Agricultural finance and investment constitute the greatest challenge that affects rice production and processing in Sub-Saharan Africa (SSA). What inclusive agricultural financing and de-risking strategies can be employed to increase financial services access by smallholder rice producers and processors? What effects does inclusive agri-finance on gender equity as well as youth engagement have in making the rice-based food value chains more sustainable?

There is an increasing number of medium- and large-scale processors in SSA countries, with a positive signal shown by the governments to support such investment through newly-setup lending schemes under public-private partnership (PPP) arrangements.

In East Africa, financial inclusion has increased in both rural and urban areas due to the high rates of mobile money adoption and use. Today 72.9% of Kenyans aged 15 and older have a mobile money account. Despite the strong presence of mobile money in rural areas, most farmers remain financially excluded.

For the long-term resilience of the rice-based food systems, the only way to enable scale in production and processing is through value chains strengthening by increasing financial services to farmers through the other players in the value chains. Thus, we can support the farmer through engaging wholesale and retail actors, agrochemical manufacturers, equipment suppliers, transporters, and distributors. Under PPP arrangements, smallholder farmers are now able to access financial support to increase their production capacity and secure the market for their produce.

This thematic stream will draw on new empirical evidence and case studies from various countries in East and West Africa to identify and examine innovators, organizations, and businesses that have disrupted the existing situation of poor access to financial services and investment.

Attendees will learn:

• Key challenges and opportunities in upscaling both public and private financial services in rice-based food systems.

• How existing policies and regulations can be improved to enhance the financial landscape in rice-based food systems.

• How farmers’ organizations/cooperatives (as intermediaries), digital platforms, and mobile-based solutions can increase access to financial services to rice farmers and processors.

• Case studies where inclusive financing arrangements have led to increases in production, productivity, and earnings for both women and men rice farmers and processors.

• PPP arrangements in financing to the rice value chain that has been successful in improving quality rice processing and farm productivity, drawing from the example from West Africa

• What incentives and approaches SSA countries can use to reduce risk and uncertainty and time delays for rice farmers while increasing their incomes.

About the presenters

Presentation overview

Leveraging Private Sector Finance for Rice in West Africa

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

Presentation overview

The Role of Effective Stakeholder Engagement in Improving Service Delivery and Governance in the Rice Sector of Kenya

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