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African AgribusinessesOn November 30, 2020, USAID announced a joint operation with the Swiss Agency for Development and Cooperation and the IKEA Foundation to contribute $30 million to Aceli Africa to help bridge the financing gap experienced by many African agribusinesses. The grant is estimated to have a tremendous impact and will unlock $700 million in financing for up to 750 African agribusinesses in Tanzania, Kenya, Rwanda and Uganda.

Agri-SMEs Lack Financing

Much of Aceli Africa’s work focuses on a data-driven approach to incentivizing financial institutions to provide loans for small and medium-sized African agribusinesses or “agri-SMEs”, as Aceli Africa calls them.

According to Aceli Africa’s research, agri-SMEs represent a golden opportunity to solve hunger and poverty throughout Africa and help fulfill key U.N. Sustainable Development Goals (SDGs), such as gender equality and climate action.

This is because smallholder farmers consist of both men and women and provide direct access to food sources that are responsibly raised in accordance with the needs of the local environment. Furthermore, the expansion of the agricultural sector in Africa is two to three times more effective in eliminating poverty than growth in any other sector.

Despite the great potential of African smallholder farms, banks are largely unwilling to loan them much-needed financing to power additional growth. Banks do not have the risk appetite for small farms in Africa due to price volatility, the seasonality of farming, pest invasions and a weak regulatory environment.

The result of this is an investment shortfall of $65 billion per year for agri-SMEs in Africa. Initiatives focused on microfinancing do not provide enough financial injection for agri-SMEs, which are larger than the microenterprises that are the usual recipients of microloans. Agri-SMEs are thus left out of financing. However, the work of Aceli Africa aims to change these circumstances.

Aceli Africa Incentivizes Banks to Loan to Agri-SMEs

To bridge this gap in financing, Aceli Africa partners with numerous organizations such as USAID, the IKEA Foundation, Feed the Future and the International Growth Center to incentivize banks to loan and provide technical assistance to agri-SMEs.

This is where the aforementioned $30 million contribution has the potential to positively impact agriculture and African agribusinesses. One of the incentive programs that Aceli Africa employs is to cover the losses of the first loan that a financial institution gives to an African agri-SME.

This works by depositing 2-8% of the loan’s value in a reserve account that the lender can access when losses are experienced. This boosts risk appetite among lenders and makes banks and other institutions more willing to invest in agri-SMEs in Africa.

Aceli Africa also provides technical assistance for financial management for African agri-SMEs through online tools and other in-person approaches to help smallholder farmers optimize growth using the loans they receive. These approaches have the potential to put U.S. taxpayer dollars to effective use by addressing poverty and hunger abroad.

United States Outreach is Key in Combatting Poverty

USAID’s decision to partner with the Swiss Agency for Development and Cooperation and the IKEA Foundation to contribute to the work of Aceli Africa symbolizes the value and power of international partnership in the fight against global poverty. When the United States decides to lead on an issue, the rest of the world follows. Key international partnerships are essential for the United States to take the lead and garner international support to address key global issues.

– John Andrikos
Photo: Flickr

Human Rights in SwitzerlandHuman rights have always been a hot topic for the global community. Hence, when countries seem to get it right, we all can’t help but go to the old search bar to find out for ourselves whether human rights in Switzerland is that good.

Multiple internationally-acknowledged measures create a positive image of human rights in Switzerland. In 2016, Switzerland ranked third in the human development index, a composite index set up by the United Nations Development Programme (UNDP) to measure human development according to life expectancy, access to education and gross national income.

They were ranked first in the gender inequality index (GII), another UNDP project, which looks at development from the view of gender inequality. It measures gender inequality by reproductive health(maternal mortality and adolescent birth rate); gender empowerment; the number of seats women hold in Parliament; female secondary education and female labor force participation.

Additionally, and perhaps most importantly on the topic of human rights, Switzerland ranked second on the human freedom index. This index tries to be as comprehensive as possible, taking into account 79 clear indicators of personal and economic freedom in multiple areas such as the rule of law, religion, movement and expression.

The above information highlights the importance that the Swiss government and people place on human rights in Switzerland. A quote from the Swiss Agency for Development and Cooperation(SDC) says, “sustainable development is only possible if fundamental human rights principles such as non-discrimination, participation, and the rule of law are respected. These rights form the basis of international cooperation. This fact is why the promotion of human rights is a critical issue for the SDC.”

Indeed, human rights in Switzerland exceeds the norm in several areas, but that does not mean it is perfect. For instance, in reaction to the influx of migrants going to Europe, the country provides asylum to a few thousand refugees, resettling them across the country. One town mayor boasted that his town was “safe and idyllic” and that this would continue because “no refugees were there.” The mayor went so far as to pay a $300,000 penalty than to accept the federal quota of eight refugees in a town of two thousand.

Furthermore, according to Amnesty International in September, the Lower Chamber of the federal Parliament adopted a bill to ban the use of full-face veils at the national level. At the end of the year, the bill was still pending. It all goes to show that while human rights in Switzerland in comparison to others may seem ideal, like many other things in life, nothing is perfect.

Finally, Switzerland is ranked fifth on the corruption perception index, where over two-thirds of countries out of 176 scored less than halfway on their scale: “no country gets close to a perfect score.”

Obinna Iwuji
Photo: Flickr