By Samuel Timothy
In a keynote speech at the Annual Meetings of the World Bank Group at Washington, DC on October 23, 2024, President Ajay Banga has highlighted great agribusiness potential to boost global food security and climate resilience.
He identified four emerging shifts that offer an unprecedented opportunity for the agriculture sector to increase productivity in a manner that reduces emissions. This is a defining moment in how the World Bank Group approach agribusiness according to Banga.
The Four key Shifts for a New Strategic Approach to Agribusiness Presented By Banga
“Agriculture is increasingly vulnerable to climate risks and a significant contributor to emissions – yet it only receives 4 percent of climate finance globally,” Banga pointed out as the fist shift. He emphasized that redirecting climate finance toward climate-smart agriculture is crucial for harnessing agribusiness potential. By doing so, productivity can be increased while simultaneously reducing the sector’s environmental impact.
The second shift discussed by Banga was the growing role of financial tools that are unlocking new avenues for private capital to flow into the agriculture sector. “We’ve seen credit guarantees, first-loss facilities, and insurance instruments help make lending safer and more commercially viable,” Banga said, underscoring the power of these mechanisms to de-risk investments and encourage private sector participation.
By using these tools in combination with public policy reforms, the World Bank aims to create an environment conducive to private investment in agribusiness. This approach will enhance the ability of farmers, especially smallholder producers, to access much-needed financing while reducing risks for financial institutions. “These financial tools, when paired with public sector policy and regulatory reforms, can create a favorable environment for private investors,” he added.
The advent of digital technologies is another key shift (third shift) in transforming agribusiness. According to Banga, “Advancements in digitalization and new digital tools have created opportunities to aggregate farmers and connect them with buyers, financial services, and innovative technologies that enhance productivity.”
The introduction of digital tools has not only improved farmer access to financial services but has also helped them build a credit history through their digital footprints. This development is particularly significant for smallholder farmers who previously struggled to obtain financing from traditional banks. By lowering transaction costs by up to 90%, digitalization is proving to be a game-changer for improving agribusiness potential.
“In the past, reaching individual farmers has been difficult for fintechs or commercial banks,” Banga noted, highlighting how digital tools have dramatically changed this dynamic. This increased connectivity allows for better access to markets, financing, and even climate-smart technologies.
A Coordinated Ecosystem Approach for Agribusiness Transformation
While addressing the fourth shift, Banga’s remarks focused on the inefficiencies caused by fragmented agribusiness financing, particularly from large food companies and traders. He observed, “A significant portion of agribusiness financing is sourced from large food companies and traders, who often operate in isolation.”
To overcome this challenge, the World Bank is taking an ecosystem approach that integrates smallholder farmers into global supply chains. “With farmer associations and producer organizations, we can move beyond the challenges of the past,” Banga said. By placing these organizations at the center of the new agribusiness strategy, the World Bank aims to streamline operations and eliminate inefficiencies.
Additionally, the World Bank is increasing its investments in agribusiness financing, doubling its commitments to $9 billion annually by 2030. This funding will be channeled into various initiatives, from building capacity in the public sector to mobilizing private capital. “Our public sector arms can help countries develop regulations and standards, like those that ensure products comply with export market requirements,” Banga explained.
A Focus on Job Creation and Youth Employment
Beyond food security and climate resilience, Banga also linked agribusiness development to solving the critical issue of youth unemployment. He cited the alarming projection that 1.2 billion young people will enter the workforce in the next decade, while only 420 million jobs will be available. This employment gap is a potential source of social unrest and migration unless urgent action is taken.
“The effort to transform agribusiness is not only about securing the food systems of tomorrow—it is fundamentally a jobs initiative,” Banga stated. By leveraging the agribusiness potential to create jobs in rural areas, the World Bank’s strategic shift aims to offer young people new opportunities in agriculture and related industries. “For young people, the rise of a thriving agriculture industry brings the promise of a better life,” Banga emphasized, pointing to the broader economic and social benefits of increased agricultural productivity.
Summary
President Banga’s speech at the Agriculture Flagship Event underscores the critical need for a coordinated and innovative approach to agribusiness. The World Bank’s strategy hinges on four key shifts climate-smart agriculture, financial tools for de-risking, digitalization, and integration of smallholder farmers—that together offer a roadmap for unlocking agribusiness potential.
As global food demand is set to rise by 50 to 60 percent in the coming decades, this strategic pivot is not just about feeding the world but about creating a sustainable and prosperous future. As Banga put it, “By transforming agriculture and agribusiness, we can create the food system of tomorrow, raise living standards, and create jobs.”
