New alliance promises to transform Africa’s agriculture with $3bn investment

Onome Amuge

The African Development Bank Group, Afreximbank, Arise Integrated Industrial Platforms, the Islamic Development Bank Group, and the United Nations Industrial Development Organisation have launched a new alliance to support agro-industrial development in Africa. The founding members have committed $3 billion to support the initiative.

The alliance was launched recently at the 2023 Africa Investment Forum Market Days in Morocco. During the launch session, founding members discussed how the SAPZ model could impact Africa’s agro-industrialisation process.

The Alliance for Special Agro-Industrial Processing Zones (SAPZ),  is made up of development financial institutions, private sector partners, and development-oriented technical partners,and will streamline the development and delivery of SAPZ projects. It aims to transform Africa’s rural areas into agro-industrial hubs of prosperity by providing much-needed financing and support for the development of agro-industrial processing zones across the continent.

Financial commitments include $1.1 billion from the African Development Bank Group, $1 billion from Afreximbank, $300 million from the Islamic Development Bank Group, and $600 million from Arise IIP and its partners.

The United Nations Industrial Development Organization (UNIDO) brings to the Alliance its extensive technical assistance knowledge, practical experience, tools, and methodologies.

Special Agro-Industrial Processing Zones stimulate structural transformation in agriculture by connecting rural and urban development through the zone’s ecosystem. The zones integrate smallholder farmers into value chains through logistics and infrastructure, connecting them to agro-industrial processors and consumer markets.

According to the alliance members, meeting the financing goal will allow for the delivery of an additional 15 to 20 SAPZ projects in various countries across Africa, as well as the improvement of administrative, policy, and investment incentives.

The African Development Bank has committed more than $853 million to the development of over two dozen Special Agro-Industrial Processing Zones in 11 countries across the continent. This investment has attracted $661 million in co-financing from the bank’s partners.

Akinwumi Adesina, president of the African Development Bank Group, said that the Alliance will raise funds through various investment windows to support project preparation, development, and construction, as well as financing for tenant companies.

This, according to Adesina, will bridge the critical financing gap and complement existing initiatives to mobilize resources towards enhancing agricultural value addition in Africa.

Beth Dunford, African Development Bank’s vice president for agriculture, human and social development, commented on the beauty of the alliance in bringing together diverse players from different backgrounds, and expressed hope that more would join in the future.

Benedict Oramah, president and chairman of the board of directors of Afreximbank, welcomed the establishment of the alliance and suggested the creation of continental regulatory bodies that countries could adhere to in order to attract private sector investment. He highlighted the visibility of such projects and their importance in sustainable development.

Hani Sonbol, CEO of the International Islamic Trade Finance Corporation and acting CEO of the Islamic Corporation for the Development of the Private Sector, echoed this sentiment, stressing the need for a new approach to investment that emphasises self-sufficiency, climate change adaptation, and private sector involvement in Africa’s food sovereignty.

Gagan Gupta,Arise IIP CEO,stressed the need for infrastructure around the zones that meets the needs of the communities in which they are located, such as housing, transportation, health care, and extension services.

UNIDO’s Gunther Beger explained that the organisation has a wealth of experience in the development, planning, and implementation of industrial parks and special economic zones. He described the alliance as a groundbreaking approach to transforming Africa’s agro-food system, highlighting the importance of a partnership between financial institutions, public and private sector players.