Chapter 7

Investing in agri-food
value chains for West
Africa’s sustainable
development
This chapter identifies policy options to strengthen
sustainable investments in West Africa’s agri-food
sector. The sector is chosen due to its large contribution
to employment and economic growth in West Africa.
The chapter first discusses how investments flow into
and out of the region and how they are distributed
across sectors and countries (Benin, Burkina Faso,
Cabo Verde, Côte d’Ivoire, Gambia, Ghana, Guinea,
Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal,
Sierra Leone and Togo). It then analyses in detail
the potentials and limitations of West Africa’s agri-
food sector. The chapter concludes with concrete
suggestions for West African policy makers on how to
attract more sustainable investment.
 7. Investing in agri-food value chains for West Africa’s sustainable development

IN BRIEF Recent global crises have slowed down growth,

increased debt and dampened investment in West
African countries. These developments have also
reduced sustainable investments in the region’s agri-
food sector (covering agriculture, food processing,
packaging, transportation, distribution and retail)
despite its vast potential for employment creation,
poverty reduction and productive transformation.
Growing domestic and intra-regional demand
for processed food products continues to offer the
potential to develop West Africa’s agri-food value
chains. However, funding from domestic credit,
development finance institutions and governments
for the region’s agricultural sector has stagnated,
totalling USD 10.3 billion in 2021 and thus remaining
below the pre-COVID-19 level of USD 10.8 billion in
2018. Foreign direct investment into agribusinesses,
despite their importance for capital-intensive
investments, amounted to less than USD 1.8 billion
per year between 2017 and 2022. Between 2010
and 2020, only 4% of development finance for
the agricultural sector went to agro-industrial
activities and 12% to environmental protection.
Compared with other African regions, informal
private investments play a more significant role in
West Africa; yet these have limited productivity
effects and can introduce risks and vulnerabilities
for informal suppliers. The agri-food sector’s vast
potential to drive industrialisation and contribute
to job creation, livelihoods, food security and
enhanced regional value chains remains vastly
underexploited.
Policy makers can prioritise three sets of actions.
First, public financial institutions can improve
smallholder farmers’ access to productivity- and
sustainability-focused financial products. Second,
regional integration policies and place-based
programmes can fulfil complementary roles in
strengthening agri-food value chains. Third, agro-
poles, support organisations, international funders
and technical partners that directly improve the
capacities of small and informal businesses and
strengthen linkages in agri-food value chains can be
expanded.

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 7. Investing in agri-food value chains for West Africa’s sustainable development

West Africa

Contribution of investments Share of greenfield FDI West Africa's export of food

to GDP growth (p.p.) (2017-22) products in 2021 (USD billion)

West 2.7
11.3
29%
Africa for the 12
other West
-0.4 African
71%
1.2
countries
Nigeria, 3.8
Africa -0.5 Côte d’Ivoire
and Ghana

2017-19 2020-22
Primary food Processed food
products products

Agri-food industries accounts The region’s growing

for the bulk of employment in West Africa off-farm food economy employs

% of total employment 82 million people

Agriculture
34% 68%
Other 66%
32%
Agri-food of which: Off-farm of the region’s
68% food economy
workers are
women

Investments in West Africa’s

4%
agriculture, forestry and fishing sector Agro-industrial
amounted to only activities received

USD 23.1 billion only 4% of total

development finance
in 2010-20
in 2020

Improve smallholder farmers’ access to financial

products that include support for improving
productivity and social or ecological sustainability

Strengthen regional agricultural policies and

What's next? place-based programmes, such as agro-industrial parks

Build agro-poles and incubators, to enhance food

security and agricultural practices

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7. Investing in agri-food value chains for West Africa’s sustainable development

West Africa regional profile

Figure 7.1. Components of economic growth and sources of financing in West Africa
A. Components of three-year change in GDP, by expenditure, 2011-22 B. Sources of financing for West Africa compared with government Afrique de l'Oues
Final consumption Gross fixed capital formation and private investment flows, 2010-21
Inventories Foreign balance Government revenues Capital inflows
Remittances Net official development assistance
Real GDP growth Government investment Private investment
Percentage points of GDP USD billion
8 180
7
6 160
5
140
4
3 120
2
1 100
0
80
-1
-2 60
-3
40
2011-13
2014-16

2020-22
2011-13

2020-22
2011-13

2017-19
2020-22

2017-19
2020-22

2014-16
2017-19
2017-19

2014-16
2017-19

2014-16

2011-13
2014-16

2011-13

2020-22
20
West Africa Africa Latin America and Asia (no high- High-income
the Caribbean income countries) countries 0
(excluding LAC) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Note: The components of gross domestic product (GDP) growth are calculated on an annual basis by using real annual GDP
growth to estimate the increase in real US dollars. Aggregate figures are calculated by taking the average of the national
figures weighted by GDP in purchasing-power-parity dollars. The components of GDP growth over three-year periods were
calculated by taking the difference between the geometric average of the annual real GDP growth over the period and
the real GDP growth when setting each component to zero for individual years. Foreign balance is the difference between
imports and exports. Imports contribute negatively to GDP. “High-income countries” refers to countries classified as
“high-income” according to the World Bank Country and Lending Groups outside of Latin America and the Caribbean.
Government revenues include all tax and non-tax government revenues minus debt service and grants received. Capital
inflows include foreign direct investment, portfolio investment and other investment inflows reported by the International
Monetary Fund under asset/liability accounting. Figures for capital inflows should be interpreted with some caution as
some figures for 2021 and for portfolio inflows are missing.
Source: Authors’ calculations based on IMF (2022a), World Economic Outlook Database, www.imf.org/en/Publications/WEO/
weo-database/2022/October; OECD (2022a), OECD Development Assistance Committee (database), https://stats-1.oecd.org/
Index.aspx?DataSetCode=TABLE2A; World Bank (2022a), World Development Indicators (database), https://data.worldbank.org/
products/wdi; IMF (2022b), Balance of Payments and International Investment Position Statistics (BOP/IIP) (database), https://data.
imf.org/?sk=7A51304B-6426-40C0-83DD-CA473CA1FD52; IMF (2022c), Investment and Capital Stock Dataset (ICSD) (database),
https://data.imf.org/?sk=1CE8A55F-CFA7-4BC0-BCE2-256EE65AC0E4; and World Bank-KNOMAD (2022), Remittances (database),
www.knomad.org/data/remittances.
12 https://stat.link/tnkj96

Figure 7.2. Greenfield foreign direct investment flows into West Africa,
by activity, source and destination, 2017-22
A. By business activity B. By source country C. By destination country

Other activities Rest of world OTH

USD 7 billion (8%) USD 8 billion (9%)
Construction LBR
USD 5 billion (5%) France Europe, unspecified TGO
USD 7 billion (9%) USD 23 billion (27%)
Logistics and transport Senegal
USD 7 billion (8%) Manufacturing USD 4 billion (5%)
USD 35 billion (39%) Italy Nigeria
USD 8 billion (9%) Guinea USD 38 billion (43%)
Electricity USD 6 billion (7%)
USD 8 billion (9%)
Côte d’Ivoire
Asia, unspecified USD 7 billion (8%)
USD 9 billion (11%)
ICT China
USD 11 billion (12%) USD 16 billion (18%)

Ghana
Extraction Africa
USD 18 billion (21%)
USD 15 billion (17%) USD 15 billion (17%)

Note: The fDi Markets database is used only for comparative analysis. Actual investment amounts should not be inferred,
as fDi Markets data are based on upfront announcements of investment projects, including a share of projects that do not
actually materialise. ICT = information and communications technology, TGO = Togo, LBR = Liberia and OTH = other.
Source: Authors’ calculations based on fDi Intelligence (2022), fDi Markets (database), www.fdiintelligence.com/fdi-markets.
12 https://stat.link/3by1dk

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 7. Investing in agri-food value chains for West Africa’s sustainable development

Recent crises have dampened investment into West Africa, and sustainable
investments target few countries and sectors

COVID-19 temporarily thwarted investments and growth while increasing

sovereign debt
The COVID-19 pandemic slowed down investments and growth in West African
countries, and the recovery has yet to stabilise. In 2020, at the onset of the COVID-19
pandemic, West Africa’s gross domestic product (GDP) shrunk by 0.6%, before rebounding
to 4.4% in 2021 when the initial economic shock subsided. In 2022 – while disruptions
in international trade, food and energy price inflation, and tightening fiscal conditions
slowed the recovery – growth was still projected to remain robust at 3.9% (IMF, 2023a).
Before the pandemic, private investments had surged, almost doubling from USD 76.8
billion in 2017 (7.9% of GDP) to USD 141.1 billion (9.6% of GDP) in 2019 (Figure 7.1, Panel B).
Accordingly, investment (gross fixed capital formation) became the dominant driver
of GDP growth during the 2017-19 period, contributing 2.7 percentage points. However,
during the pandemic, disinvestments negatively affected the region’s GDP, lowering it by
0.4 percentage points from 2020 to 2022 (Figure 7.1, Panel A).
In 2020, all external financial flows except official development assistance (ODA)
contracted, but in 2021, flows rebounded to pre-crisis levels. External financial inflows
to West Africa fell from USD 72 billion in 2019 to USD 60 billion in 2020. In contrast, ODA
increased by 29% to USD 18.4 billion (2.8% of GDP), its highest level since 2011 (Figure 7.1,
Panel B). In a reversal, all external flows rebounded in 2021, with foreign direct investment
(FDI) reaching a nine-year peak of USD 13.8 billion in 2021 and portfolio investment
climbing to USD 9.1 billion, matching the level of 2017 (Figure 7.1, Panel B).
Fiscal deficits and sovereign debt pressures are increasing in West Africa. In response
to the COVID-19 pandemic, many governments implemented policies such as tax relief or
social assistance programmes to support vulnerable populations and economic activities
during and after lockdowns. Domestic revenue mobilisation in 2021 increased slightly
from 10% to 11% of GDP, while expenditures increased by 4%, bringing the fiscal deficit
to 47% of GDP for the region. Concerns over sovereign debt permeate West Africa, though
less so than in other African regions. According to the International Monetary Fund (IMF,
2023b), 4 out of 15 countries – Gambia, Ghana, Guinea-Bissau and Sierra Leone – are at a
high risk of debt distress. In particular, Ghana faces significant debt pressure, with the
country engaging in negotiations with the IMF to obtain financial support in early 2023
(AfricaNews, 2023).

The allocation of sustainable investments is skewed towards a few countries

and sectors
Greenfield FDI offers opportunities for job creation but targets sectors with mixed
environmental outcomes. Nigeria, Côte d’Ivoire and Ghana received 71% of greenfield FDI
to the region between 2017 and 2022 (Figure 7.2, Panel C). Thirty-nine per cent went to the
manufacturing sector, a significant driver of employment, creating about four jobs per USD
thousand invested, a higher ratio than any other sector (Figure 7.3, Panel A). Extraction
and mining activities attracted the second-most FDI within the same period. Over the
last decade, the transport sector received an important share of FDI but contributed more
than any other sector to the overall increase in greenhouse gas emissions. Nigeria, the
largest recipient of West Africa’s FDI in 2017-22, contributed 68% to the region’s total
emissions (Figure 7.3, Panel B).

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7. Investing in agri-food value chains for West Africa’s sustainable development

Figure 7.3. Sectoral job creation of greenfield foreign direct investment

and greenhouse gas emissions for economic activities in West Africa
A. Greenfield FDI to West Africa, capital expenditures and job creation by business activity, B. Annual greenhouse gas emissions from West Africa, 2010-20
2017-21 Transport Residential
Capital expenditure Jobs/Capital expenditure ratio (right-hand side) Electricity/heat Manufacturing/industry/construction
Energy industry own use Commercial/public services
USD million Agriculture/forestry Other
30 000 4.0 Megatonnes
250
3.5
25 000
3.0 200
20 000
2.5
150
15 000 2.0

1.5 100
10 000
1.0
5 000 50
0.5

0 0.0 0
Manufacturing Extraction ICT and Internet Logistics, distribution Electricity 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
infrastructure and transportation

Note: ICT = information and communications technology.

Source: Authors’ calculations based on fDi Intelligence (2022), fDi Markets (database), www.fdiintelligence.com/fdi-markets
and IEA (2022), Data and Statistics (database), www.iea.org/data-and-statistics/data-tools/greenhouse-gas-emissions-from-
energy-data-explorer.
12 https://stat.link/cs9txw

The majority of greenfield FDI in West Africa comes from outside the region and
continent. Fifty-six per cent of greenfield FDI between 2017 and 2021 originated from
high-income countries, followed by Asia (21%), mostly due to significant investments from
the People’s Republic of China (hereafter “China”). Investment from other African regions
accounted for 17% of total greenfield FDI, mainly from Southern and North Africa, with a
large share going to Nigeria. Togo received the largest share of intra-regional investments,
most of which flowed from Nigeria (Figure 7.6).
ODA and philanthropic inflows complement limited public investment in social
sectors but concentrate in one country. Public health expenditures accounted for only
0.8% of GDP in 2019, lower than in any other African region except Central Africa. Similarly,
public investment in education represented only 1.6% of GDP, lower than in any other
African region. In contrast, 46% of the USD 72 billion ODA over the 2011-20 period went to
social infrastructure and services (health, education, civil society, and water supply and
sanitation) (Figure 7.4, Panel A). About 48% of philanthropic flows allocated between 2016
and 2019 targeted the health and reproductive sector (Figure 7.4, Panel B). However, ODA
and philanthropy remained heavily focused on Nigeria.

Figure 7.4. Allocation of official development assistance and philanthropic inflows

to West Africa
A. ODA allocation by sector, USD billion, 2011-20 B. Philanthropic inflows by sector and countries, USD million, 2016-19
Unallocated/unspecified Health and reproductive health Agriculture, forestry and fishing Education
USD 3.3 billion Banking and financial services Government and civil society Other social infrastructure and services
Action relating to debt Water supply and sanitation Other
USD 3.6 billion USD million
Programme assistance 900
USD 3.9 billion
800
Multisector 700
USD 4.2 billion
600
Production Social infrastructure and
500
USD 6.6 billion services
USD 33.7 billion 400
Humanitarian 300
USD 7.9 billion
200
Economic
infrastructure 100
and services
USD 9.8 billion 0
Nigeria Ghana Burkina Senegal Côte Mali Niger Liberia Sierra Benin Guinea Guinea Cabo Togo Gambia
Faso d'Ivoire Leone Bissau Verde

Note: The eight largest sectors are displayed. “Other” captures the remaining sectors.
Source: Authors’ calculations based on OECD (2022a), OECD Development Assistance Committee (database), https://stats-1.
oecd.org/Index.aspx?DataSetCode=TABLE2A; and OECD (2021a), Private Philanthropy for Development: Data for Action Dashboard
(database), https://oecd-main.shinyapps.io/philanthropy4development/.
12 https://stat.link/ex42ps

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 7. Investing in agri-food value chains for West Africa’s sustainable development

Additional sources of private finance such as impact investments and domestic

institutional investors are growing in West Africa. Interventions by development finance
institutions accounted for about 97% of impact investment in the region between 2005
and 2015 (GIIN, 2015). Regulatory changes in Nigeria, such as the Regulation of Pension
Fund Assets in 2006, have allowed pension funds to increase assets under management
(Juvonen et al., 2019; National Pension Commission, 2006), reaching USD 32.3 billion in
2020 (OECD, 2021b). Ghanaian pension funds have also grown steadily, accumulating
USD 4.7 billion as of 2021, making Ghana the second-largest pension fund market in
the region (Nyang`oro and Njenga, 2022; OECD, 2021b). The Nigerian Sovereign Wealth
Authority had USD 3 billion in assets under management in 2021, the highest amount of
any sovereign wealth fund in West Africa. This was followed by the Senegalese Sovereign
Wealth Fund for Strategic Investments (FONSIS) and the Ghana Heritage Fund, with assets
under management of USD 0.8 and USD 0.7 billion respectively (SWFI, n.d.).
West Africa mobilised large amounts of blended finance, targeting sectors with both
high and low sustainability potential. Over the 2012-20 period, on average USD 2.4 billion
per year of private finance were mobilised through development finance institutions or
development banks, more than in any other African region other than Southern Africa.
Mirroring the allocation of greenfield FDI, most blended finance went to Nigeria (37%),
Ghana (24%) and Côte d’Ivoire (15%), followed by Senegal (7%) and Guinea (6%). While
significant shares went to sectors with high overall sustainability potential (e.g. energy,
banking and financial services and agriculture, forestry and fishing), a sector with a poor
environmental and social sustainability record – industry, mining and construction –
attracted the second-highest amount (Figure 7.5; see Chapter 1).

Figure 7.5. Private finance in West Africa mobilised through official development
finance by sector, USD billion, 2012-20

Other Banking and financial

5.9 USD billion services
5.9 USD billion

Agriculture, forestry and

fishing
1.1 USD billion
Industry, mining, and
construction
5.3 USD billion
Energy
5.2 USD billion

Note: “Other” includes (by order of magnitude): government and civil society; trade policies and regulations; multi-
sector/cross-cutting; water supply and sanitation; education; health; business and other services; tourism; other
social infrastructure and services; unspecified allocation; population policies/programmes and reproductive
health and humanitarian aid.
Source: Authors’ calculations based on OECD (2022b), “Mobilisation”, OECD.Stat (database), https://stats.oecd.org/
Index.aspx?DataSetCode=DV_DCD_MOBILISATION.
12 https://stat.link/wktxjn

West Africa is less integrated into intra-African investments and exports than
other African regions
Intra-regional and intra-African exports are less significant in West Africa than in
Southern Africa. About 57% of total formal exports from West African countries to other

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7. Investing in agri-food value chains for West Africa’s sustainable development

African countries remained within the region between 2014 and 2016. For comparison,
intra-regional exports constituted about 85% of the total exports from Southern African
Development Community (SADC) countries to other African countries in the same period.
Before the COVID-19 pandemic, Senegal was the only West African country among the top
ten intra-African exporters, while three West African countries were among the bottom
ten (UNCTAD, 2019).
Nigeria dominates intra-regional investments and has the most listed companies in
the region. Greenfield FDI outflows from West African countries mostly target other West
African countries (40%), followed by high-income countries (29%) and East Africa (14%).
Nigeria accounts for 86% of the region’s outward FDI (Figure 7.6). Nigeria is also home to
15 of the top 20 publicly listed private companies by market capitalisation in West Africa,
8 of which are in the finance and insurance sector.

Figure 7.6. Greenfield foreign direct investment outflows from West African countries,
by destination regions, 2017-21, USD million
ORIGIN DESTINATION
Rest of the world 188
Central Africa 177

East Africa 397

High-income countries 438

North Africa 192

Nigeria 4 356

West Africa 3 661

Côte d’Ivoire 286

Ghana 143
Burkina Faso 113
Other countries 155
Note: “Other countries” includes Togo (USD 76 million), Senegal (USD 46 million) and Mali (USD 34 million) while “Rest of the
world” includes countries in Southern Africa (USD 50 million), Developing Asia (USD 137 million) and Latin America and the
Caribbean (USD 1 million).
Source: Authors’ calculations based on fDi Intelligence (2022), fDi Markets (database), www.fdiintelligence.com/fdi-markets.
12 https://stat.link/xwuzj0

Sustainable investments into the agri-food sector can drive West Africa’s
productive transformation
West Africa’s agri-food sector supports employment and livelihoods across the region,
especially for rural populations, suggesting that it should be prioritised for sustainable
investment. Average agriculture, forestry and fishing value-added was 24.4% of GDP in
2021, compared to 16.5% for Africa and 4.3% for the world (World Bank, 2021). At the end
of 2020, the agricultural sector accounted for around 25% of the region’s GDP and 45%

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 7. Investing in agri-food value chains for West Africa’s sustainable development

of employment. The agri-food sector as a whole (i.e. agriculture plus food processing,
packaging, transportation, distribution and retail) accounts for around 66% of the region’s
total employment. The off-farm food economy employs 82 million people, mostly in
retail and wholesale (68%), followed by food processing (22%), a segment projected to
keep growing (Allen, Heinrigs and Heo, 2018). Investments in the agri-food sector and its
workforce offer West African countries the opportunity to achieve long-term synergies
between economic, social and environmental sustainability and resilience (Ali et al., 2020).
Around 53% of the West African population lives in rural areas where most agricultural
activities take place. Sixty-eight per cent of all employed women work in the food economy,
and women make up 88% of employment in food-away-from-home services, 83% in food
processing and 72% in food marketing (Allen, Heinrigs and Heo, 2018).
West Africa leads the world in primary agricultural production across a range
of products, while export rates remain low. Since the 1980s, the value of agricultural
production in West African countries has consistently grown, mostly driven by non-cereal
agricultural products (Figure 7.7). In 2020, the total value of agricultural production in
Africa reached about USD 319 billion. West Africa contributed almost USD 125 billion to
this total (39%).1 Several West African countries rank among the world’s top producers
of agricultural products (AUC/OECD, 2019). Over 2019-21, the bulk of the world’s yams
(95%) and cowpeas (85%) were produced in West Africa, and seven of the region’s top
15 agricultural products accounted for 50% of Africa’s total production. However, for most
of West Africa’s food products, only a fraction (less than 1%) is exported, with the notable
exception of cocoa beans at 73% (Table 7.1).
Trade of food and beverage products between West African and other countries has
stagnated since 2010, while imports of processed products from non-African countries
have recently increased. Between 2010 and 2020, West African countries’ imports and
exports of food and beverage products remained at` a constant level, and far more of that
trade was with non-African than with other African countries. Even though West Africa
is a major exporter of primary food products to non-African countries, the region imports
a large share of processed products from them (Figure 7.7). Between 2016 and 2020, West
African countries imported close to USD 60 billion worth of food products, about 67% of
which was semi-processed or processed (Badiane et al., 2022). The top imported products
include cereal and cereal-based products, meat and dairy products, processed sugar and
non-alcoholic beverages.

Figure 7.7. Imports and exports of primary and processed food and beverage products
for West African countries, 2010-21, USD million
A. Imports B. Exports
Processed, Africa Processed, world outside Africa Processed, Africa Processed, world outside Africa
Primary, Africa Primary, world outside Africa Primary, Africa Primary, world outside Africa
USD million USD million
20 000 12 000
18 000
10 000
16 000
14 000
8 000
12 000
10 000 6 000
8 000
4 000
6 000
4 000
2 000
2 000
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Authors’ calculations based on CEPII (2023), BACI: International Trade Database at the Product-Level (database), www.cepii.
fr/CEPII/en/bdd_modele/bdd_modele_item.asp?id=37.
12 https://stat.link/i4uhds

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West African agri-food output for some products is falling, while staple food prices are
increasing globally. Recent crises have foregrounded West Africa’s dependence on imports
of some agri-food products and inputs, especially cereals (Figure 7.8). For instance, in some
parts of the rural Sahel, cereal production fell by roughly one-third in 2022, in part due
to fertiliser shortages (Oxfam, 2022), while international conflicts induced supply chain
shocks that sent wheat prices soaring, jumping 60% in June 2022 compared to January
2021 (World Bank, 2022b).

Figure 7.8. Gross value of agricultural and cereal production in West Africa,
1985-2020, constant 2014-16 USD
Agriculture Agriculture excluding cereals Cereals

USD billion constant 2014-16

140

120

100

80

60

40

20

Source: Authors’ calculations based on data from FAOSTAT (2022a), Production (database), www.fao.org/faostat/
en/#data/QV.
12 https://stat.link/5mrfyq

Table 7.1. Top 15 agricultural products in West Africa by production volume, 2019-21
Country with highest
Total production Share in Share in Share in Share in
Agricultural production volume Percentage
in 2019-21 Africa’s global Africa’s global
product (share of the region’s exported
(million tonnes) production production exports exports
production)
Cassava, fresh 303 52% 33% Nigeria (59%) 0% 0% 0%
Yams 215 97% 95% Nigeria (71%) 0.1% 100% 37%
Maize (corn) 79 29% 2% Nigeria (48%) 1% 5% 0%
Fresh eggs 70 29% 1% Nigeria (66%) 0.002% 3% 0%
Rice 62 56% 3% Nigeria (40%) 0.01% 13% 0%
Oil palm fruit 53 77% 4% Nigeria (56%) n.a. n.a. n.a.
Sorghum 39 47% 22% Nigeria (51%) 0% 11% 0%
Plantains and 32 33% 24% Ghana (45%) 1% 55% 3%
cooking bananas
Other fresh 29 46% 3% Nigeria (70%) 0.3% 14% 1%
vegetables, n.e.c.
Groundnuts, 28 57% 18% Nigeria (48%) 1% 76% 15%
excluding shelled
Millet 28 70% 31% Niger (32%) 0.2% 67% 4%
Dry cowpeas 23 88% 85% Nigeria (48%) 0.03% 8% 2%
Sugar cane 22 8% 0% Côte d’Ivoire (28%) 0.01% 2% 0%
Sweet potatoes 17 20% 6% Nigeria (70%) 0.3% 18% 2%
Tomatoes 16 25% 3% Nigeria (68%) 0.2% 1% 0%

Note: n.a. = not available. n.e.c. = not elsewhere classified.

Source: Authors’ calculations based on data from FAOSTAT (2022b), Trade (database), www.fao.org/faostat/en/#data/TCL and
FAOSTAT (2022c), Production (database), www.fao.org/faostat/en/#data/QCL.

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West Africa is experiencing population growth, high food expenditure and an

increasing demand for processed foods
The region’s population is growing, and household expenditure on food is significant.
West Africa’s working-age population has grown at an annual average of 2.8%, compared to
1.2% in Southeast Asia and 1.3% in Latin America and the Caribbean. By 2030, West Africa
will be home to 520 million people. Household food expenditures in West Africa remain
high: in 2021, 59% of Nigerian and 39% of Ghanaian and Ivorian consumers’ expenditures
went to food, compared to 56% in Kenya, 50% in Angola, 45% in Cameroon, 44% in Uganda,
41% in Ethiopia, 27% in Tanzania and 20% in South Africa (USDA ERS, 2021).
West Africa’s rising urban middle class increases the demand for processed and
industrially produced food products, many of which are currently imported. In 2020, the
region’s 75 large urban agglomerations (i.e. cities with at least 300 000 inhabitants) had a total
of over 93 million inhabitants, the largest of any African region (OECD/UN ECA/AfDB, 2022).
Higher purchasing power in the urban middle class creates a large demand for processed
foods which are relatively easier to transport, store and prepare (Allen and Heinrigs, 2016).
For instance, focus group discussions held in Lagos (Nigeria) and Accra (Ghana) revealed that
urban consumers prefer local foods but take issue with the packaging, presentation, food
safety and quality of locally processed food items, ultimately choosing imported products
that are more convenient to prepare (Badiane et al., 2022; Hollinger and Staatz, 2015; Box 7.1).

Box 7.1. The promise of the infant food value chain in Africa

Africa’s demand for infant food is poised to keep expanding across the continent, while the
dependence on imports remains high. African countries currently import ten times more
food for infants under three years of age than they export. Current imports are valued at
EUR 570 million and are expected to exceed EUR 1.1 billion by 2026. A study conducted between
2021 and 2022 showed that 16% of surveyed firms along the infant food value chain received
inputs from African producers (ITC, 2022a).
With environmentally friendly packaging, African producers would be more competitive.
Although products by African infant food producers are often better suited to local consumers’
preferences and more affordable than imported brands, lower-quality processing and packaging
can limit their attractiveness. Biodegradable packaging and refund schemes for packaging (such
as bottles) represent an untapped opportunity for infant food production. An International
Trade Centre survey shows the infant food value chain to be the only one of the four value
chains it examined for which business clients and consumers are willing to pay a premium for
more environmentally friendly products (ITC, 2022a).
Access to credit, transport logistics and difficulties in retaining skilled professionals constitute
key bottlenecks for African infant food producers to scale. Local actors are beginning to
challenge the dominant market position of multinational enterprises such as Nestlé, which
currently accounts for 52-55% of the infant food market in West Africa. For instance, Nigeria’s
BabyGrubz, a female-led company, offers products for premature and malnourished babies.
While 100% of its sourcing and processing takes place within Nigeria, the company plans to
export to neighbouring countries in the near future. However, in Nigeria as elsewhere on the
continent, infant food producers struggle with talent retention, the absence of robust food safety
assessments, and fragmented regulations for labelling, packaging and shelf life (ITC, 2022a).

Formal investments in the agri-food sector have stagnated and insufficiently

target downstream activities
Financing from domestic credit, development finance disbursements and government
expenditure for West Africa’s agricultural sector has remained largely unchanged. Albeit

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volatile, domestic credit (i.e. loans provided by local banks) represents by far the largest
formal source of finance for the agriculture, forestry and fishing sector in West Africa
(USD 6.7 billion in 2020). Development finance disbursements and government expenditure
are smaller (USD 1.7 billion and USD 1.1 billion in 2020) (Figure 7.9).

Figure 7.9. Financing provided to West Africa’s agriculture, forestry and fishing sector
through various formal channels, compared to gross fixed capital formation, 2010-21
Development finance disbursements Government expenditure
Domestic credit (loans from banks) Gross fixed capital formation
USD million constant 2010
25 000

20 000

15 000

10 000

5 000

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Note: 2021 figures for development finance disbursements are unavailable; 2020 values are used.
Source: FAOSTAT (2022d), Investment (database), www.fao.org/faostat/en/#data/CISP.
12 https://stat.link/5u1q69

Public investment in the agricultural sector has not grown and has been volatile.
According to the monitoring of the Comprehensive Africa Agriculture Development
Programme (CAADP) by the African Union Development Agency‑New Partnership for
Africa’s Development, West Africa scores 3.47 out of 10, indicating that the region is not on
track in implementing the CAADP’s goal of allocating 10% of public budgets to agriculture,
as it was reconfirmed in the Malabo Declaration on Agriculture transformation in Africa
(AU/AUDA-NEPAD, 2020; AUC/OECD, 2022).2 Across most countries of West Africa, the
share of government budgets allocated to agriculture has been unstable or declining
since 2001. Only Senegal and Burkina Faso have surpassed the 10% target, allocating 11%
and 10.5% respectively (AUDA-NEPAD, 2017). Côte d’Ivoire (1.9%), Nigeria (2.2%) and Sierra
Leone (4.9%) rank lowest in public spending on agriculture, while Benin stands at 9.3%
(AUDA-NEPAD, 2017).
Compared with other African regions, informal private investments play a more
significant role than credit or development finance in West Africa, limiting productivity
and introducing risks for informal suppliers. Gross fixed capital formation (GFCF) – a
measure of the total fixed assets that overall investments have financed – in the region’s
agriculture, forestry and fishing sector was more than double the amounts of domestic
credit, development finance disbursements and government expenditure combined in
2020 (USD 23.1 billion vs. USD 9.5 billion; Figure 7.9). This suggests that informal private
investments are the single largest source of financing for agricultural production in the region.
GFCF has also grown much faster in West Africa than elsewhere on the continent, and West
Africa’s share of Africa’s total GFCF is far greater than its shares of credit and development
finance for agricultural production (Table 7.2). Most private domestic investments are
mobilised by farmers’ organisations, concentrating largely on the upstream (production)
end of agri-food value chains. While informal private financing is an important channel
for smallholder farmers, it does not typically support productivity upgrades and can
create risks, for instance, through excessive interest rates or low financial accountability.

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Table 7.2. Domestic credit, development finance disbursements

and gross fixed capital formation in the agriculture, forestry and fishing sector,
Africa and West Africa, 2010-20
Africa West Africa (share of Africa total)
Domestic credit
Total (USD billion) 186.2 55.9 (30.0%)
Average annual growth rate 7.5% 14.9%
Development finance disbursements
Total (USD billion) 49.6 13.5 (27.3%)
Average annual growth rate 6.9% 18.2%
Gross fixed capital formation
Total (USD billion) 411.9 232.8 (56.5%)
Average annual growth rate 3.9% 6.5%

Source: Authors’ calculations based on data from FAOSTAT (2022d), Investment (database), https://www.fao.org/
faostat/en/#data/CISP.

FDI and blended finance are volatile and focus on large West African economies,
suggesting a widespread shortage of financing for capital-intensive investments in
agricultural productivity and downstream activities, such as processing. Large-scale
and formal private sector investments are typically needed to establish downstream
activities (transportation, processing, logistics, retail) but remain scarce in West Africa
(Box 7.2). For instance, FDI to agribusinesses in West Africa is smaller than government
expenditure for agricultural production, with announced capital expenditures for FDI
projects amounting to USD 9 billion from 2017-22, or USD 1.8 billion per year on average.
Over that same period, FDI to West Africa went almost entirely to agribusinesses in
Nigeria (52%), Togo (22%), Côte d’Ivoire (15%) and Ghana (10%), with less than 1% going to
all other countries in the region combined.3 The role of blended finance is increasing but
remains small as a share of overall investment amounts: an average of USD 228.8 million
per year of private finance for the agriculture, forestry and fishing sector was mobilised
through development finance from 2017 to 2020.4

Box 7.2. Poultry production and processing in West Africa

Poultry is a staple source of protein in West Africa, but its production and consumption are
concentrated in only a few countries. Poultry meat accounts for over 70% of West Africa’s
total meat consumption, while demand is increasing with population growth. The top three
producers in 2021 (Côte d’Ivoire, Nigeria and Senegal) accounted for 58% of production volumes;
three countries (Benin, Ghana and Nigeria) accounted for 52% of consumption. In the past,
Nigeria produced 68% of egg tonnage in the entire Sahel and West Africa region (SWAC-OECD/
ECOWAS, 2008).
Demand for value-added poultry products in West Africa is rising, but production cannot match
domestic demand. Across the region, consumer spending is shifting from basic towards higher-
value poultry products. However, small-scale farmers dominating the poultry sector lack access
to inputs, equipment and infrastructure (Adeyonu et al., 2021). The livestock sector receives
little support in the form of public investment in processing and packaging infrastructure and
lacks policies to stimulate regional trade in animal products (Amadou et al., 2012). The sector
struggles with high production costs, capacity constraints and low productivity (Boimah et al.,
2022). Investments can upgrade the poultry value chain by addressing gaps in production,
processing, commercialisation and equipment/input (Salla, 2017). As a result, West African
countries rely on imports to fulfil their domestic demand for poultry products (SWAC-OECD/
ECOWAS, 2008).

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Box 7.2. Poultry production and processing in West Africa (continued)

Solutions exist to raise the productivity and competitiveness and to lower the production costs
of West Africa’s poultry sector. Removing infrastructural bottlenecks and enhancing input
supply will increase productivity. Developing value-added poultry products, such as processed
meats, can help to improve the sector’s competitiveness (Eeswaran et al., 2022). The West African
region imports a large amount of poultry inputs, such as feed and day-old chicks, to meet its
demand. Developing these inputs’ local production can also help to improve competitiveness.
Increasing access to other quality inputs, such as feed, hatching eggs and vaccines, will help to
reduce production costs (Boimah et al., 2022).
Large-scale investments are often missing, especially in the downstream segments of the value
chain. Investments in the West African poultry sector are often local, small-scale and informal.
Large-scale investments, where present, typically focus on upstream input supply. For instance,
the Rearing for Food and Jobs (RFJ) programme in Ghana provided 729 smallholder farmers with
a total of 72 967 cockerels at a 50% subsidised price. In a related intervention, the RFJ supplied an
additional 25 poultry farmers with 43 183-day-old chicks at a 50% subsidised price (Boimah et al., 2022).

Development finance for agriculture is heavily skewed towards primary agricultural

production and neglects downstream activities and environmental protection. West
Africa’s agro-industrial activities, such as processing, dairy production and fertiliser
plants, received only USD 546 million in development finance from 2010-20, equivalent
to 4% of the region’s total development flows to agriculture. Over the same period,
environmental protection received close to USD 1.7 billion (or 12%) of such development
funding.5 While fertiliser production has recently been bolstered, development funding
for processing and other agro-industrial activities has stagnated. Environmental activities
have mostly focused on research and administration rather than on direct interventions
in supply chains (Figure 7.10).

Figure 7.10. Development flows into West Africa’s agro-industry

and general environmental protection, 2010-20, USD million constant 2020
Environmental policy and administrative management Environmental research
Other general environmental protection Agro-industries
Fertiliser plants Other agro-industry
USD million constant 2020
300

250

200

150

100

50

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Note: “Agro-industries” refers to staple food processing, dairy products, slaughterhouses and equipment, meat and
fish processing and preserving, oils/fats, sugar refineries, beverages/tobacco, and animal feed production. “Other
agro-industry” includes cottage industries and handicrafts, textiles, leather and substitutes, forest industries,
and fertiliser minerals. “Other general environmental protection” includes bio-diversity, biosphere protection,
environmental education/training and site protection.
Source: Authors’ calculations based on FAOSTAT (2022e), Investment (database), www.fao.org/faostat/en/#data/EA.
12 https://stat.link/dykh26

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Current investments often remain inaccessible to smallholder farmers and are

hampered by informality, fragmentation and land rights
Smallholder farmers face significant barriers to accessing financing that would allow
them to improve their productivity and product quality. Physical distance is no longer the
main barrier separating small-scale producers from urban consumption centres. Rather,
the main constraint is the degree of sophistication demanded by a growing share of
consumers – more ready-to-cook or ready-to-eat products (Badiane et al., 2022). However,
smallholder farmers – mostly informal enterprises – face a number of barriers in accessing
the financing necessary for them to upgrade production value (Box 7.3). The impact of
mitigating those barriers can be substantial: in Nigeria, over 80% of farmers are classed
as smallholders (Mgbenka and Mbah, 2016). Barriers include:
• High collateral requirements for loans lock out smallholder farmers and agri-food
entrepreneurs, preventing them from investing in improved farming practices
and technologies. Smallholder farmers and agri-food entrepreneurs often struggle
to find adequate collateral to secure loans (e.g. lack of clarity on land rights can
be an obstacle, in particular for women when they face discriminatory social
norms [OECD, 2021c]). Consequently, bank financing for increasing productivity
and innovation remains low (IFC, 2019). In Burkina Faso, where smallholders
dominate the agri-food industry, less than 4% of loans provided by banks target
the agricultural sector, despite agriculture comprising 27% of the country’s GDP
(IFC, 2019).
• Shortages and increased prices of inputs, such as fertiliser, affect smallholder
farmers. The ripple effects of international conflicts in 2022 have tripled the cost
of fertiliser (World Bank, 2022b). West Africa depends on fertiliser imports, with
Russia having supplied over 50% of potash to Côte d’Ivoire, Mali, Niger, Senegal
and Sierra Leone in 2021. As of April 2022, just 46% of fertiliser needs were met
in West Africa and the Sahel (WFP, 2022). The high cost and fertiliser shortages
risk decreasing fertiliser use, hence lowering yields (WFP, 2022; World Bank, 2022b).
Smallholder farmers, rural communities and family farms, that struggle to access
finance and are located far from major urban areas, are particularly vulnerable
(Oxfam, 2022).
• Limited information on financial products and market research hamstrings small
actors in the agri-food value chains’ ability to transform production. Language
barriers hinder the utilisation of available sustainable financing. Information related
to green funds is often provided solely in English, hampering the dissemination
of information on available financing (Lipton, 2022). Small and medium-sized
enterprises (SMEs) often lack the investments they would need to scale up data
and market research on food consumption trends, preventing them from designing
strategies to capture demand (FAO, 2015).

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Box 7.3. West Africa’s cassava value chain

West Africa is a major cassava producer, and the crop plays an essential role in the region’s
food security. Cassava is a staple food crop in West Africa that can mitigate food security risks
because of its resilience to drought and to poor soil conditions (Hershey et al., 2000; Howeler et al.,
2013). Accordingly, cassava production in the region mainly focuses on capturing domestic food
demand. In Nigeria’s Niger Delta area, for example, roughly 80% of cassava demand is domestic
(PIND, 2011). In Ghana, cassava is the most consumed food crop, with a per capita annual
consumption of 152 kg (Acheampong et al., 2021). West Africa’s cassava production represented
33% and 52% of global and African production volumes in 2020, respectively (AUC/OECD, 2022).
Nigeria is the world’s largest producer, accounting for 23.5% of global production. Despite high
output, the region struggles to capture international demand, in part coming from the diaspora.
West African cassava represents just 0.33% of global cassava exports (ITC, 2022b).
A lack of affordable credit prevents the realisation of cassava’s yield potential. In Sierra Leone,
for example, just 2% of farmers can access credit, even through informal means. Moreover,
80% of farmers who can access credit are delayed by complicated administrative processes
(Coulibaly et al., 2014). Overcoming financing difficulties, through the expansion of micro-
finance institutions and development finance, can help fund the adoption of higher-yield
cassava varieties and fertiliser, pesticides and other farming equipment (Coulibaly et al., 2014;
MoFA of Ghana, 2019). For example, Ghana has the highest productivity rates in the region, with
an average yield of 21 metric tonnes per hectare (Mt/ha) (Acheampong et al., 2021). However,
despite its regional proficiency, productivity remains below the estimated yield potential of
45 Mt/ha (MoFA of Ghana, 2019). Developing credit access to farmers could increase production
and support food security.
Increased regional production of value-added cassava derivatives can replace imports. Cassava
cannot only be used as an input in many food products (including noodles, traditional desserts
and sweeteners) but also in non-food industries. Yet, most of the starch for industrial use in
West Africa is imported, totalling USD 51.3 million in 2020 (OECD, 2020). High-quality cassava
flour (HQCF) can act as a replacement for wheat flour, which is largely imported to the region
(CABRI, 2019; ITC, 2022b). Similarly, while ethanol for the beverage, food, manufacturing and
pharmaceutical sectors is largely imported, cassava-based ethanol has been successfully
integrated into processing by Allied Atlantic distilleries in Nigeria and the YUEN alcohol factory
in Benin (ITC, 2022b).
Investment in agricultural equipment, post-harvest facilities and transport services along the
cassava value chain can help alleviate price uncertainty and supply disruptions. Market price
volatility, low access to financing for equipment, and a lack of disease and pest control services
are major obstacles for smallholder farmers to upscale production (Adebayo and Silberberge,
2020; Coulibaly et al., 2014). Market price volatility, in particular, amplifies producers’ needs
for storage facilities to store the crop until favourable prices return. The induced volatility in
domestic supply forces the import of derivatives, hindering the emergence of new, industrial
processing centres (Adebayo and Silberberge, 2020). Underinvestment in road infrastructure can
result in transportation delays that cause cassava to perish, as it is often harvested in the wet
season (CABRI, 2019). Furthermore, the cost of transporting fresh cassava accounts for 5-10% of
the total variable cost of processing (ITC, 2022b). Solving transport issues by upgrading roads
to better withstand difficult seasonal weather and locating producers and processors close to
markets would help in moving cassava along the value chain. Programmes such as the Root
and Tuber Improvement and Marketing Programme in Ghana have achieved some success in
working with cassava producer groups to improve productivity-enhancing practices, despite
challenges related to financing and effectiveness (MoFA of Ghana, n.d.).

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Firms in food processing and distribution are mostly small, informal and fragmented
and do not represent attractive targets for investments. Africa’s food processing sector
is characterised by a small number of large firms with high labour productivity and a
large number of lower-productivity informal micro and small firms (ReSAKSS, 2022). For
instance, in Ghana, over 70% of agro-processing is done by small informal enterprises:
85% of the country’s agro-processing firms are micro-enterprises, 7% are very small firms,
5% are small and only 3% are medium-sized. Also West Africa’s informal distribution
networks are ill-equipped to handle growing demand and supply. Informal market
players dominate food distribution – such as vendors in small shops, street markets
and food stalls, hawkers, and street food sellers (Allen, Heinrigs and Heo, 2018). These
informal firms and microenterprises do not represent viable investment opportunities in
themselves, and they limit capacity increases further up the chain.
Informal enterprises mostly have limited market experience and formal expertise,
which lowers profits and hinders product innovation. The pervasiveness of informal
enterprises limits technical innovations, knowledge transfer, quality control, value
addition and linkages along agri-food value chains (Owoo and Lambon-Quayefio, 2018).
While co-operatives offer one means to organise informal firms, they cannot achieve the
same economies of scale and efficient application of technologies as larger, formal firms.
Most staple food processing value chains in West Africa are currently in the initiation
phase or about to enter a phase of expansion. Without innovation in production technology
and improved business practices, the number of enterprises continues to rise and profits
decline. A critical mass of firms with capabilities in product innovation, production
methods, internal management, sales and marketing has yet to emerge (Badiane et al., 2022).
West Africa suffers from gender inequality in land rights, including agricultural land.
Three of the eight African countries (Côte d’Ivoire, Equatorial Guinea and Guinea-Bissau)
where, by law, the husband as the family head has control and ownership over the
management of assets and properties, including agricultural plots and land, are located
in West Africa (OECD, 2021c).
Irrigation projects offer a large potential for sustainable investments. For a long time,
only large-scale irrigation projects in Africa were deemed viable to provide high returns
on investment and drive agricultural productivity growth. However, recent estimates
show that, in large parts of Africa, the internal rate of returns of investment for large-
scale irrigation projects ranges from only 7% to 17%, while that for small-scale projects is
26-28% (Abebrese, 2017).

Good interactions between leading supermarkets and local producers can

increase productivity and sustainability in West Africa’s agri-food value chains
Supermarkets can contribute to transforming West Africa’s agri-food value chains,
but the right components must be present. Agri-food value chains are the interface
between agricultural producers in rural areas and the increasing population of urban
food consumers whose demand for food products is continuously evolving (Barret et al.,
2022). Four central market actors are required for the transformation of agri-food value
chains: producer organisations, the public sector, agribusiness and finance (Elbehri, 2013).
Sophisticated retailers, particularly supermarkets, occupy a strategic position while also
acting as a financing intermediary. Reardon, Liverpool‑Tasie and Minten (2021) highlight
the lead role that supermarkets, alongside large agribusinesses, played in transforming
the agri-food sector in Latin America, Central and Eastern Europe, and Asia. While market
opportunities for supermarkets exist in abundance in West Africa, two components – a
stable macroeconomic environment and reliable contract enforcement – are often missing.

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Supermarkets can orchestrate local value chains, thereby reducing fragmentation

and driving supply chain efficiency. West Africa’s agri-food value chains are fragmented,
causing inefficiencies that limit labour productivity. For instance, although Ghana’s
wholesale and retail trade sector increased its employment share from 17% in 2000 to 25%
in 2010, this did not create a corresponding rise in economic output (AfDB/OECD/UNDP,
2016). Supermarkets often create backward linkages with agricultural producers, which
can remove intermediary costs and connect them directly to urban markets (Barrett et al.,
2022; Reardon, Liverpool‑Tasie and Minten, 2021). Supermarkets buy products in bulk
directly from the primary producers (farmers) and make them available in their outlets at
a relatively affordable price, while reducing transportation costs, which can contribute to
reducing the ecological footprint of the agri-food value chain. They also sometimes directly
invest in processing. The Dairy Development programme of Friesland Campina WAMCO,
a multinational subsidiary in Nigeria, illustrates this point. The large dairy manufacturer
provides technological interventions directly to local farmers to improve yield per cow,
raw milk quality and hygiene as well as feeding, breeding and farm management.
The interaction of supermarkets with local producers can result in enhanced quality.
Supermarkets typically have quality requirements. This is connected to the visibility of
supermarket chains to regulators and quality standards agencies. Some supermarkets
act as export intermediaries for local raw foods, such as yam and cassava, that are
demanded globally but only grow in limited areas, including West Africa. Consequently,
local producers are incentivised to meet higher quality standards, in order to satisfy
the standards of the domestic procurement systems of supermarkets and the product
requirements of export markets. While the quality requirements for different segments
of the domestic market may vary, the safety certification is common for all the items of a
given type (AfDB/OECD/UNDP, 2014; Weatherspoon and Reardon, 2003).
Supermarkets may pose risks for sustainability, in particular for social inclusion, but
mitigation strategies are available.
• Exclusion of producers that lack efficient scale: As supermarkets engage in bulk
buying, they may expect discounted prices and scale efficiencies that small-scale
producers and input suppliers cannot deliver. Tailored policy solutions are required
to disincentivise the liability of size and to ensure that agri-food value chains are
inclusive of vulnerable smallholder farmers. One policy option is to set benchmarks
for supermarkets’ backward integration (i.e. the inclusion of producers into the
supermarkets’ operations, for example through combined stock management).
Benchmarks may be calibrated according to the size of supermarkets and would
help to minimise supermarkets’ passing costs to producers once they have a
stake in their success. Co-ordinated market and tax regulations by West African
governments could boost the investments in and patronage of local producers by
large supermarkets, some of which may prefer to import products from outside
West Africa.
• Crowding-out effects of quality standards: As supermarkets introduce more stringent
quality standards, small producers risk being excluded, as they often cannot meet
the costs of compliance with standards without external help. Public-private
alliances can support capacity building among small actors in the agri-food value
chain to help mitigate this risk. Investments are less effective in the absence of
knowledge, skills and capabilities. Thus, targeted interventions are required to
develop the skills of farmers, strengthen formal educational programmes linked to
agriculture (such as agricultural engineering, food preservation and nutrition) and
invest in agricultural research and development.

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• Productivity pressure: As supermarkets demand more volume from small-scale

producers, some may be suppressed from the more developed downstream end of
the agri-food value chains if they are unable to meet required production levels.
Network-oriented policies will help to mitigate the risk of smallholder exclusion.
First, such policies will incentivise smallholders to pool output in order to meet
production targets. Second, they will discourage supermarkets from monopsony
behaviour (i.e. exploiting the fact that they are the only buyer) by encouraging
them to become embedded with their suppliers. Small neighbourhood or district-
level markets are a common place for daily commercial business in many West
African countries. Implementing policies that aggregate these fragmented markets
would raise the standards, quantity and quality of products and would create more
efficient markets.
• Environmental footprint: Estimates suggest that supermarkets are a major source of
certain environmental hazards. They indicate extremely high per capita consumption
rates of single-use plastics in West Africa, arising mainly from packaging in retail
outlets (Jambeck et al., 2018; Miezah et al., 2015). Against this background, policies
must incentivise supermarkets to rally investments in environmental sustainability.
For instance, by investing in waste management systems and working with other
value chain actors, including financiers, supermarkets can make agri-food value
chains more environmentally friendly (Adam et al., 2020). Such a transformation
would require not only waste management but also other aspects in which agri-food
value chains have an environmental footprint. The Shoprite Group is an example:
in August 2022, it obtained sustainability-linked loans totalling approximately
USD 208 million to invest in its broad-based sustainability strategy. The strategy
includes the increase of energy from renewable sources as a share of total electricity
consumption, the recycling of cardboard and plastic, sustainable packaging, and
energy efficiency.

Policies supporting the productive transformation of West Africa’s agri-food

sector can catalyse sustainable investment
The vast and growing local and regional demand for high-quality food products offers
a unique policy opportunity to drive the sustainable transformation of West Africa’s
agri-food sector. It allows countries to focus on improving efficiency and sustainability
standards of production and supply chains and to strengthen West Africa’s resilience
towards global shocks through regional integration (AUC/OECD, 2022). The region’s agri-food
sector provides a unique setting for achieving synergies between economic, social and
environmental sustainability goals.

To transform agri-food value chains in West Africa’s diverse economies, customised

and co-ordinated policy approaches will be required. Countries will need to mobilise
private investments where possible while using development and public finance where
necessary. This chapter has shown stark intra-regional differences in production capacity
(e.g. Table 7.1), which should inform how to tailor policy approaches. The suitable emphasis
on private versus public investments will vary by country:
• Currently, private investment flows largely to agribusinesses in the economies of
Côte d’Ivoire, Ghana, Nigeria and Togo, which attract the lion’s share of the FDI
flowing to the region. These countries can pursue public-private co-financing
and risk sharing, as well as scale-oriented measures benefiting from their larger
markets and attractiveness for FDI.

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• Benin, Burkina Faso, Gambia, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Senegal
and Sierra Leone represent the Least Developed Countries with mostly smaller
domestic markets. These economies will need to pursue product specialisation and
integration with larger countries’ markets and value chains (for example through
Mali’s dry mango value chain in Koulikoro and Sikasso). They can be supported
by preferential access to development assistance, strategic public investments and
partnerships with the Economic Community of West African States (ECOWAS) and
larger economies in the region (for instance, for skill exchange programmes).
• The island nation of Cabo Verde can make use of its marine endowments.

Domestic financial institutions can improve smallholders’ access to financing

for downstream activities and insurance
Despite governance challenges, public financial institutions remain important
sources of financing for agricultural producers. State-financed agricultural development
banks and agricultural credit guarantee schemes became popular in the 1970s, though
many underperformed and had to close. The factors that account for their poor
performance include preferential treatment given to large-scale farmers and politically
connected persons, embezzlement, poor loan repayment rates, and heavily skewed
spending towards the purchase of agricultural inputs and outputs (Domke, 2022; Salami
and Arawomo, 2013). Nonetheless, governments implemented reforms to ensure that
agricultural development banks are viable and sustainable providers of financial services
to all segments of the rural populations. National, regional, continental and global
financial institutions – such as Ghana’s Agricultural Development Bank, the West African
Development Bank, the African Development Bank (AfDB) and the International Fund
for Agricultural Development (IFAD) – continue to provide essential financial services to
agricultural producers whom commercial banks often consider as not creditworthy.
Examples of agricultural financing programmes in West Africa that couple credit with
productivity training and sustainability requirements include:
• IFAD co-financed the Shared-risk Agricultural Financing Incentive Mechanism
Support project (ProMIFA) in Togo, which offers agricultural financing for SMEs
and smallholder farmers between 2019 and 2025. Starting with key agropastoral
value chains (including rice, market gardening, maize and poultry raising), the
project seeks to improve financial literacy and business plan drafting among its
beneficiaries, mainly women and youth. It is aligned with the country’s Five-year
National Development Plan for 2018-22 and implements one of the strategic pillars
of the Ministry of Agriculture’s 2025 roadmap: acceleration of the agricultural
financing mechanism (IFAD, 2018).
• NSIA Banque Côte d’Ivoire and the Development Bank Ghana offer examples of
attaching sustainability criteria to agricultural financing. They integrate credit with
social and environmental criteria assessments at all stages of lending, including in
the agricultural sector (Anesvad Foundation, 2020; MoF of Ghana, 2022).
• The West African Initiative for Climate-Smart Agriculture (WAICSA) is a unique
example of a West Africa-led blended finance fund focusing on climate-smart
agriculture (CSA). It has encouraged smallholder farmers to employ CSA practices.
The fund pools public and concessional capital to offer loans of up to USD 1 million
at subsidised interest rates to farmers’ organisations and agribusinesses. WAICSA
has been estimated to improve the food security of up to 90 000 farming households
across the region (Climate Finance Lab, n.d.).
Financing instruments that provide comprehensive support for downstream activities
along agri-food value chains should be strengthened. To address value chain gaps

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comprehensively, large amounts of funding and extensive co-ordination between funders

and recipients can be necessary (Box 7.4). Here are three current financing instruments:
• The Africa Food Security Fund (AFSF) was launched to address the needs of
agricultural SMEs that are outside of the scope of larger private equity funds and
commercial banks. It focuses primarily on processing, distribution and provision
of agricultural inputs such as fertiliser and agronomic services. AFSF invests in
potential high-growth SMEs operating in the agri-food value chains with a view to
enhancing food security in Africa. The fund’s USD 100 million portfolio is managed
by Zebu Investment Partners and supported by investments from the African
Development Bank, British International Investment and the European Investment
Bank. Much of AFSF’s interventions take place in West Africa – given the size of
its population relative to the rest of the continent – particularly in underserved
countries such as Mali and Senegal. At least 20 direct jobs are expected to be created
for each USD 1 million invested, benefiting over 14 000 small-scale farmers, mainly
women (AfDB, 2019; BII, n.d.).
• In Ghana, the Outgrower and Value Chain Fund, effective since 2011, provides
affordable credit for medium- and long-term investments through the banking
sector, involving an outgrower association, a technical operator or buyer, and a
participating bank. Outgrower schemes refer to contractual agreements between
individual or collectives of farmers and firms that require a stable supply
of agricultural products (Felgenhauer and Wolter, 2009). These co-ordinated
commercial relations between producers, processors and traders allow integration
into the agricultural value chain.
• In 2022, the AfDB approved a USD 127 million package to improve transport links
to areas with potential for agriculture, forestry and livestock farming in Niger’s
Eastern region. The project includes support to farming value chains through
farmers’ centres and the installation of dairy units (AfDB, 2022).
Agriculture insurance can improve farmers’ resilience to weather shocks and natural
disasters while improving their access to credit. Insurance can help producers expand
and upgrade their businesses, as financial institutions are more willing to lend to farmers
who are insured. Africa represents a mere 0.5% of the world’s agricultural insurance
industry. By way of comparison, North America (55%), Europe and Asia (20% each) account
for nearly the totality of the world’s agricultural insurance premiums (Fonta et al., 2018).
Instead of being based on claimed losses, weather index insurance payouts are based
on predetermined rates against extended periods of droughts, floods, hurricanes, etc.
Although the uptake is low on the continent – due to the poor involvement of farm
households in the early stages of pilot initiatives – the reach of such products is increasing
in West Africa. For example, OKO Mali was established in 2019 as a maize and cotton
index insurance for unbanked smallholder farmers. Accessible via a mobile interface, it
provides affordable insurance to farmers in Côte d’Ivoire, Mali and Uganda and delivers
instant claim settlements (OKO, n.d.).
Digital avenues offer new pathways to make agricultural credit accessible for
smallholder farmers. Given relatively high digital access rates among smallholder
farmers, digital solutions offer untapped potential for financial institutions to reach
informal agricultural producers and agro-processors with credit and insurance products.
National efforts to incorporate digital channels include Sterling Bank’s SABEX in Nigeria,
a blockchain solution that allows farmers to use their produce as collateral, store
harvested crops in dedicated facilities and trade agricultural commodities (Sterling, n.d.).
Partnerships with digital platforms such as Thriv’Afric in Nigeria, which collect
comprehensive credit-relevant transaction data, can improve farmers’ credit scores and
avoid the need for collateral.

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Box 7.4. The role of public-private alliances in improving value addition in

Senegal’s rice production

By combining policy and practical support, public-private alliances can be effective in

achieving competitive and inclusive agri-food value chains. One example is the rice
value chain. Local rice production covers only around 60% of local demand in the
15 ECOWAS member countries. In 2021, drained foreign reserves with rice imports cost
West Africa around USD 3.7 billion (Dione and Toto, 2022).
Supporting local production is essential, especially in countries where local demand
is high, like Senegal. The country’s average annual consumption of rice per capita
is 85 kg (CFC, 2022). The government supported the founding of a consortium-led
private processing and distribution company of local rice. The consortium includes a
network of import marketers, producer organisations and processors. Improved rice
quality and processing capacity were two of the short-term results of investments
(Elbehri, 2013). Complementing investments in processing, Senegal’s Common Fund for
Commodities (CFC) offers USD 1.46 million in financial support to local rice millers and
their smallholder suppliers while also building irrigation channels and modernising
equipment (CFC, 2022).

Regional integration policies and place-based programmes can fulfil

complementary roles in strengthening agri-food value chains
The gradual elimination of intra-African trade tariffs through the African Continental
Free Trade Area offers an opportunity for West African countries not only to trade more
but also to encourage more investment in the downstream segments of agri-food value
chains. Overall, West Africa exhibits a higher level of forward integration in agri-food
value chains for exports outside than within the region. This means that a higher share
of its exports functions as inputs for non-West African countries’ exports, reflecting
the predominant role of agricultural commodities in West Africa’s exports (AUC/OECD,
2022). Returns on strategic investments in specialised national agri-food value chains
(including in processing) stand to increase as a result of reduced intra- and extra-regional
trade barriers.
The ECOWAS provides a regional agricultural policy framework. Initially adopted in
2005, the Economic Community of West Africa Agricultural Policy (ECOWAP) supports
the development of agricultural programmes in the region. It features a web-based
monitoring and evaluation system that eases data collection, analysis and knowledge-
sharing. The implementation of ECOWAP relies on three complementary mechanisms:
i) the formulation of national agricultural investment plans; ii) a regional agriculture
investment plan that puts in place regional programmes focused on issues such as the
management of shared natural resources, and iii) specific regional policies and policy
instruments (ECOWAS, n.d.). Assessments during the ECOWAP+10 review process
questioned the coherence and co-ordination of agricultural policy implementation and
called for greater emphasis on the post-harvest and commercialisation segments of the
agricultural value chains (Oxfam, 2015; SWAC/OECD, 2015).
Countries can co-ordinate their agro-industrial strategies via ECOWAP. Countries
have pursued export-oriented industrial strategies in various ways. Cash crops targeting
exports, such as the cotton industry in Burkina Faso, have proven useful to generate
foreign earnings in poorer economies but have had limited impact in reducing poverty,
owing to insufficient local transformation. Senegal provides an example of how a Least

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Developed Country can establish resilient food value chains (such as rice and fresh
vegetables), catering to both local consumer needs and growing regional demand for
agricultural exports. The country has employed policies targeting local entrepreneurs
and developed public-private alliances and centres of intensive agricultural services.
At the same time, duplicating strategies can come with risks. For instance, through the
2000s, most West African countries relied on cheap poultry imports from the European
Union, which destabilised their national production capacity. Using ECOWAP can help the
region’s countries avoid trade conflicts and enable scaling and specialisation.
Place-based programmes to encourage sustainable investments in downstream
agri-food value chain activities should be at the core of national development plans and
regional strategies. Place-based programmes offer policy makers a toolbox to support the
industrialisation of agri-food value chains through economies of scale and specialisation
(e.g. large-scale production infrastructure and knowledge exchange) and multi-sectorial
synergies (e.g. through the creation of shared infrastructure) (Table 7.3). Such programmes
should be embedded in regional and continental strategies, such as the African Union’s
Common African Agro-Parks Programme (CAAPs). The CAAPs is one of the concrete
initiatives to implement the Comprehensive Africa Agriculture Development Programme
in support of Agenda 2063 and the Malabo commitment to triple intra-African trade in the
agriculture and services sectors (AU, 2021).

Table 7.3. Investment promotion tools in the agricultural sector

Investment
Overall objective Geographic focus Roles for public investment Profile of target group
promotion tool
Agro-clusters - Network linkages Regional or provincial, Growth of agglomeration Multinational and domestic
close to production area economies and promotion of agribusiness/agro-industry firms and
collective action construction companies
Agro-industrial parks - Value addition Urban, easily accessible Common infrastructure, Agribusiness/agro-industry firms,
(including agro-techno - Green agro-processing to production area logistics facilities and specialised service providers and
parks, science parks and - Research and dedicated services logistics companies
agro-eco-industrial parks) innovation
Special agro-industrial - Processing Urban, often near port Advantageous economic Agribusiness/agro-industry firms,
processing zone - Export and FDI area and regulatory frameworks, specialised service providers and
promotion common infrastructure and logistics firms
services
Agro-incubators - Entrepreneurship and Urban Common infrastructure Agribusiness/agro-industry startups,
innovation and dedicated services venture capital and angel investors
to create and coach new
agribusiness firms
Agro-corridors - Integrated planning Regional, national or Infrastructure investments, Multinational and domestic
of infrastructure supranational; linear trade and regulatory policy agribusiness/agro-industry firms,
and agribusiness agglomeration spanning reforms, and sectoral construction companies, etc.
interventions. across hundreds or development plans
thousands of kilometres

Source: Authors’ compilation based on FAO (2017), Territorial Tools for Agro-industry Development: A Sourcebook, www.fao.org/3/
i6862e/i6862e.pdf.

National strategies in West Africa can further develop special agro-industrial

processing zones. Such zones offer an opportunity for countries to produce higher value-
added exports. Efficiency and productivity can be bolstered by improving linkages between
post-harvest production and value addition in the agro-cluster. The SKBo Triangle cross-
border zone, launched in 2018, comprises the areas of Bobo Dioulasso (Burkina Faso),
Korhogo (Côte d’Ivoire) and Sikasso (Mali). The zone is set to attract private investment
in agro-industry and the mineral industry, across more than 6 million ha of land (AUC/
OECD, 2019; UNCTAD, 2021). The USD 538 million Special Agro-Industrial Processing Zone
programme and the Lekki Free Trade Zone in Nigeria are further examples.

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Addressing infrastructure constraints is foundational to improving intra-regional

trade within agri-food value chains (AUC/OECD, 2022). Infrastructure gaps in West
African countries are large, and they vary widely (PPIAF, 2022). Agricultural investment
promotion tools (Table 7.3) can be a viable approach to fill agri-food-specific infrastructure
gaps, as they serve different value chains by providing centrally managed infrastructure
and supporting services. For example, the Northern Agro-Industrial Pole Project in Côte
d’Ivoire is designed to establish five sites to operate as storage, secondary packaging and
primary processing centres for agricultural products; the project also includes dams,
rural roads, healthcare centres and schools, and infrastructure for fisheries and livestock
production (AfDB, 2023; OPEC Fund, 2021).
National agricultural investment plans (NAIPs) can increase focus on agro-processing
and rural-urban supply chains, especially through distribution and logistics networks
in intermediary cities. NAIPs that follow ECOWAS frameworks are currently in their
second iteration (they expire around 2025-26). Forthcoming iterations could better
target investments in downstream activities of agri-food value chains. Connecting the
rural-urban supply chains via the NAIPs could transform value-added sectors such as
agro-processing, branding and marketing. For instance, in its second generation NAIP
(2018-21), Ghana’s target was to increase domestic secondary and tertiary processing of
cocoa beans to 50% of the annual output, from 30% in 2017-18 (MoFA of Ghana, 2018).
Within NAIPs, strategically located intermediary cities can be destined as logistics hubs
(e.g. storage facilities for perishable rural goods). The cities can increase the productivity
of industrial and agricultural value chains by providing infrastructure such as roads and
transportation networks (AfDB/OECD/UNDP, 2015; OECD/PSI, 2020).

Agro-poles, support organisations, international funders and technical partners

can help improve food security and agricultural practices
Agro-poles can be a viable means to support food security, as shown in Benin.
Since the early 2000s, roughly 40 agro-poles have been established across Africa both
to ensure food security and accelerate the shift from subsistence farming to agro-
industrial development. A success story emerges from agro-poles in Benin. As part of
the Government of Benin’s strategy to transform its agricultural sector, the country
has designated 13 priority agricultural products. Since 2016, the country’s Programme
National de Développement de la Filière Ananas has promoted the sustainable production
and competitiveness of pineapple in agro-poles to value its local potential (Jones, 2021).
In 2021, Pain de Sucre pineapple from Benin’s Allada Plateau became the country’s first
protected geographical indication by the African Intellectual Property Organization.
Although this is an achievement, most countries in the region either have no dedicated
food safety agency that provides oversight to the pineapple processing industry or lag
behind in product certification (e.g. International Organization for Standardization [ISO])
(Schreinemachers et al., 2022).
With additional funding, support organisations such as agricultural research, agro-
incubators and interprofessional associations could refocus support for smallholder
farmers towards productivity and sustainability-related practices. Agricultural research
could play a critical role in enhancing the product development of agro-processors
(Owoo and Lambon-Quayefio, 2018). Agro-incubators can promote product quality: they
are conducive to agricultural innovation given their combination of entrepreneurs and
multidisciplinary, experienced teams of experts and mentors, together with knowledge
and research organisations and investors (FAO, 2017). Interprofessional associations
in West Africa’s francophone countries can help to pool resources and information for
SMEs, but they face financing issues (Shepherd et al., 2009). These interprofessional

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associations would benefit from public support, which in turn could aid SMEs in scaling
up. Programmes such as the Fertilizer and Seed Recommendation Map for West Africa,
an online platform that provides information on seeds of improved varieties, appropriate
fertiliser recommendations and good agricultural practices specific to an agro-ecological
zone (FeSeRWAM, n.d.), can help disseminate to West African farmers the most up-to-date
farming practices.
A well-known case is the Shonga Farms in Nigeria’s Kwara State. They invited
13 commercial farmers from Zimbabwe to develop dairy, poultry farming and commercial
crops, with financial resources from five Nigerian banks through the Special Purpose
Vehicle Shonga Farms Holding Limited (SFH). Its success mainly owes to the efficient
balance between public support and majority private investment. The farms employ up
to 4 500 workers in off-peak agricultural periods and 7 000 workers in peak periods. They
process 40 000 chickens and 50 000 litres of milk per day, mainly for the regional Kwara
market. Shonga Farms boast one of the continent’s highest cassava yields, which they
process for export outside of Africa (AUC/OECD, 2019; Mickiewicz and Olarewaju, 2020).
International funders and technical partners can support programmes that ensure
food security and upgrade agricultural practices, but local ownership needs to be
ensured. The New Alliance for Food Security and Nutrition (NAFSAN), established in 2012
under the auspices of the G8, aimed to encourage food security initiatives by catalysing
private investment and accelerating private capital flows to African agriculture. However,
evaluation assessments conducted at the national level pointed to mixed results due to lack
of co-ordination, lack of ownership and leadership, and poor NAFSAN management and
governance (Badiane et al., 2018). The case illustrates the importance of local ownership
which can transform financial resources into local assets and skills. A collaboration
between international funders and local technical partners has increased food security
and improved agricultural practices at a shrimp farm in Cabo Verde (Box 7.5).

Box 7.5. Shrimp farms in Cabo Verde

In the late 2000s, aquaculture was introduced in Calhau (São Vicente Island) to help
meet the local demand for shrimp consumption. At the time, all shrimp consumed in
the country was imported (PSI, 2009).
The initial project deployed funding from a national banking institution and co-financing
from the Dutch Privat Sector Investment programme. Current stakeholders include
the local partner SUCLA, known for its canned tuna; Brazil’s Universo, a company
specialised in the wholesale and retail market of seafood; and Germany’s SINN Power,
which focuses on renewable energy solutions.
In 2022, one shrimp farm, the Fazenda do Camarão, produced approximately 40 tonnes
of shrimp, aiming to double production by 2023. The total consumption of shrimp in
Cabo Verde is roughly 115 tonnes per year. While there is a potential for export, the
intention is to prioritise the domestic market.
The farm has been certified with quality and environmental labels such as Global GAP,
HACCP and BAP, as it operates mostly on wind and solar energies. It also promotes
a circular economy approach and is self-sufficient in the production of larvae. The
shrimps are fed corn flour and fish meal from the neighbouring island of São Nicolau.
With nearly 40 employees – mostly women – the farm is the largest employer in the
village of Calhau.

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Notes
1. Authors’ calculations based on FAOSTAT (2022a).
2. See https://www.nepad.org/caadp (accessed 2 March 2023).
3. Authors’ calculations based on fDi Intelligence (2022). Due to the low number of FDI projects
for agribusinesses, annual values are highly volatile, and only the total amount for 2017-22 is
presented.
4. Authors’ calculations based on OECD (2022b).
5. Authors’ calculations based on FAOSTAT (2022d).

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