World Bank Finances Senegal’s Agribusiness Plans to Boost its Food Production and Jobs; Will Also Help the Wider Sahel Region
December 19, 2013
WASHINGTON, December 19, 2013 – The World Bank’s Board of Executive Directors today approved US$86 million in zero-interest financing to help Senegal transform its commercial agriculture, boost sustainable land management, and engage local communities in agribusiness enterprises as well as land, water and forest management programs.
The project will directly benefit more than 10,000 people and 100 off-farm enterprises, representing a mix of smallholder and medium-scale farmers, wage workers, and small and medium enterprises which stand to benefit from investment in irrigation infrastructure. Over 65 percent of the project’s beneficiaries are women who also represent the majority of wage earners.
The project is financed by IDA, the World Bank Group’s fund for the poorest countries.*
“For too long, commercial agriculture has been held back by a combination of insufficient investment and an overall lack of appreciation for the poverty-fighting punch that a vibrant farm economy can deliver,” said Makhtar Diop, World Bank Vice President for Africa. “Supporting programs like this latest one in Senegal will help to realize the World Bank Group’s strategy for transforming agriculture across Africa, and for ending extreme poverty and boosting shared prosperity.”
Diop says the new ‘Sustainable and Inclusive Agribusiness Development Project’ approved today is an innovative example of the World Bank Group’s new Sahel Initiative in action and will also help to deliver on a key international commitment to help more than double the amount of irrigated land in The Sahel from 400,000 hectares to 800,000 hectares over the next five years. The commitment was made at the recent Dakar international Irrigation Forum on October 31, 2013.
The new operation is designed to support Senegal’s Stratégie de Croissance Accelérée (SCA) which seeks to accelerate diversification of agricultural exports, increase trade revenues, and promote domestic and foreign direct investment in the farming sector, a dominant part of the West African nation’s economy.
Agribusiness, particularly in horticulture, has strong potential in Senegal. The new project will focus on two areas -- Ngalam Valley and Lac de Guiers – and both have distinct advantages such as strong demand from private sector, fertile soils, access to water, and parcels of land of 15,000 and 40,000 hectares which are suitable for commercial expansion.
“Senegal’s agricultural sector is marked by increasing private sector interest,” says Vera Songwe, World Bank Country Director for Senegal. “By focusing on the key gaps hampering growth in agriculture, such as too little infrastructure and irrigation and secure access to land, this project will unleash growth, enable smallholder farmers to raise their incomes and yields, better protect the environment by expanding sustainable land management practices, while also creating jobs for young people and raising incomes for women.”
The SCA has identified 15 growth poles in the agribusiness sector for key promising value chains with high potential for growth. Six poles lie along the Senegal River, a focus area for this project. Seven of the 15 poles have strong potential for horticulture where exports have already boomed, rising from only 2,700 tons in 1991 to over 31,000 tons in 2010 with significant potential for expansion.
The project will provide technical assistance to rural communities and small holder farmers engaged in commercial agriculture. Because current legal provisions preclude direct allocation of land from rural communities to investors, the project will test a “Lease-Sub-lease Option” land allocation model where the Government will convert land identified and selected by the rural community from the national domain (in French Domaine national) to the private domain of the state (Domaine privé de l’État). It will then lease this land (bail emphytéotique) to the rural community, which in turn will sub-lease the land to the investor.
The project will adhere to The Principles of Responsible Agro-Investments a set of guidelines developed by the World Bank and other international organizations to guide client governments in managing large-scale investments in land. In order to prevent the risk of elite capture and land grabbing, the project is designed so that rural communities themselves will make land allocation decisions in a participatory way and will be the beneficiaries of agreements with investors. By focusing efforts to involve the ‘right’ investors in the ‘right’ projects – i.e., reputable investors with technical know-how and financial depth willing to invest in the kind of productive enterprises that yield a private return, the project will contribute to Senegal’s development goals while protecting the rights of rural communities.
“Sustainable and inclusive development of agribusinesses in Senegal is the guiding vision of this project, and we look forward to working closely with the Government and other key development agencies to help transform lives in the region.” says Jean-Philippe Tré, World Bank Senior Agricultural Economist and Team Leader for the project.
The project is part of a new push to achieve more security and development in Sahelian countries announced during an historic trip to the Sahel last month by World Bank Group President, Jim Yong Kim, UN Secretary General Ban Ki-moon, and other development leaders. President Kim pledged $1.5 billion in new financing to support major regional development priorities such as social safety nets to help families weather the worst effects of economic adversity and natural disasters; to improve infrastructure and create opportunities in rural areas with more hydropower and other sources of clean energy to greatly expand irrigation and transform agriculture.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing zero-interest loans and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 82 poorest countries, 40 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 108 countries. Annual commitments have increased steadily and averaged about $16 billion over the last three years, with about 50 percent of commitments going to Africa.