By TBY | Mozambique | May 27, 2014
“The BAGC came about out of the realization that agriculture and agribusiness is not taking off,” said Emerson Zhou, Executive Director of the BAGC. A problem inherent to the region, […]
“The BAGC came about out of the realization that agriculture and agribusiness is not taking off,” said Emerson Zhou, Executive Director of the BAGC. A problem inherent to the region, Mozambique simply isn’t getting enough out of its fertile lands—the sector is worth $8.5 billion a year and is the country’s largest contributor to GDP, yet only 4 million to 5 million hectares of a potential 36 million hectares of arable land are in use, just 3% of that is irrigated, and few farmers have access to market information, fertilizer, and pesticides. And the situation is no different along the Beira corridor, where just 3% of arable land is commercially exploited. And thus, despite its massive potential, Mozambique is a net importer of food, and agribusinesses often import large quantities of goods for use in final products.
The BAGC initiative is targeting investment of $1.7 billion until 2030, driven by cooperation between the private sector and the government. The master plan envisages bringing 190,000 hectares of food and other crops under commercial irrigation, incorporating smallholders.
And should it become a reality, the cash will be channeled toward transportation and irrigation development and mobilizing new resources. “We’re trying to mobilize stakeholders, both public and private, so that they can invest to address identified constraints to commercial agriculture,” reinforced Zhou, adding that, “these constraints revolve around infrastructure such as water for irrigation, electrical power, and roads.” A large part of the plan also involves getting local farmers, across the provinces of Tete, Sofala, and Manica, where the corridor is taking shape, better engaged with modern technologies. The BAGC estimates that if the target amount of investment is met, it could yield $1 billion in additional agriculture revenues every year, stimulating more investment along the chain.
But giving a helping hand to those already in business is just one aspect of the initiative, which also boasts a fund for start-ups. The Catalytic Fund, a key part of the BAGC initiative, is a $20 million pot of funding and acts as the initiative’s financing window. So far, 16 businesses have received funding, and SMEs are a major target; “we provide equity and loans for the promotion of SMEs, in which farming is the core business of the company,” said Zhou, adding that as much as $1 million can be handed over to develop the modern farmers of tomorrow. The largest financial contributor to the project is the UK’s Department for International Development (DfiD), which has provided £6.5 million through AgDevCo to the BAGC, following by the Norwegian Embassy in Maputo, which has chipped in $1.85 million to the initiative, and the Dutch Embassy, which has provided $10 million to the Catalytic Fund and corridor.
However, the BAGC initiative isn’t alone, as it ties into a larger road and rail corridor project that links Beira with Zimbabwe, Zambia, Malawi, and the Democratic Republic of Congo. In that respect, Mozambique is looking to act as an exit to the Indian Ocean for its landlocked neighbors.