"African Development Bank Mulls $500 Million Facility to Mobilize Financing for Smallholder Farmers"

" African Development Bank Mulls $500 Million Facility to Mobilize Financing for Smallholder Farmers \r\n\r\nAfrican Development Bank Group President Dr. Akinwumi Adesina has announced plans to launch a $500 million facility designed to unlock $10 billion in financing for smallholder farmers and small agribusiness enterprises across Africa.\r\n\r\nSpeaking at the High-Level Conference on Scaling Finance for Smallholder Farmers in Nairobi, Adesina revealed that Bank management is currently consulting with its Board of Directors on establishing this groundbreaking facility.\r\n\r\nThe facility will deploy multiple financial instruments, including trade credit guarantees, first-loss coverage, blended finance mechanisms, and origination incentives to reduce the high transaction costs of serving enterprises, complemented by technical assistance.\r\n\r\n\u201cWe stand on the threshold of making history by pushing the boundaries of innovation and building extensive collaborative alliances to bridge the financing gap faced by smallholder farmers and agribusinesses,\u201d said Adesina in his keynote address.\r\n\r\nOrganized in partnership with the Pan African Farmers\u2019 Organization (PAFO), the conference sought to address Africa\u2019s critical $75 billion annual financing gap for farmers and agricultural enterprises.\r\n\r\nAdesina, who was recently awarded Kenya\u2019s highest national honor by President William Ruto\u2014called for global action: \u201cTogether, let us unleash the potential of agriculture in Africa. Let us make Africa the breadbasket of the world. And together, let us feed Africa with pride!\u201d\r\n\r\n Progress since Dakar 2 Feed Africa Summit \r\n\r\nAdesina highlighted substantial progress since the 2023 Dakar 2 Feed Africa Summit, where 34 African heads of state committed to ensuring food security and sovereignty.\r\n\r\nFinancial commitments from development partners have surged from an initial $30 billion to $72 billion in less than a year, with the African Development Bank pledging $10 billion. The Bank has approved 77 projects valued at $3.9 billion to support the implementation of Country Food and Agriculture Delivery Compacts across 32 countries, with an additional $1.72 billion in planned approvals this year.\r\n\r\nKey initiatives supporting smallholder farmers\r\nThe Bank has launched several major initiatives to strengthen smallholder farmers:\r\n\r\nThe Technologies for African Agricultural Transformation (TAAT) initiative has reached 25 million farmers with high-yield, climate-resilient crops, boosting Africa's food production by 120 million tons.\r\n\r\nThe African Emergency Food Production Facility, a $1.5 billion program, has delivered 459,000 tons of seed and 2.8 million tons of fertilizer to 12.3 million farmers, producing 37.6 million metric tons of food.\r\n\r\nThe Special Agro-Industrial Processing Zones initiative has invested $934.51 million, with $938.27 million in co-financing, supporting 27 projects in 11 countries.\r\n\r\nThe Affirmative Finance Action for Women in Africa (AFAWA) program has approved $2.52 billion in funding for 24,000 women-led businesses.\r\n\r\nThe African Fertilizer Financing Mechanism has implemented trade credit guarantees in nine countries, distributing 125,193 metric tons of fertilizer worth $62.8 million to 776,971 smallholder farmers.\r\n\r\nThe Inputs Supplier Risk Sharing Program, a $600 million initiative, is working to de-risk input supply chains in Uganda, Kenya, Tanzania, Ghana, and Zambia.\r\n\r\nThe Mobilizing Access to the Digital Economy (MADE) Alliance Africa, in partnership with Mastercard, has seen the Bank commit $300 million to integrate 3 million farmers in Kenya, Tanzania, and Nigeria into the digital economy.\r\n\r\n Addressing persistent challenges \r\n\r\nCurrently, only 6% of African smallholder farmers have access to credit, and less than 20% use improved seeds. Financial institutions often perceive smallholder farmers as high-risk borrowers due to climate variability and lack of collateral. Bank lending to agriculture remains low, accounting for less than 5% of total loan portfolios in many African countries, despite the sector being a major economic driver.\r\n\r\n\u201cFor some of you, these numbers may sound familiar; for the rest of us, they should be frustrating to hear. We must act now to change this reality,\u201d urged Dr. Beth Dunford, Vice President for Agriculture, Human, and Social Development at the Bank, speaking at the opening session on Monday.\r\n\r\nPAFO President Ibrahima Coulibaly urged stakeholders to take bold action: \u201cIf we want to save our continent from hunger, malnutrition, and poverty, we must create jobs in the agricultural sector. There is no other sector capable of doing this.\u201d\r\n\r\nKenyan Cabinet Secretary for Agriculture and Livestock Development, Senator Mutahi Kagwe, called for urgent implementation: \u201cIf we prioritize innovative, practical measures, we will transform agriculture into a thriving business. Let\u2019s commit to ensuring that no farmers are left behind due to lack of finance.\u201d\r\n\r\nOn Tuesday, a panel of leading global and African financial experts also issued a resounding call to align financial structures with the needs of smallholder farmers. They underscored the crucial role of government in creating an enabling environment for financial institutions to expand agricultural lending."

"African Development Bank Mulls $500 Million Facility to Mobilize Financing for Smallholder Farmers"

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