Energy Capital & Power

Standardizing Sustainable Agribusiness in Africa in Accordance with ESG Practices

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With agribusiness contributing approximately 25% of Africa’s GDP and 70% employment – and with agriculture-based products accounting for roughly half of all exports from developing countries – Africa is poised to benefit exponentially from its commodity-based resources, with agribusiness expected to contribute significantly to economic growth, facilitating the creation of jobs, economic wealth, innovative technologies, and added value.

“The technology is there, and the AI is there, and we are trying to specialize our operations to the individual farms,” stated Henk Agenbach, CEO of agriculture development business, Co-Op Humansdorp in Cape Town on 11 March, adding, “We’ve formed a community trust that looks after the communities in all the areas where we operate, focusing on health and wellness, caring for the elderly, education, and job creation.”

Despite its enormity and potential to drive socioeconomic development on the continent, however, Africa’s agribusiness industry will require large amounts of sustained investment, easier access to international markets, and innovative technologies in order for the continent to become a net exporter of agriculture-based commodities.

Considering the sector’s impact on environmental, social, and governance (ESG) standards, industrial agriculture has been implicated in a variety of risks and opportunities, often straining the sector, and leading to unpredictable prices, potentially damaging the industry.

“ESG is not something that companies want to do just because it looks good, it’s becoming an integral part of society,” said Wouter Kool, Head of Trade and Commodity Finance in Africa for multinational banking and financial services company, Rabobank, concluding, “Because it’s not just something that we have to do from a long-term climate change perspective, or for other reasons, but also from a risk perspective.”

With a population expected to double to 2.4 billion by 2050, Africa will need to invest heavily in its agriculture industry and develop strategies to support agribusiness projects, infrastructural development, productivity improvements, and better engagement with small-holder supply chains in order to facilitate a geopolitical environment whereby the continent, and its people, may prosper.

“ESG investing ranges from negative screening to actually trying to create a positive impact through our investments. Our main strategy has been small-holder farmers in the agri-space because small-holder farmers are innately ESG-focused,” added Andrea Renner, Impact Analyst for Barak Fund Management.

The development of Africa’s agribusiness industry is expected to contribute significantly to the creation of jobs, economic wealth, technological innovations, and added value, and with the continent serving as the world’s largest free-trade area, and with a market of 1.2 billion people, the agriculture sector has the potential to spur socioeconomic development while engaging in best ESG practices and investment.

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Matthew Goosen

Matthew Goosen

Matthew Goosen is a Video Editor and Content Writer at Energy Capital & Power. He holds an Honours Degree in Film and Media Studies at the University of Cape Town and is currently undergoing his Masters Degree. Born in Pretoria and raised internationally, he has been living in Cape Town since 2013.