In these turbulent times, the availability of food and its affordability has become a very worrying theme for many populations in the world. We have seen the costs of basic foodstuffs increase significantly in the developing world, and the availability of these basic foods has come under question. Importers of staple foods are especially at risk.
It is for this reason that Absa is very proud to be a financial services supplier to Senwes. Our relationship has grown in leaps and bounds, from a stage where Absa was a junior financial partner to one where we now supply most of Senwes’s funding and banking needs.
We see Senwes as a strategic player in the South African food chain. Senwes has developed into a diversified agricultural input and services company, without whom food security in South Africa will be under threat. It understands the challenges of the agricultural sector and its farmer client base very well. Senwes, along with its peers are playing a vital role to keep South Africa’s food secure.
The challenges agricultural players have to contend with are diverse, but can perhaps be illustrated by the following trends:
- Populations in Africa specifically have become poorer and more food insecure.
- Urbanisation and the growth of slums seem to be a wave picking up speed and strength. These populations will be dependent on high-yielding agricultural production systems to feed them.
- Water scarcity is expected to increase significantly over the next decade, so much so that despite advancements in agricultural science, there may be reductions in grains production in 10 years’ time.
- Climate change as well as the damage and loss to natural ecosystems through urbanisation, exploitation and “slash and burn” practices are destroying the earth’s ability to repair itself.
- A very sizeable portion of food production in Africa is lost in the logistics chain. Some estimates indicate as much as 35 per cent, but even the most favourable estimates indicate more than 20 per cent. This is truly astounding in a continent that is not food secure.
Absa is the bank with the largest exposure to agriculture in South Africa and has a material presence outside South Africa, which we aim to expand in the countries we do business in. During a recent strategic review, Absa re-affirmed its commitment to the agricultural sector as we believe it offers significant investment opportunities across the continent. Our objective of being a positive force in the markets we do business in is very well illustrated by our commitment and involvement in agriculture.
Our total appetite in the agricultural sector is market-leading and it leaves us with sufficient scope to be involved in large-scale projects. Typical banking services and products Absa provides are the following:
- Funding – long and short term for capital expenditure and working capital
- Transactional banking services
- Risk mitigation – Foreign Exchange Hedging, Interest Rate Hedging, Trade Finance and Documentary Trade
Agriculture commodity finance is becoming increasingly important for Africa as markets develop. The Absa Commodity Finance team is a leading financier of projects in the grains market and it also participates in the funding of other commodities such as raisins, cotton, coffee, sugar, dairy products and animal feed products, not only for the local market but also for the entire Pan-African region.
With global competition in agriculture very strong, it is important for clients to be able to work with banking teams who understand the challenges of local conditions and place this in the context of global supply and marketing chains. Absa is well positioned in this regard through its understanding of the sector by working with clients such as Senwes.
The bravery to imagine and the will to get things done. That’s Africanacity.