Africa: CAD Fund to Increase Agriculture Investment in Continent

PRESS RELEASE

China-Africa Development Fund (CADFund), the Chinese state fund promoting investment co-operation between China and Africa, is considering entering into partnerships with Agriculture development banks in some African countries to expand investment, the fund's vice president Hu Zhirong said.

China's co-operation with African development banks dates back to 1985 when the government started supporting the Africa Development Bank (AfDB). Since then China has been providing aid to the African banks.

In an exclusive interview with Xinhua on Friday, Hu said the fund's core plan is to expand Chinese farming investments in Africa.

Hu said CADFund is working together with its major shareholder China Development Bank (CDB) in this investment plan.

The plan would also consider partnering with local agriculture companies and other financial institutions supporting agriculture development, he said.

"We do have plans to work with agriculture development banks in some African countries so that we expand our agriculture investment in Africa.

"Our shareholder is China Development Bank so both the CDB and China-Africa Development Fund are willing to develop agriculture projects in African countries," Hu said.

CADFund reportedly is the first equity investment fund in China focusing on investment in Africa. It was established in June 2007 with committed funding of 5 billion U.S. dollars. CADFund is a key component of the Chinese government's forging of the Sino-African New Strategic Partnership.

"We also need local partners including the financial institutions and other agriculture local companies.

"In this way we can work together to develop agriculture in Africa," the deputy CEO said.

Fund report showed that by the end of 2008, CADFund had invested nearly 400 million U.S. dollars in over 20 projects, which in turn would facilitate investment by Chinese enterprises to the value of about 2 billion U.S. dollars in Africa.

Hu, not indicating which banks the fund is targeting, said CADFund is currently funding different agriculture projects in Malawi, Zambia, Mozambique, Tanzania and that plans are at an advanced stage to extend the funding to Sudan.

He said the CADFund wants to team up with Chinese companies.

"I am encouraging Chinese companies to invest in this so we can invest with Chinese companies," he said, adding that the CADFund is also investing in expanding its presence in Africa and currently is investigating the investments environment and the incentives of some local governments in north Africa.

"We are planning to have two new representative offices in the north region," Hu said.

The senior official said the Fund is hoping to open these offices by the end of this year or early next year. CADFund has establishment representative offices in Zambia, Ethiopia, Ghana and South Africa.

Xinhua

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Aid groups question Group of 8 plan to fight African hunger

JOHANNESBURG, South Africa -- A plan to improve agriculture in poor countries through private investment won a tepid welcome Friday from humanitarian agencies, which said the Group of 8 major industrialized nations should stick to its previous commitment to donate $7.3 billion a year.

The G-8's New Alliance for Food Security and Nutrition announced Friday to fight global hunger calls on multinational corporations to invest $3 billion in agriculture in developing countries, mainly in Africa. But aid agencies questioned whether the money would reach the small farms that grow most of the continent's food.

With more than half Africa’s population living on $1.25 a day and a quarter suffering chronic hunger, fostering a “green revolution” across the continent is seen as the way to lift populations out of poverty and to provide adequate nutrition.

But global climate change has hit hard in many African countries, making some farm areas marginal and forcing food prices up. Africa’s population is expected to double by 2050, increasing the intense pressure on food resources.

Gregory Adams, spokesman for the humanitarian and advocacy organization Oxfam, said one of the key reasons for the lack of agricultural growth in African countries in recent decades has been a systematic government failure to invest in rural roads and other infrastructure that would enable farmers to increase production and get their goods to market.

Oxfam also argues that climate change and food wastage in both developing and developed nations contributes to the sharp increases in global food prices that have left many people hungry.

At a 2009 meeting in L'Aquila, Italy, the G-8 promised to provide $22 billion for agricultural development in poor countries over three years. With just months to go in that  agreement, around 44% of the money has been disbursed.

But aid groups question the new focus on private investment to deliver the next phase of agricultural development.

"Where is the sustained commitment from the G-8?" Adams asked. "This problem was caused by several decades of public disinvestment in agricultural development. You don’t solve it in three years.

“We want to see the G-8 give a commitment commensurate with the scale and level of the problem," he said. "We’d like to see leaders double down on their commitments at L’Aquila and continue the $7.3 billion a year for the next three years.”

But Kenya’s Calestous Juma, director of Harvard’s Agricultural Innovation in Africa Project, said the lowered funding commitment was at least honest. “There’s been a huge gap between public commitments by Western donors and actual delivery. I’d prefer they underplayed and delivered than overplayed and not delivered.”

Some agencies questioned whether the shift to private investment signaled that European Union governments, facing financial crises of their own, were backing away from promises to end hunger in the developing world.

But Juma said the investment pledges by large multinational corporations was a significant vote of confidence in the future of African agriculture.

“They would not be interested in making a commitment if they didn’t believe it has a future,” he said in a phone interview. “That level of commitment by foreign firms also helps to get African leaders to think about complementary investments in energy, transport, irrigation and communications. This is the role that the African public sector can play.”

It would also encourage African businesses to invest in agriculture.

The barriers to a “green revolution” in Africa, are myriad: lack of access to improved seeds, fertilizer, irrigation and markets; lack of storage and refrigeration; poor transportation and infrastructure; and insufficient bank finance.

The head of the U.S. Agency for International Development, Rajiv Shah, told journalists Friday that boosting food production through private investment would raise 50 million people out of poverty and hunger in the next 10 years.

The alliance announced Friday will include G-8 and African leaders, aid agencies and multinational companies such as Unilever, Diageo and Vodafone. The role that farmers will play was less clear, said Adams.

The central objective is to encourage small-scale farmers to increase their output and their capacity to get goods to market.

“In partnership with Africa’s people and leaders, our goals are to increase responsible domestic and foreign private investments in African agriculture, take innovations that can enhance agricultural productivity to scale, and reduce the risk borne by vulnerable economies and communities,” said a White House statement on the initiative Friday. “We recognize and will act upon the critical role played by smallholder farmers, especially women, in transforming agriculture and building thriving economies.”

In addition to pledges of $3 billion from the private sector, the alliance would seek another $1.2 billion over the next three years from donors -- a far cry from the $7.3 billion annually humanitarian agencies were calling for.

Adams said African countries faced vastly different challenges among themselves and compared to the rest of the world in fostering a green revolution. He cautioned against drawing analogies with the Asian and Latin American green revolutions that spurred economic growth in past decades.

“We have a different global market and a different climate, and new technologies and solutions," he said. "A green revolution in Africa is going to look different to what it looked like 40 or 50 years ago.”

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DA: Govt's funding withdrawal hurt fruit exports

Exports compromised by withdrawal of government funding for international trade fair, says DA

HOPEWELL RADEBE

Published: 2012/05/07 05:22:06 PM

SOUTH Africa’s fruit exports have been compromised by the recent withdrawal of Department of Trade and Industry funding for a trade fair in Europe, the Democratic Alliance (DA) has claimed.

In February, the department withdrew funding for the local Fresh Produce Exporters’ Forum to exhibit its products at the Fruit Logistica in Berlin, Germany — seen as one of the most important trade fairs for South African fruit producers. This forced the sector to attend the show with few resources, participants and products.

According to the department, the organisers had not sufficiently involved emerging South African producers and small and medium-sized enterprises (SMEs).

Wilmot James, DA spokesman on trade and industry, last week accused the department of reneging on its promise last year to fund the exporters’ forum. He said this had led to "a diminished and disorganised presence" of South African exporters at an event of great importance for the fruit export sector.

According to forum organisers, Mr James said, the department "did not honour the final agreement (and) never explained why".

However, Lionel October, director-general of trade and industry, said while there could have been miscommunication, the exporters’ forum lost the department’s support because it failed to satisfy the criteria for promotional funding by lacking a sufficient number of entrepreneurs and small businesses.

"Most funding in the past supported big business, but the government now expects departments to ensure that entrepreneurs in small and medium businesses across all sectors are offered similar opportunities to access international markets and to be assisted to exhibit their products at these international trade fairs," he said.

As an example, Mr October said, the department supported 80 businesses — 50 large companies and 30 SMEs — on a trip to China last year to forge trade links and access that market.

"At the moment big business provides lots of jobs and contributes to the gross domestic product," he said. "However, we have to cater for SMEs because they also have potential to create jobs, provided market access and business opportunities are offered to them."

Mr October added: "We are trying to strike a balance between preserving what we have, which is valuable, and encouraging new entrants, involving sectors that have potential to contribute to the future economic growth of the country."

Mr James said the fruit industry should not be taken lightly because it was a highly productive sector, employing 460000 South Africans who in turn support 2-million dependants. The industry earns roughly R12bn a year in foreign exchange through exports to 70 countries.

He urged the Department of Trade and Industry to repair its relationship with exporters and "clarify its strategy" by working with organised agricultural groups to ensure access for South African products to overseas markets.

radebeh@bdfm.co.za

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April 2012 tractor sales up 43.5% - Saama

Tractor sales rose 43.5% to 528 units last month, compared with 368 units sold in the comparative period of 2011, South African Agricultural Machinery Association data showed on Tuesday.

On a year-to-date basis, tractor sales were up 38.3% to 2,763 units, from 1,998 units in the same period last year.

Combine harvester sales rose 52.4% to 64 units in April, compared with 42 units recorded in the previous comparable period.

On a year-to-date basis, combine harvester sales lifted 31.9% to 120 units, compared with 91 units previously.

The association said the fundamentals in the market still remained positive.

"Recent deliveries on government tenders continue to give the market a boost. The market is still very competitive. Crop prices are still holding up well, with stock levels being finely balanced between supply and demand. This will have a bearing on crop prices as local and international grain stocks are quite low," Saama said in a statement.

"Harvesting is only just beginning now, so farmers do not yet have a good feel for what their crops will yield. Once harvesting is proceeding in earnest, farmers will have a better idea about the quality and quantity of the current crop. This should then give the lead to the direction of the agricultural machinery market over the next few months."

Industry predictions for tractor sales for the 2012 calendar year are currently between 6,700 and 7,300 units, up to 10% down on 2011 sales.

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