Sub-Saharan Africa remains home to a disproportionate share of the world’s poorest people. In 2024, nearly 67% of the global population living in extreme poverty defined as surviving on less than US$2.15 per day resided in this region. Addressing poverty and inequality requires not only identifying where the most affected populations live but also investing in sectors that can directly improve their livelihoods. Agriculture stands out as the most promising pathway for inclusive growth.
Around 70% of the poor in sub-Saharan Africa live in rural areas, where the majority are employed in agriculture. This sector contributes significantly to economic output, accounting for 30% to 40% of GDP. Yet, despite its importance, agriculture remains underfunded due to constrained domestic resources and declining external assistance. With limited financial options, innovative strategies are necessary to finance agriculture in a way that drives sustainable development.
Economic models evaluating various funding strategies across ten African countries Angola, Mozambique, Namibia, Botswana, Rwanda, Gabon, Malawi, eSwatini, Lesotho, and Zimbabwe demonstrate the powerful impact of agricultural investment. The models tested three financing scenarios: raising taxes, cutting other government spending, and increasing external borrowing or aid.
Results showed that external financing produced the most substantial gains in national and rural incomes. Though such funding carries risks, such as exchange rate fluctuations that may reduce export competitiveness, it remains more cost-effective than domestic alternatives. Among the internal strategies, redirecting funds from non-agricultural investments consistently raised income levels in nearly all the countries studied. This suggests that reallocating existing resources could be a practical option for countries with constrained budgets.
The models also revealed that all three financing options led to increased rural incomes, contributing to reductions in poverty and hunger. These results support the idea that investing in agriculture yields significant social and economic benefits, especially in rural communities where poverty is most severe.
Furthermore, simulations indicated that agriculture-led investment had the most pronounced impact on reducing poverty and inequality, followed by investments in industry and services. Even modest increases in agricultural spending triggered notable poverty declines. For example, Malawi experienced the most significant poverty reduction, with strong results also seen in Rwanda, Botswana, eSwatini, and Angola. In Angola, however, the services sector particularly due to its ties to the oil industry had a greater impact on poverty reduction, highlighting the importance of country-specific dynamics.
To sustain progress, strategic action is needed. In the short to medium term, governments should aim to eliminate wasteful spending and improve the cost-effectiveness of expenditures, redirecting savings toward agriculture. Reforming tax systems to generate more revenue, while maintaining transparency in how funds are used, is also essential. Transparent allocation helps build public trust and support for tax reforms.
Over the long term, aligning national development strategies with ambitious agricultural growth initiatives will be key. A balanced mix of external support and carefully managed domestic financing can help unlock the transformative potential of agriculture. This approach not only uplifts rural communities but also fosters inclusive, sustainable economic growth across the continent.
