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African agriculture offers investment opportunities though risks remain

Africa's agricultural sector offers investment opportunities to international investors despite hurdles such as land-grabbing 

African_agriculture_CIATAfrica offers tremendous growth potential in the agricultural sector. (Image source: Africa offers tremendous growth potential in the agricultural sector. (Image source: CIAT)

 

According to Organization for Economic and Development (OECD) executive manager Karim Dahou, "Africa is clearly a continent where there is a tremendous growth potential in the agricultural sector."

Dahou was speaking at the Agriculture Investment Summit which was held recently in London.

"It's not only an opportunity for foreign investors, but also for the African countries that have been affected by decades of under-investment."

He added, "Land tenure is not an issue that is well-settled in Africa at the moment. It is not easy for investors to identify the holders of the rights. Proper procedures need to be followed by potential international investors to negate land grabbing risks."

Land acquisition, however, was not the only option available to investors, Dahou stressed, pointing out to the international major Cargill's preference to work with African agricultural producers.

The narrow financial markets of many African countries make international investment a key component of diversifying funding, Dahou explained. Developing better irrigation, secondary roads and improved electricity supply is crucial to domestic, regional and international investment.

Only five per cent Africa's farmland have been irrigated, with the remainder being rain-fed, according to a report by Dow Jones. Up to 50 per cent of farm production could be lost after harvest as storage and drying infrastructures are insufficient in the continent.

The Food and Agriculture Organization's (FAO) recent endorsement of new global guidelines to help governments safeguard the rights of people to own or access farmland, forests and fisheries was pointed out at the Summit to be a landmark decision that would help halt land-grabbing phenomenon.

The guidelines recommended that safeguards be put in place to protect tenure rights of local people from risks that could arise from large-scale land acquisitions, while acknowledging that responsible investments by the public and private sectors are essential for improving food security.


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