Feed the Future
This project is part of the U.S. Government's global hunger and food security initiative.

Professionalizing Ag: Is BDS the critical ingredient to sustainable entrepreneurship in the agriculture sector?

The Feed the Future-funded USAID/Rwanda Private Sector-Driven Agricultural Growth (PSDAG) project is charged with increasing smallholder incomes by supporting the Government of Rwanda to achieve its Vision 2020 aim of “transforming agriculture into a market-oriented, competitive, and high-value sector.” To help do this, the project has engaged with the range of value chain actors – particularly aggregators, processors, and exporters – to significantly upgrade targeted value chains including potato, maize, dairy, and various horticultural crops.

Over the past three years, the project has leveraged a $5 million Value Chain Competitiveness Fund (VCCF) to identify SME partners and provide co-investment grants that allow them to invest in technology upgrades and strengthen relationships between themselves, producers, investors, and financial institutions. For agricultural enterprises looking to invest in scaling their own upgrading or expansion with private capital, this initial phase can be critical to proving their capacity and business model.

However, through our experience and analyses it’s become clear that the co-investments that help SMEs buy down risk in investing in new technologies through the VCCF was only one important piece of the puzzle. As the PSDAG project has grown, its strategy has focused on building demand for business development services (BDS) and technical services, which is still nascent in Rwanda’s agribusiness sector. As we continue to implement BDS and technical services activities, we expect to see our already-improving agribusiness partners see a significant bump in interest from investors and, as a result, more investment at farmer level in production, support services, and post-harvest handing to meet growing needs.

Read the full post and, in the comments below, share some of your lessons learned in facilitating agribusiness investment through BDS.

Discussion

I agree totally.  When agribusinesses have more transparent and formal operations, clear and forward-looking growth strategies, they are likely to attract the right type of capital.  Of course, their offerings need to be commercially viable to attract investors in the first place.  But many commercially viable agribusinesses continue to struggle with lack of access to growth capital.   Needs based and well-designed business development services could play a huge role in unlocking the great potential of many African agribusinesses.  As business skills develop and growth is realized, technology uptake will also be enhanced as an integral component of the growth trajectory.

 

The challenge is that most agribusinesses have yet to understand the strong correlation between well-designed and executed business development services and growth.  In view of this, development agencies, corporates and other key stakeholders could play a critical role by creating awareness and catalyzing the development of more effective BDS within the agribusiness ecosystem.

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