Stream E - Inclusive Finance & Investment
20 May 2021
Virtual | East Africa Time (GMT+3)
11:00 - 12:30
About the presenters
14:30 - 16:00
Globally, current levels of investment in agricultural value chains are insufficient to achieve key development goals including ending poverty and hunger and boosting shared prosperity. To realize this vision, more private finance must be leveraged to complement scarce public resources, and investments should be directed strategically to Maximize Finance for Development (MFD). Factors that can help maximize finance for agricultural development include; i) improving the enabling environment for the private sector; ii) promoting responsible investment; iii) improving the policy and regulatory environment; and iv) using public financing to improve private incentives and to reduce transaction costs and risks—including through blended finance. There remains a critical need for public resources to finance essential public goods and services such as human capital, agricultural research, and infrastructure.
Sustainable development of the rice sector in West Africa represents an opportunity to maximize finance for development goals including improving food security, creating jobs and preserving natural capital. A recent survey of rice production in ECOWAS identified the top constraints facing the sector as access to finance, competition from imported rice, and access to mechanization. Under the MFD approach, public sector support would prioritize irrigation and storage infrastructure, access to quality inputs, increased incentives for lending, and import regulations. These improvements would encourage the private sector to formalize and invest in the value chain, strengthening supply chain relationships and providing millers and farmers access to finance to mechanize and upgrade equipment. The investment priorities described above would be ideally suited to a PPP model of financing, including irrigation systems and milling operations.
The World Bank is investing directly in rice development in West Africa through the Food System Resilience Program (FSRP), a $1 billion regional initiative which aims to strengthen the resilience of the food system to shocks in order to improve food security, reduce poverty and promote sustainable growth. The World Bank also supports broader development partnerships, like the Rice Observatory, which is designed to catalyze the rice sector’s growth in West Africa. This program will provide public and private perspectives to help governments harmonize relevant policies and coordinate access to finance for millers, farmers, and infrastructure development. The Rice Observatory and FSRP represent opportunities to implement and innovate on PPP models for rice sector financing.
About the presenter
According to the National Rice Development Strategy, 2019 – 30 (NRDS – 2), Kenya imports 90% of its rice demand but the country has a huge potential to produce enough rice and even export to countries in the region. The challenges to increase domestic supply are several and include lack of high yielding seed, high cost of inputs, poor post-harvest practices, distorted markets due to parastatal interventions and importation of cheap poor quality rice which is fraudulently repackaged and sold in the local market, lack of finance, and unfavourable land tenure. These same problems were identified back in 2008 when the first rice strategy (NRDS – 1) was launched in 2008 but very little has changed. There are some institutional and governance issues that seem to perpetuate the status quo.
Among key stakeholders in the Kenyan rice supply chain are: farmers and farmer organizations, policy makers and regulatory bodies, the National Irrigation Board/ Authority, research organizations (KALRO and universities), agro-processors, service providers such as stockists and seed producers and suppliers, rice traders and merchants, credit providers, consumer organizations, NGOs and CBOs. These stakeholders need an effective engagement to share power and drive the rice sector towards an inclusive development, generating adequate incentive for the producers and decent employment for the youth and women. A National Rice Stakeholders’ Forum (NRSF) was proposed and established under NRDS-1. In addition, a Technical Committee and Secretariat (renamed as e National Rice Technical Committee, NRTC, under NRDS-2) comprising Ministry of Agriculture (MoAL&F), KEPHIS, KARLO/KARI and universities, and NIB/NIA was established to provide technical and administrative guidance and undertake M&E activities. However, NRSF has never been active and there is no evidence showing that stakeholders had the opportunity to articulate their needs and shape policies to address the structural weaknesses and governance challenges in the rice sector.
The objective of this presentation is to review the factors contributing towards weak stakeholder engagement. It will try to identify the nature of key constraints followed by an assessment of the space provided to stakeholders in reviewing the design and implementation of policies and change interventions. The presentation will conclude with some recommendations on the type of multi-stakeholder engagement needed to reform institutional processes that favour the status quo, improve access to credit and other services, ensure adequate incentive to producers, and promote transparency and reduce asymmetric information.
About the presenter