Increasing demand, limited supply
Domestic and regional African agricultural markets have seen growth, with increasing demand for high value crops. This is great news. However, Africa still relies on imports for most of their raw materials. Importing leaves the continent susceptible to supply shortages and foreign currency risks. Based on current trends, food production system in Sub Saharan Africa would only meet 13% of its food demand in 2050.
International traders are increasingly interested in sourcing from Africa, but the supply quality and quantity is limited and often do not meet procurement requirements. The majority of smallholder farmers lack access to affordable services (including finance) and management expertise to become top-class suppliers for off-takers.
Regional food production, quality raw materials
Through the Grown Sustainably in Africa program, IDH develops partnerships with brands, like Nestle and Unilever, that have the power to increase regional food production and incorporate small scale farmers and SMEs into their supply chains. IDH provides technical assistance to SMEs, to build their capacity to meet supplier requirements, in terms of quality and quantity. With this support, SMEs can become top-class suppliers to international and regional markets and companies, securing raw materials and building traceability for food products across supply chains.
IDH Farmfit Fund – accessable, affordable finance
IDH can also provide equity or guarantees to SMEs, through the IDH Farmfit Fund, to help overcome when banks are unwilling to fund investments into SMEs, or where the cost of funding is too high. This enables local financial institutions and supplier to reduce their risk and expand the scope of lending and service provision.
The IDH approach to value chain development
The GSA program is part of a broader approach IDH takes to develop value chains. The approach is being applied in Rwanda under the HortInvest program, with prospective projects in the Gambia, South Africa, Benin and Guinea. HortInvest is aligned with Rwanda’s National Horticultural Policy and is financed by the Embassy of the Netherlands through the Dutch Ministry of Foreign Affairs. Here we’re partnering with SNV, Agriterra, Wageningen University, and Holland Greentech. Through the program in Rwanda households growing vegetables and fruits for household consumption are working towards compliance with international markets.