Africa produces what it doesn’t consume, and consumes what it doesn’t produce. That stark line captures the contradictions of a continent that holds between 50% and 60% of the world’s uncultivated arable land, yet still imports about 80% of the food it consumes.

At the core of this paradox is a persistent financing gap: an estimated $170 billion annually; agro-industrial SMEs squeezed between risk-averse banks and financing tools ill-suited to their cash cycles; and private capital that continues to shy away from a sector it views as too risky.

This is precisely the challenge Tarek Toko Chabi is working to address. As Head of Agro-Industry at the West African Development Bank (BOAD), he is one of the few professionals combining financial and sector expertise within a regional development institution. Based in Lomé, within the Agriculture and Agro-Industry Department, he oversees agro-industrial investment projects across the eight WAEMU countries, from project structuring to financing and implementation.

In this interview with Ecofin Agency, he challenges common assumptions about investment risk in African markets, explains what truly makes an agro-industrial project bankable, and argues that private sector hesitation is less about caution than economic rationality, given still inadequate risk-mitigation mechanisms. He also sheds light on the significant transformation underway at BOAD under President Serge Ekué, with a shift in its operating model that could redefine the role of regional development banks in financing Africa’s private sector.

Ecofin Agency: Africa faces a financing gap estimated at $1.3 trillion per year to achieve its Sustainable Development Goals, and the consensus emerging from major investment platforms is that public funding alone can no longer bridge it. Yet the continent already holds more than $900 billion in institutional capital and $2.5 trillion in commercial banking assets. Is the financing challenge for Africa’s private sector truly about the availability of capital, or something else?

Tarek Toko Chabi: It is first and foremost a financial intermediation failure. Capital exists, but it does not reach businesses. Most African economies are marked by a sharp divide between very large corporations and very small firms, with a near absence of mid-sized companies. Large firms are typically subsidiaries of foreign groups or state-owned enterprises operating in strategic sectors.

At the other end, micro, small, and medium-sized enterprises form the backbone of the economy in Sub-Saharan Africa and account for the vast majority of jobs. Often poorly understood and only weakly integrated into formal regulatory systems, they nonetheless remain a key driver of wealth creation and distribution.

The core issue is that most of these businesses operate informally, with weak management practices and limited financial transparency, making them unattractive to banks. Financial institutions typically require physical collateral, especially land titles, which many firms cannot provide. Available financial products are poorly suited, with high interest rates and repayment periods that are too short for long-term investments. Another often overlooked constraint is chronic payment delays by clients, including governments and large corporations, which strain SME cash flows. In effect, these firms end up financing their clients rather than themselves.

These mid-sized firms are too large for microfinance and too small for major development finance institutions. They represent the so-called “missing middle.” While support mechanisms such as incubators, national agencies, and industrial upgrading programs do exist, their reach remains far too limited relative to the scale of demand.

EA: Private sector credit fell from 56% of GDP in 2007 to 36% in 2022, constraining the continent’s industrialization. At the same time, most investment funds operating in Africa are based outside the continent and remain concentrated in a handful of Anglophone countries, leaving much of Francophone Africa underinvested. Is “African risk” real, or largely a matter of perception?

TTC: It is both, which is what makes it complex. There are real structural constraints: unreliable power supply, weak transport infrastructure, and limited port capacity. The informal sector accounts for 36% of GDP and 70% of employment in Sub-Saharan Africa, narrowing the tax base and increasing perceived risk. Corruption costs the continent $148 billion each year. Legal uncertainty and political instability in some regions further increase that risk.

Risk perceptions often go far beyond reality and mask strong returns and the resilience of many African economies

At the same time, perceptions often go far beyond reality and mask strong returns and the resilience of many African economies. Countries such as Côte d’Ivoire and Benin are showing through reforms that private capital can be attracted on a sustained basis. Conditions are improving faster than investor perceptions. What persists is a combination of structural constraints and misperception.

EA: The changes on the ground are also bringing in new players. Fintech has transformed financial inclusion in Africa in less than a decade. Do you see a similar trend in business financing, particularly through agritech or alternative financing platforms, or is disruption in that segment still limited?

TTC: A similar shift is emerging in business financing, driven by agritech and alternative lenders, which accounted for 63% of tech funding in 2021. But it is more uneven than in consumer finance. Mobile money solved the payments problem, but access to long-term financing for SMEs and agriculture remains a major constraint, with only gradual progress.

Disruption is increasingly driven by agritech firms using alternative data such as satellite imagery and mobile money transaction histories to assess the creditworthiness of farmers previously excluded from the banking system. Although the fintech market is projected to reach $65 billion by 2030, progress remains uneven. Regulatory constraints, infrastructure gaps such as electricity and internet access, and limited access to long-term capital are slowing adoption compared with the pace seen in payments.

At the same time, crowdfunding and peer-to-peer lending platforms for SMEs are expanding, offering alternatives to bank financing, though they remain largely confined to niche segments.

EA:  Africa imports 80% of the food it consumes, even though it holds between 50% and 60% of the world’s unexploited arable land. Raw commodity exports still dominate. Where do you see the main bottleneck in this chain: production, processing, marketing, or public policy?

TTC:  A phrase from Africa Consumer Rights Watch captures this paradox better than any report: “Africa producing what it does not consume while consuming what it does not produce.” It reflects a profound misalignment between the continent’s agricultural potential and its industrial processing capacity.

Most local value chains do not go beyond the first or second stage of processing. Entire segments remain untapped, particularly in the cosmetics and pharmaceutical industries.

The main bottleneck is in processing, not in production, although that also needs modernization. The lack of processing infrastructure prevents value addition and keeps the continent locked into a pattern of exporting raw materials and importing finished goods. Most local value chains do not go beyond the first or second stage of processing. Entire segments remain untapped, particularly in the cosmetics and pharmaceutical industries.

This bottleneck is compounded by two factors. First, public policies still fall short in supporting agri-food industrialization, protecting local markets, and creating an enabling environment for local investors, despite progress over the past fifteen years.

Second, significant post-harvest losses, estimated at 37% of total production, including 40% to 50% for fruits and vegetables, amount to about $4 billion per year due to inadequate storage, roads, and logistics. This is compounded by the lack of traceability and non-compliance with certain standards, which restrict access to high-standard markets.

EA: You identify processing as the central bottleneck. But for an operator seeking to overcome that constraint and build an agro-industrial project, access to finance remains a major obstacle: maturities are too short, rates are too high, and financing products are often poorly suited to agricultural cycles. In practical terms, what makes a project bankable in West Africa, and what are operators still getting wrong when they approach a financier?

TTC: A bankable agro-industrial project is first and foremost one that tells a coherent story from start to finish. Land tenure must be secure. Raw material supply must be backed by contracts with producers. End markets must be identified and supported by letters of intent or purchase agreements. The project must show that risks can be managed across operating cycles. And governance must not rest entirely on the lead promoter, which is still too often the case.

What operators mainly get wrong is this: they approach financiers with big ambitions and business plans that are not fully developed. They underestimate what a financier needs to see: a credible management team with proven technical, agricultural and financial expertise; a serious approach to ESG issues; and, above all, alignment between the stated ambition and the actual capacity to deliver. A project whose scale is out of line with the promoter’s financial and operational capacity is the clearest red flag for any financier.

EA: Success stories do exist: Côte d'Ivoire already processes 30% of its cashew production locally, with around thirty active processing plants. But these remain isolated cases. Is the private sector holding back from investing in agro-industry at scale out of caution, or is it simply acting rationally in the face of risks that current financing mechanisms do not adequately address?

TTC: The private sector is clearly acting rational. And we need to stop blaming it for doing that. A private investor looking at African agro-industry sees real climate risks, in a region where agriculture is largely rain-fed, with no suitable insurance products to mitigate them.

They see operating cycles that conventional financing cannot accommodate, and limited access to credit affecting not only the lead promoter but every player in the value chain. Land access issues persist, and weaknesses in storage and transport infrastructure drive up transaction costs while increasing the risk of losses.

The private sector is not philanthropic; it will only take on risk if that risk is shared through effective support mechanisms. And today, those mechanisms remain insufficient.

This is not timidity; it is economic calculation. The private sector is not philanthropic; it will only take on risk if that risk is shared through effective support mechanisms. And today, those mechanisms remain insufficient. The Ivorian cashew example is particularly instructive because it shows what is possible when the state creates the right conditions: tax incentives, a stable regulatory framework, and support for setting up processing plants. It is not a miracle; it is policy.

EA: The African Continental Free Trade Area is often presented as a catalyst for agro-industry, by opening up a market of 1.4 billion consumers. But in practice, non-tariff barriers, weak infrastructure, and fragmented regulations still impede the movement of processed goods. Does the AfCFTA genuinely change the economic calculus for a private investor in agro-industry, or is it still a theoretical promise?

TTC: The AfCFTA is a legal and commercial reality that is reshaping the agro-industrial investment landscape. For an investor, it makes regional integration more accessible over the long term, but it requires navigating high operational risks. It offers real opportunities for value-added production and export, especially if national industrial policies support local processing.

To date, the phased elimination of tariffs on 90% of products facilitates the importation of inputs at lower cost — crucial for agro-industry. Special Economic Zones (SEZs) are developing, offering more attractive regulatory frameworks for private investors.

However, efforts remain to be made to address non-tariff barriers (administrative procedures, corruption), infrastructure gaps (transport, energy), and regulatory fragmentation (disparate sanitary and phytosanitary standards), in order to better control transaction costs and enable the free movement of processed goods.

EA: The BOAD structures its agro-industry strategy around support for food security and the development of high-value-added sectors. In your view, are the mandate and instruments of a regional development bank well aligned with the needs of the West African agro-industrial private sector in its current state, or does the way these institutions operate need to be reconsidered?

TTC: The instruments are in place and are delivering results. Since 2021, the Djoliba plan has enabled BOAD to deploy more than $1.2 billion in support of agriculture and agro-industry across the eight WAEMU countries, through short-, medium- and long-term financing, securitization and equity investments. The results are tangible: higher local processing rates in sectors such as cocoa, cashew, shea, cotton and cereals; jobs created and sustained for women and youth; West African products reaching global markets; and increased tax revenues for governments.

Even more significant is the shift in the model itself. President Serge EKUÉ has committed BOAD to an originate-to-distribute approach. The Bank no longer systematically holds risk on its balance sheet. It now leverages the credit risk insurance market to optimize capital allocation, expand its operational capacity and improve its risk profile. A captive insurance vehicle is also being considered, which would allow the Bank to retain and manage specific risks with greater flexibility. This marks a fundamental transformation, positioning BOAD as an institution better equipped to meet its clients’ needs.

The key change with “Djoliba la Suite” is scale. Funding increases to $2.2 billion for the sector. This is not a marginal increase. It is a step change driven by President Serge EKUÉ. For a private agro-industrial operator in West Africa, this means more resources, more instruments and an institution that fully embraces its role as a partner to the private sector rather than simply a lender of last resort.

EA: If you had to identify a single condition, whether financial, institutional, regulatory or political, that could truly be a game-changer for private investment in West African agro-industry over the next ten years, what would it be?

TTC: Land tenure security. Without hesitation. Everything else, financial instruments, guarantees, tax incentives, can be put in place, but if an investor cannot secure the land needed to build processing facilities, cultivate raw materials or install infrastructure, the investment cannot be sustained. It is the foundation of any viable long-term agro-industrial project. And it remains largely absent across much of West Africa.

Secure land tenure creates a bankable asset and improves access to credit. It provides long-term certainty for investors and encourages modernization and sustained investment. It signals a predictable environment and opens the door to private capital that is primarily looking for stability. Addressing land tenure challenges is not one reform among many. It is the single most important reform.

Interview by Fiacre E. Kakpo