The African Development Bank Group (AfDB) is considering the creation of a $500 million facility to amplify financing for smallholder farmers and small agribusiness enterprises across Africa. This announcement was made at a conference in Nairobi focusing on scaling finance for smallholder farmers. The proposed facility aims to unlock $10 billion in support by leveraging various financial instruments to reduce transaction costs and provide technical assistance.
The initiative is part of a broader effort to address Africa’s estimated $75 billion annual financing deficit for agricultural enterprises. Current challenges in agricultural financing include limited access to credit for most African smallholder farmers and a perception of high risk due to climate variability and lack of collateral. As a result, bank lending to agriculture remains below 5% in many African countries.
To address these gaps, AfDB has launched several initiatives, including the Technologies for African Agricultural Transformation, which has boosted food production by delivering high-yield, climate-resilient crops to millions of farmers. The African Emergency Food Production Facility has supplied seeds and fertilizers to millions of farmers, significantly impacting food production.
Additionally, the Bank has committed significant funds to various programs supporting women-led businesses, risk-sharing mechanisms for agricultural inputs, and integrating farmers into the digital economy. These efforts are part of a commitment to improving financial access for smallholder farmers and driving agricultural growth in Africa.
The announcement underscores AfDB’s ongoing leadership in driving agricultural development and financial reform to support the continent’s agricultural sector, aligning with commitments made by African leaders to ensure food security and sovereignty.
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