AfDB Supports Lease Land Proposal for Food Supply to India
To improve the agriculture sector to increase food supply, provide jobs and propel economic growth on the continent, a $5 billion Exim Bank of India fund to support Africa's agriculture development through the "Feed Africa" project seems to fit into the Africa Development Bank's plans.
In it's Economic Outlook for Africa 2018, the Africa Development Bank (AfDB) has noted that even though the agricultural sector is the primary employer in many African countries, particularly in rural areas where a majority of the people live, the sector's productivity remains low.
The AfDB said, "The average share of agriculture in employment was 51 per cent between 2011 and 2016, and the share of agricultural value-added remained virtually unchanged at about 15 per cent." The Exim Bank of India, in a working paper published in May last year, planned to create an initial corpus with $5 billion to be sourced from the country's foreign exchange reserves.
The AfDB said that, in 16 countries, the sector accounted for more than 30 per cent of output, and in Liberia and Sierra Leone in the West Africa region, more than 48 per cent. According to Exim Bank, the fund would serve as a conduit for promoting investments in African agriculture and to meet India's import requirements of pulses and oilseeds, besides creating tremendous goodwill.
The working paper has proposed that African economies could avail development assistance from India to create agriculture infrastructure, adding: "The agricultural land supported by such eco-system could be leased to Indian firms for cultivation."
Exim Bank said, "This approach would mitigate the risks associated with upfront investments of the Indian investors. The lease rentals could serve as cash-flow to service the debt, Indian investors would require funds to pay upfront lease rentals, besides sourcing of agricultural inputs and implements."
It said the funding requirements could be met by Exim Bank's Overseas Investment Finance programme. But it is proposed to create a dedicated India-Africa Agriculture Development Fund to support the Indian investments in the African agriculture sector.
Exim Bank said, the funds could be utilised to extend medium to long term foreign currency finance to Indian enterprises planning to invest in the African agriculture and allied sector. The AfDB believes "a robust and thriving agricultural sector can also stimulate broader economic development and there are three key interventions that could unleash the potential of the agricultural sector: Ensuring "acceptably egalitarian access to land, facilitating the use of modern inputs, seeds, and technologies, by improving access to credit and other means as well as strengthening the ability to develop and adapt agricultural technologies."