Unlocking ESG financing in Africa agri - business sector

The African Agri-Business sector is gaining attention from global investors focused on sustainability and Environmental, Social, and Governance (ESG) practices. The European Union s Supply Chain Act underscores the importance of social considerations in supply chains, particularly as Africa seeks to increase exports to Western economies. CNBC Africa s discussion with Ashish Patel, Managing Partner of ESG First Fund at Aavishkaar Capital, highlights Africa s potential to not only produce but also add value to agricultural products, such as nuts and cocoa, with significant ESG implications. Investments in sustainable agribusiness, like the expansion of a macadamia nut producer in Kenya, demonstrate the potential for positive ESG outcomes. However, challenges persist, including the lack of coherent government policies, difficulties in scaling up small-scale farming, and a shortage of capital. Unlike some Asian countries, Africa lacks consistent policies and funding support for its agricultural sector. To encourage more companies to tap into ESG-focused funds, Patel emphasizes the need for proactive funding policies that prioritize sectors like agriculture. A mix of financial institutions, private funds, and microfinance institutions can provide the necessary capital for small and medium enterprises to grow. Enhancing transparency and providing clear guidelines for success in export-oriented industries will also help level the playing field for farmers and businesses seeking to embrace sustainable practices. As Africa s agribusiness sector continues to evolve, the interplay between ESG financing and sustainable operations will be crucial in unlocking the sector s full potential. By prioritizing environmental and social impact alongside financial returns, stakeholders can pave the way for a more sustainable and prosperous future for the continent s agricultural industry.

Source: cnbcafrica.com
Published on 2024-09-17