1. By: Dr. B. O. Oramah Executive Vice President (Business Development & Corporate Banking ) By: Dr. B. O. Oramah Executive Vice President (Business Development & Corporate Banking ) INTERNATIONALIZATION OF AFRICA’S AGRICULTURE AND IMPLICATIONS FOR FOOD SECURITY at the IEFA (Organized by PBSF) at the IEFA (Organized by PBSF) Palm Beach, Florida, USA, April 6-8, 2014

2. INTRODUCTION (2) Thank you for the opportunity granted Afreximbank to participate in this year's International Economic Forum of the Americas. We are happy to be associated with this event because it gives us the opportunity to share our views on the impact of globalization on Africa’s agriculture.

3. (3) AFREXIMBANK: WHO ARE WE? The Trade Finance Bank for Africa 122 SHAREHOLDERS comprising -African Gov’ts and multilateral Institutions -African Private Investors and Financial Institutions -Non-African Investors 122 SHAREHOLDERS comprising -African Gov’ts and multilateral Institutions -African Private Investors and Financial Institutions -Non-African Investors MANDATE: Promote and Finance Intra and Extra African Trade MANDATE: Promote and Finance Intra and Extra African Trade RATINGS: Baa2/BBB-/BBB- (by Moody, Fitch/S&P ) RATINGS: Baa2/BBB-/BBB- (by Moody, Fitch/S&P ) CREATED in 1993 under the auspices of the AfDB HEADQUARTERED in Cairo, EGYPT AUTHORISED CAPITAL USD5 BILLION AUTHORISED CAPITAL USD5 BILLION

4.  Abundant Labour;  Abundant Water (i.e. Surface, Underground and Rainfall)  Diverse Ecosystem – from Mangrove to Desert  Vast Arable Land (4) AFRICA: AGRICULTURE RESOURCE ENDOWMENTS

5. (5) CHARACTERISTICS  SMALL HOLDINGS With Size of 0.2 – 1 hectare per farmer  FRAGMENTED FARMS Due to Land Tenure System  LIMITED USE OF TECHNOLOGY (Rainfed, Low Mechanization, Chemicals, Seeds, e.t.c)  LABOUR INTENSIVE  LARGELY SUBSISTENCE  POOR CREDIT DELIVERY TRADITIONAL AFRICAN AGRICULTURE OUTCOME  LOW YIELDS  LIMITED PRODUCTION FOR THE MARKET  LIMITED OR NO SUPPORT FOR AGRO-BASED INDUSTRIALIZATION  MALNUTRITION ESPECIALLY IN THE RURAL AREAS  POOR ANTHROPOMETRIC INDICATORS

6. PAST ATTEMPTS AT RESOLVING THE AGRICULTURE PROBLEMS (6) POLICY-BASED MARKET-BASED APPROACH INSTITUTIONAL E.g. Promotion of Cooperatives, Agriculture Credit Schemes, Government-Run Mechanization Schemes, Farm Settlements E.g. Rural banking, Subsidy schemes (such as fertilizer, e.t.c) E.g. Green Revolution, Commercialization schemes, e.t.c

7. (7) Governance Issues Inherent weaknesses in approach (e.g. in subsidy Diverse nature of Ecosystems Inadequate Funding Inadequate Funding Poor Conceptualization REASONS FAILURE OF PAST INTERVENTIONS DID NOT PROVIDE FOOD SECURITY Africa could neither feed itself nor generate enough revenue to buy what it needs to feed itself DID NOT PROVIDE FOOD SECURITY Africa could neither feed itself nor generate enough revenue to buy what it needs to feed itself

8. (8) GLOBALIZATION ECONOMIC REFORMS EMERGING TRENDS Integration of Africa’s Agriculture into the Global Supply Chain: Internationalization of Africa’s Agriculture

9. (9)  Challenges of Resource Fixity and Allocation: Production for Food vs Production for Export  Massive Land Purchases by Foreign Entities: Export of Africa’s Land Water and Labour  Rising Non-Equity Modes e.g. Contract Farming  Changing Taste as Imports replace traditional food items CONSEQUENCES OF INTERNATIONALIZATION

10. (10)  Worsening of the Food Situation in Africa RISKS Food Consumption Per Capita Per Day 1984-861997-992015 Sub-Saharan Africa205721952360 Industrialized Countries320633803440 World265528032940

11. (11)  Malnutrition especially for the most vulnerable (Women and Children) E.g. African Malnutrition Population 2010175 Million 2012239 Million  Turning Land Owners into Labourers  Possible Political Instability from Social Unrest RISKS

12. (12)  Adoption of a MODEL that brings BENEFITS of COMMERCIALIZATION while ENSURING FOOD SECURITY – SUSTAINABLE INTENSIFICATION  Adopt Pillars I-IV of African Union’s Comprehensive Agriculture Development Programme (CAADP) WAY FORWARD

13. (13)  Pillar I: Extending Area Under Sustainable Land Management and Reliable Water Control Systems  Pillar II: Improving Rural Infrastructure and Trade Related Capacities for Market Access  Pillar III: Increasing Food Supply, Reducing Hunger and Improving Responses to Food Emergency Crises WAY FORWARD

14. (14)  Pillar IV: Improving Agriculture Research and Technology Dissemination and Adoption WAY FORWARD

15. (15)  Focus on Sustainable Contract farming as an optimal approach that meets market needs while guaranteeing food security. E.g. Hortico in Zimbabwe and Farmapine in Ghana. WAY FORWARD

16. (16)................... Hortico - Zimbabwe Farmapine - Ghana Involves 3000 Smallholders; 60% being Women; Restriction of Quantity of Export Crop to free Land for Other Food Crops A Cooperative Market Strategy and Market Based Development Approach with Support from the World Bank. Enabled farmers to earn an average income of US$5,000 compared to GDP per capita of US$320 in 2004 allowing farmers to buy needed food for consumption.

17. Thank You All (17)