BARRIERS AND PROSPECTS OF AGRIBUSINESS FINANCING IN SUB-SAHARAN AFRICA: A REVIEW OF LITERATURE

Admkew Haile

No 2023-45-07, Working papers from Voice of Research

Abstract: The reviewed literature articles are studies related to sub-Saharan African agribusiness, finance and value chain financing published since 2016–2022 to provide insights and information on barriers and prospects of agribusiness financing in sub–Saharan Africa. The review is concerned on identifying and understanding the barriers faced by the agribusiness firm, who seek financing for agribusiness activities, who would provide it, and who would invest in agribusiness. It also identifies prospects for addressing critical barriers that can help close the financing gap in agribusiness. Agriculture and agribusiness are identified as a potential and turning points for African economic transformations and developments. Agribusiness in Africa is suffering from financial access and service despite its economic contributions to the regions. Despite, the significant need for working and investment capital, many value chain actors faced difficulties getting access to financing from formal sources, and the few who do find it mostly inadequate. Difficulties accessing finance and financial services are prevalent, with lending to agribusiness and affordable access to other financial services lagging far behind other sectors of the economy. The reliance on collateral and number of documents required discriminates against many small and medium agribusiness firms, who may have viable businesses but do not have the assets. The restrictions on access to finance for agribusiness, banks and some other financing institutions are starting to grow their agribusiness investment and their number of branches to rural areas where such needs are high is considered as a positive prospect for agribusiness finance accessibilities. The growing of urban food markets driven mainly by income growth and rapid urbanization are creating need for high-value agribusiness products, new supply chains, and supporting services in the agribusiness industry. The new jobs and income prospects created by this growth can significantly contribute to Africa’s economic transformation and development. However, to take advantage of these growth opportunities, Sub-Saharan Africa needs to close the agribusiness financing gap. Key words: Agribusiness, Finance Access, Barriers, Financing, Prospects, Sub-Saharan Africa

Date: 2023-03
New Economics Papers: this item is included in nep-agr, nep-cfn, nep-fdg and nep-mfd
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