“Africa is capable of sustaining its food needs,” said John Magnay, Opportunity’s senior agricultural advisor. “[But] if you look at [crop] yields in Africa, it is at 40% of what it should be.”
Magnay, a British-born, 33-year veteran of the agricultural development sector in Africa, has worked with several African governments to develop agricultural advancements, and now leads http://www.opportunity.org/Opportunity[/intlink]‘s agricultural finance program in Africa. His work is highlighted in an article published last week in Medill Reports, a newsservice written by graduate journalism students at Northwestern University.
Although the proportion of the economically active population engaged in agriculture has been falling in developing regions worldwide, it still exceeds 50% in Africa and Asia. Agricultural microfinancing, however, has been seen as too risky for financial institutions and many stopped providing the service. Agriculture accounted for 31% of World Bank lending in 1979-81, but by 2000-01, it had fallen to less than 10%, according to the U.N. International Fund for Agricultural Development.
“Climate is the biggest risk to agricultural lending,” said Paul Christensen, professor at Northwestern’s Kellogg School of Management. Christensen has three years’ experience as a fund manager for microfinancing investments. “One flood can wipe out all of your [banking institution’s] loans.” Which is why Opportunity has implemented an agricultural finance program that includes weather-indexed crop insurance, which can protect the farmer and the investor against the effects of climate change and unexpected weather events, like drought or flood.
A 2007 study released by Opportunity indicated nine primary requirements for a successful weather-indexed crop insurance system. Among them is a reliable network of weather stations, quality historic weather data dating back 30-40 years and relatively similar soil water containment capacity on the farm as is near the weather station.
Opportunity successfully tested its first weather-indexed crop http://www.opportunity.org/our-work/microinsurance/insurance[/intlink] pilot with 892 groundnut and maize farmers in Malawi. As a result, today, over 65 % of its population–more than 2,000 farmers–has weather-index crop insurance. Due to the program’s success in Malawi, it’s expanding its agriculture finance program to several other African countries in the next few years, including http://www.opportunity.org/blog/interview-with-ghana-agricultural-finance-officer/Ghana[/intlink] and Mozambique, and then to follow in Rwanda and Uganda.
Want to meet John Magnay in person and learn about innovations in agrifinance in Africa? He’ll be leading a http://www.opportunity.org/opportunity-international-conference/breakout-sessions/breakout session[/intlink], “Agricultural Finance: Reaching More of Africa,” at http://www.opportunity.org/opportunity-international-conference/Opportunity’s Fall Microfinance Conference[/intlink] on Oct. 8-9. http://www.opportunity.org/opportunity-international-conference/Click here[/intlink] to learn more and to register for the conference.
- http://www.opportunity.org/blog/interview-with-ghana-agricultural-finance-officer/Spotlight on Agricultural Finance: An Interview with an Agriculture Finance Officer[/intlink]
- http://www.opportunity.org/blog/melinda-french-gates-on-the-impact-of-agriculture-finance/Melinda French Gates on the Impact of Agricultural Finance[/intlink]
- http://www.opportunity.org/blog/what-were-reading-world-finance-magazine-discusses-opportunitys-agricultural-finance-program/What We’re Reading: World Finance Magazine Discusses Opportunity’s Agricultural Finance Program[/intlink]
Watch the “Harvesting Hope” video: