needs, need tailored finance and training, which can be expensive
  • Rohit: We hire sector specialists to leverage their knowledge to build a non standard portfolio,  there is a skill gap, but there are actions to fill that skill gap, including improved weather forecasting, warehousing, processing

What are we doing to support women from subsistence farming to businesses, especially with lack of ability to get capital?

  • Agnes: need to push capacity that does not require land and even certain technologies, this helps build their credibility, also help them invest in assets
  • Solomon: Africa can move faster then they think.  Just as many women have mobile phones as men and mobile payments help build a financial history, and women better manage money than men.  So more women credit officers
  • Rohit: Women should open bank accounts and your tool is your phone
  • Alloysius: Women listen to 80-100% of farmer messaging, men less than 60%, women will also use info more and pay more—simply better customers.

 What can government do and not do?

Agnes: Real optimism for agriculture, with increasing needs to invest in enablers, ability for governments to listen to private sector and civil society

What will agriculture look like in the future, with population growing and land being subdivided?  Can indigenous solutions in the farming sector be banked?

Solomon: Real impediment is the infrastructure, there is where we focus and then PS and entrepreneurs will come along and can solve the rest.  Land will not be the constraint.

Agnes: We need more agribusiness, and less people on the land to make it more productive, need more businesses

 

How to better transfer knowledge to farmer, i.e. organic farming.  Agribusiness hubs: soil testing, farmer aggregation.  What are other challenges that agribusiness entrepreneurs are facing?

  • Rohit: People are trying to chase good deals, but maybe the info is not getting to the farmers and farmers are not able to make the pitches
  • Solomon: There is unanimity on the importance of agriculture.  There are a lot of dollars to complement sustainable agriculture, technology and end user value
  • Alloysius: Mobile technology is by far the best way to transfer knowledge and training.  Great time to get into ag, just be able to show your impacts and have consistent effort
  • Eric: Need more early stage capital, most of the funds are giving the money to foreigners, need to get it to locals
  • Agnes: Need post harvest mechanization. Agriculture is a holistic system, and all investments have a ton of dividend.  The highest sectoral return on investment for poverty reduction