The African Development Bank (AfDB) is developing a 500 million financial facility to mobilize 500 million financial facility to mobilize 10 billion in funding for smallholder farmers and agricultural businesses across Africa, President Dr. Akinwumi Adesina announced.
Speaking at the High-Level Conference on Scaling Finance for Smallholder Farmers, Adesina revealed the Bank is currently seeking approval from its Board of Directors for this innovative program. The facility will use various financial tools including credit guarantees, risk-sharing mechanisms, and blended finance to address the challenges small farmers face in accessing capital.
Addressing Africa’s $75 Billion Agriculture Financing Gap
The conference, organized with the Pan African Farmers’ Organization (PAFO), highlighted the critical need to bridge Africa’s massive agricultural funding shortfall.
“With this facility, we’re pushing the boundaries of financial innovation to transform African agriculture,” Adesina stated in his keynote address. “Our goal is to make Africa the world’s breadbasket and ensure food security across the continent.”
Building on Recent Successes
The announcement builds on momentum from the 2023 Dakar 2 Feed Africa Summit, where:
- Financial commitments from development partners grew from 30billionto30billionto72 billion
- The AfDB pledged $10 billion in agricultural support
- 77 projects worth $3.9 billion were approved across 32 countries
Current AfDB Agricultural Initiatives
- Technologies for African Agricultural Transformation (TAAT): Reached 25 million farmers, increasing food production by 120 million tons
- African Emergency Food Production Facility: Distributed seeds and fertilizer to 12.3 million farmers, yielding 37.6 million metric tons of food
- Special Agro-Industrial Processing Zones: $1.87 billion invested across 11 countries
- AFAWA Program: Provided $2.52 billion to 24,000 women-led agribusinesses
The Financing Challenge
Despite agriculture being Africa’s largest employer, critical gaps remain:
- Only 6% of smallholder farmers access formal credit
- Less than 20% use improved seeds
- Banks allocate less than 5% of loans to agriculture
“We must act now to change this reality,” stressed Dr. Beth Dunford, AfDB Vice President for Agriculture. “These numbers should frustrate us into action.”
Leaders Call for Bold Steps
PAFO President Ibrahima Coulibaly emphasized: “Agriculture remains our most powerful tool against hunger and poverty. We must create jobs in this sector.”
Kenya’s Agriculture Cabinet Secretary Mutahi Kagwe added: “By prioritizing practical solutions, we can turn farming into thriving businesses. No farmer should be left behind due to lack of financing.”
The proposed $500 million facility represents a major step toward unlocking the potential of Africa’s 33 million smallholder farmers, who produce up to 70% of the continent’s food supply.
Key Features of the Proposed Facility:
- Trade credit guarantees
- First-loss coverage
- Blended finance options
- Technical assistance programs
- Digital integration support
The AfDB expects the facility to significantly reduce transaction costs and risks associated with agricultural lending, potentially transforming Africa’s food production landscape.
(Source: afdb.org)
