Cultivating Africa's future: Financing sustainable growth
Agriculture is more than Africa’s past; it’s the key to its future. However, as the continent faces climate challenges and a rapid growing population, traditional farming methods are no longer enough. For businesses in farming, or those that rely on it, choosing sustainability isn't just the right thing to do; it's essential for long-term growth.
In South Africa, for instance, temperatures are rising twice as fast as the global average. This leads to more frequent heatwaves, longer dry spells and water scarcity. These conditions directly harm crop yields and livestock, creating serious risks for farming businesses. This problem is seen across Africa, where the population is set to increase by about 63% by 2050. This will dramatically raise the demand for food while, as research suggests, current food systems are under threat due to climatic impacts, and production might shrink by an estimated 18%.
This challenging landscape demands a transformative and sustainable approach. At Standard Bank, we believe that approach is Climate-Smart Agriculture (CSA).
Beyond business as usual: The power of CSA
Agriculture finds itself in a unique position: it's vital for livelihoods and food security, yet it also contributes to greenhouse gas emissions. CSA offers a powerful pathway to reconcile these competing demands, providing innovative strategies to enhance productivity sustainably and build resilience against a changing climate.
CSA is built on 3 interconnected pillars:
- Adaptation: Building resilience to cope with climate change impacts means using climate-resilient crop varieties, smart water use such as drip irrigation and resources such as farm insurance and weather forecasts.
- Mitigation: Reducing or removing greenhouse gas emissions and increasing carbon storage involves practices such as cover cropping, agroforestry and no-till farming to improve soil and capture carbon. Also, using precision farming, renewable energy and waste-to-energy systems helps lower environmental impact and optimise resource use.
- Productivity: By effectively employing adaptation strategies (such as resilient crops and efficient water management) and mitigation efforts (including healthy soil practices and renewable energy), we ultimately increase agricultural yields and income, thereby ensuring food security.
Unlocking opportunity: The Standard Bank advantage
Despite the clear benefits, CSA adoption in Africa remains relatively low. This presents a significant market opportunity for businesses willing to invest and innovate. Studies suggest that sustained implementation of CSA can lead to enhanced farm-level economic performance and output, with some regenerative practices boosting the agricultural sector's GDP in sub-Saharan Africa by as much as 20%.
While the transition to CSA may present an initial ‘J-curve’, a temporary dip in productivity as ecosystems recover, this curve illustrates that after an initial downturn, there is a subsequent, often accelerated, period of growth and improved performance, making the long-term advantages substantial. These include increased profitability due to improved soil health, reduced input costs, more stable yields and enhanced attractiveness to sustainability-conscious export markets.
Our commitment to the agricultural sector spans more than 150 years, driven by our belief in Africa's growth story. As the continent's largest bank with a footprint in 20 sub-Saharan countries, we recognise our responsibility in driving sustainable growth. Our commitment to achieving net-zero CO2 emissions across our lending and investing activities by 2050 means we are actively leading the transition to CSA throughout the agriculture value chain.
Tangible impact: Standard Bank's role as a CSA enabler
Beyond comprehensive business banking, we support our agribusiness clients through various CSA funding instruments and expert guidance:
- Sustainability-linked finance solutions: Tailored for assets, inventory, working capital and loans, supporting sustainable agriculture practices
- Partnerships with development finance institutions: Expanding our capacity to provide blended finance for development projects by sharing risks, offering more accessible funding
- Green bonds: Raising capital specifically for CSA projects
Our approach is always case by case, tailoring solutions to specific client needs. Consider these examples:
• Hydro power in the Eastern Cape: We financed South Africa’s most significant private hydro project (362kWp), providing sufficient power for 2 farms. This project is projected to yield significant long-term savings and energy independence.
Learn more about Lowmar Farm’s significant hydro plant investment.
• Floating solar in Mpumalanga: We backed a ‘water-borne’ solar plant, enabling a family-owned farm to power its entire estate off grid. This achievement not only ensures energy independence but also strategically positions the farm for market integration with the European Union, potentially unlocking higher prices and increased sales due to its low carbon footprint.
Find out more about our involvement in this ‘water-based’ solar plant.
• Solar-powered irrigation in Botswana: Through a partnership with the Agri3 Fund, we co-financed a 1MW solar plant to power irrigation systems, expanding irrigated land and reducing annual electricity expenditure by approximately 65%. This project is also expected to increase permanent employment by 50%.
Discover how we partnered with Kwenantle farmers for sustainable growth.
Empowering your sustainable journey
Our specialists possess deep sector expertise, understanding the unique risks and cycles of farming. They work closely with clients to understand their businesses and goals, supporting them in maintaining sustainable and economically viable operations. We also believe education is essential, which is why we've invested in the Sustainability Academy, an online learning platform designed to equip our clients with the knowledge needed for their sustainability journeys.
For businesses in the growth, enterprise and commercial sectors, embracing CSA is not just about mitigating risks; it's about seizing new opportunities, enhancing efficiency and building a more resilient and profitable future.
Navigating this essential transition requires a strong partner, and Standard Bank is here to provide the financial solutions, expertise and support your business needs to thrive sustainably.