Skip to main content


With the agricultural sector playing such a major role in the regions in which we operate, Africa, Asia and the Middle East, it was inevitable that agricultural finance would play an integral part of our global strategy.

More than 60 per cent of the labour force in countries across Africa work in agriculture, but the sector accounts for just 20 per cent of the continent's gross domestic product. There are primarily three reasons for this: the poor availability of suitable financing solutions; a lack of skills in modern agricultural practices; and the inability to access the latest technology in terms of seed development and fertiliser optimisation. At Standard Chartered, we have drawn on our long heritage and unique understanding of the countries in which we operate to support Africa's agricultural sector and assist in addressing these challenges.

Small scale farmers and commercial farmers continue to struggle in accessing the finance they need to maintain a sustainable and productive level of output. Small scale farmers which require loans to buy inputs, such as seeds and fertilisers, are often required to borrow against collateral such as real estate, which they simply do not have. As a result, they are unable to fertilise their land and are forced to use seeds held back from the preceding harvest to plant their new crop. These seeds are poor in quality and have degenerated over time and, combined with ineffective fertilisation and application of insecticides, leads to decreasing yields and poor quality crops.

Working from its headquarters in Johannesburg in South Africa, the Bank's Africa Agrifinance Division plays a key role in the Bank's regional agricultural financing portfolio, which is valued in excess of $2 billion. This portfolio includes both traditional agricultural finance and structured agricultural finance solutions. Due to outdated farming methods, farmers currently lose between 15 and 25 per cent of their crop in the field, whilst another 15 to 20 per cent is lost after harvest. Many of these losses are caused by a lack of expertise at the cultivating, harvesting and selling stages of the agricultural cycle.

Through the Bank's structured agricultural finance division, Standard Chartered supports both the commercial and small-scale farmer across our 13 country African footprint. Both commercial and small-scale farming sectors present their own unique areas for strong growth and development potential. The Bank uses traditional forms of collateral in the form of farmers' physical assets (land, infrastructure etc), as well as Standard Chartered's unique Input Financing Model.

This innovative Input Finance Model differentiates itself within the market as it uses a farmer's commodity as collateral (maize, wheat, soya, rice etc) rather than traditional fixed assets, thereby empowering the farmer by increasing his/her funding potential as well as freeing up physical assets for additional financing ventures. In addition to providing hands-on precision farming consultation and expertise, the Model also incorporates a tailor-made multi-peril insurance policy, which minimises the farmer's risk against climate risk, fiscal risks and disease outbreaks - all of which can cause farmers crippling financial losses.

An example of how Standard Chartered has managed to extend the reach of its unique Input Financing Model to benefit the small-scale farmer is in Tanzania. Here the Bank uses a cooperative approach, where more than 75 small scale farmers within one area collaborate under the management of a local rice milling company, to gain access to the latest developments in seed technology, agricultural machinery and technical know how. This input financing structure empowers previous subsistence farmers to gain direct benefit from pooled resources and produce rice on a commercial scale, accessing commercial farming skills, commercial pricing and ultimately, dramatically increasing their income potential.

In Zambia, the Bank has provided trade finance on a structured basis to a large trader, which is contracted by the Government to import fertiliser from the Middle East and Asia, within the government's subsidy scheme. This programme enables small-scale farmers to access the fertiliser required to cultivate their crops, and contribute to the valuable level of food supply in the country. The government employs a team of 100 managers, working in strategically placed centres, to oversee its distribution. This programme is predicted to benefit more than 250,000 farmers with small holdings growing maize crops. Not only does this initiative contribute to the economic empowerment of these small scale farmers, but also enhances food security in Zambia. Higher yields will enable Zambia to export more of its crop and increase its foreign currency reserves.

Sierra Leone, a country stricken with a long and tumultuous history of fiscal and political unrest, has been last on the beneficiary list in accessing agricultural support and finance. With the Bank's on the ground presence, Standard Chartered created a structure to fund the importation and bulk storage of rice, which is then sold onto local traders. To manage the inherent risks, the Bank employs an experienced collateral management team who understand the country, formal and informal sectors and culture, and as such can effectively manage the delivery and execution of the finance. The Bank's unique footprint across Asia and Africa enables Standard Chartered to manage supply chain from end-to-end: from the commodity source in Asia, right through to the end user in Sierra Leone. This programme is a leading example of how the Bank's international expertise, coupled with our on the ground presence and knowledge, delivers a sustainable solution for a struggling economy which demonstrates growth potential as well as being well positioned to support valuable trade links between Africa and Asia.

Commercial farmers have somewhat different financial restraints. They need financing solutions which will enable them to invest in well-advanced technologies that are suited to large-scale enterprises, as well as those which facilitate the cross-border trade in their agricultural produce. These solutions are often complex and farmers struggle to find a solution which fits their particular financial needs. The Bank's approach is solution based: we have the expertise required to tailor make structures which enable our clients to maximise their yields or exporting produce, whilst capitalising on the latest technical advancements and methodologies in precision farming techniques.

We realise the transformation and advancement of the region's agricultural sector is not a task which can be tackled alone, but demands strategic and relevant partnerships between governments, non-government organisations (NGOs) and the private sector to achieve this long term objective. One such example is our partnership with the German Development Bank (DEG), where Standard Chartered has been nominated as the DEG's preferred partner in delivering €100 million worth of financial support and guarantees to the continent's agricultural sector of the next three year period. The programme is appropriately named AgroAfrica and given the Bank's successful track record in structured agricultural finance in the region, we will work with the DEG to deliver sustainable value to farmers and agricultural development. AgroAfrica aims to increase the level of commercial farming skills, advance mechanisation of farming, productively utilise the vast amounts of arable land available and ultimately contribute to the food supply in not only the region, but also globally.

The first structure in this partnership has been implemented in South Africa, where the German Development Bank will guarantee €20 million of an ongoing input financing scheme, thereby extending the current farmers' cultivation area from 140,000 hectares to more than 300,000 by the end of 2012. Total agricultural output from the extended cultivation area is expected to be around 1.1 million tonnes of wheat, soya beans and maize, suggesting that the programme will make a significant contribution towards meeting South Africa's demand. The programme has been so successful that the Bank is now looking to expand similar input financing schemes within the AgroAfrica partnership to Namibia, Zambia and Cameroon.

Looking to the long term future of this sector, the Bank applies strict governance standards in evaluating and financing agricultural projects. Farmers must comply with local agricultural and labour practices, and projects must adhere to the internationally accepted Equator Principles as well as apply strict avoidance measures to Ramsar1 accredited wetland areas.

Africa needs to develop a sophisticated agricultural sector, which boasts the skills and mechanisation necessary to keep pace with its own fast growing population, as well as provide an additional food source for the global population, which is expected to grow from today's 6.7 billion to more than 9.2 billion in 2050. Rapid population growth already means that countries such as China and the United Arab Emirates are net food importers. If developed sustainably, Africa is well placed to assist with this need and capture a significant share of global trade.

As it currently stands, Africa's agricultural sector is neither ready nor able to play this global role. Productivity averages a mere 300 to 500 kilograms per hectare for maize, while in America the average is around 2,500 kilograms. By working in partnership with national governments, development organisations and local NGOs, commercial banks such as Standard Chartered can play an integral role in providing food security, both on the continent and beyond.

RAMSAR is an intergovernmental treaty that provides the framework for national action and international cooperation for the conservation and wise use of wetlands and their resources. It was adopted in the Iranian city of Ramsar in 1971 and came into force in 1975. It is the only global environmental treaty that deals with a particular ecosystem.

Report tools

Annual Report and Accounts 2009