According to the World Bank, agriculture is essential for sub-Saharan Africa’s growth and for achieving the Millennium Development Goal of halving poverty by 2015. However, growth in the sector is still relatively slow.
(READ MORE: Sub-Saharan Africa the next big growth story)
“The reality is that most studies have demonstrated that there is no investment that pays off more than investing in agriculture to reduce poverty,” Kola Masha, CEO of Doreo Partners told CNBC Africa.
About 65 per cent of Africa’s labour force is currently employed by agriculture and it accounts for 32 per cent of GDP. Despite this, a lot still needs to be done as over 40 per cent of the people living in sub-Saharan Africa live in absolute poverty.
“Most studies have demonstrated that if governments were able to effectively spend around 20 per cent of their budgets, that will probably be the minimum required to leverage agriculture to lift its populations out of poverty,” he explained.
China lifted 440 million people out of poverty in 10 years and while agriculture in Nigeria has the possibility to lift the majority of its population out of poverty, the country has a long way to go as it is not even meeting the UN’s minimum requirement of 10 per cent.
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“In countries like Nigeria typically, the percentage has gone between two and four per cent. Reality is that even that two to four per cent, is often not spent in a way that will actually sustainably lift people out of poverty,” he said.
According to him, more often than not, we see African governments leveraging investments as opposed to catalysing investments by the private sector which will then multiply because of their desire for quick impact.
“The reality is that, we firmly believe that government investments should go into areas that really help to solve problems. The first is infrastructure. When we talk about infrastructure, we talk specifically about one type of infrastructure and that’s good roads,” he added.