The financing of agriculture reaches even 1% of the credit granted to the real economy

According the projections, in 2050, the population will be between 2 and 3 billion then 4.4 billion in 2100. It would stand for 39% of the world population. According to the UN's 2018 report on the state of food security and nutrition around the world, 821 million people are suffering from hunger and more than 150 million children are stunted.

The number of chronically undernourished people in the world has increased by 17 million over the 2016-2017 period. Whith 60% of the world's uncultivated arable land (farm that can allow Africa to feed almost the entire planet at least three quarters), Africa is the region of the world where the undernourished population is the highest (20.4% up to 31.4% in East Africa).

In Togo, in 1960, the population was 1.4 million; 2.7 million in 1981 and 6.2 million in 2010. The number of inhabitants increased from 6.8 million in 2015 to 7.6 million in 2020, reaching almost 10 million in 2031. Standing for an annual average growth rate of 2.3% between 2010 and 2031.

Serious social problems will arise including food, and it is necessary to invest in agriculture to feed the growing population, finance agriculture to exploit the land still available (only 40% of agricultural land is exploited with low yields).

It should be remembered that the primary sector dominated by agriculture, fishing and livestock, contributed on average over the last 12 years (2008-2019) to the formation of GDP at 26.83%.

The secondary sector dominated by industrial activities, contributes 18.33% to the creation of wealth and the tertiary sector controlled by trade has contributed 40.98% of GDP.

In West Africa, for example, 76% of jobs are in agriculture and its share of GDP averages 26%.

In Togo, the share of agriculture in the current national GDP in 2018 is 31%. It accounts for 70% of the active population and is the main source of income for 97% of rural households and therefore an important lever for poverty reduction; 73% of the poor being in rural areas.

Despite the fact that the primary sector and therefore agriculture receives less bank financing (0.3% of credits granted to the sectors), its share of wealth creation remains significant and higher than that of the secondary sector which receives more than 33% of bank funding.

If the financing of agriculture reaches even 1% of the credit granted to the real economy, by extrapolation, this would correspond to 89.43% as a share of the GDP. This participation will be significantly higher than that of the tertiary sector, which, despite its 62% of financing, generates only 40.98% of GDP.

Better understand the obstacles to action

Although agriculture is a sector with strong economic and growth potential, it remains the sector with the least bank support.

In fact, there are several obstacles to financing the agricultural sector despite the performance and the need for the latter. Challenges related to the development of agriculture including mechanization (very low mechanization rate (-0.01 cv per hectare), water management (agriculture still rainy ie no rain no agriculture) technological innovation (low yields of crops ranging between 1 and 2 tons / ha for cereals, 0.5 and 1 ton / ha for legumes and around 10 tons / ha for tubers), constitute risks evaluated by commercial banks.

However, these obstacles and challenges can be considered as business opportunities to be grasped by economic operators. For example, the private sector can generate interest by:

- investing in mechanization: providing adapted agricultural equipment according to the customer, equipment rental and repair services, etc. ;

- developing irrigation services and proposing innovative solutions for water management and optimal management of the crop calendar.

The detailed business opportunities to be seized by economic operators can be found in the research paper of KAPI Consult "Paradoxe du financement agricole en Afrique de l’Ouest: Cas du Togo".

This document shows the need to finance agriculture to develop, analyzes the financing of the real sector, discusses the risks and obstacles related to agricultural financing, while taking care to indicate all the business opportunities that arise and discusses the efforts made by the government.

Recommendations are also made to farmers, micro and small agricultural enterprises (MPERs), banks, MFIs and insurance companies and to the state.

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