Fund developed to support African Agri-food SMEs pursuing climate smart models and women empowerment
SMEs produce, process or transport around 65% of Africa’s food, yet they face a financing gap of more than US$180m annually.
The Agri-food SME Catalytic Financing Mechanism aims to catalyse and de-risk this investment, while strengthening Africa’s agricultural value chains and improve food security across the continent.
“At the Africa Food Summit, we have seen a strong commitment to addressing the financing gap for SMEs and creating an environment that encourages private sector investments in climate-smart, gender-oriented agricultural solutions,” said Dr Beth Dunford, AfDB’s VP for Agriculture, Human and Social Development.
“The Agri-food SME Catalytic Financing Mechanism will help unlock opportunities for these businesses in Africa, particularly for women and youth.”
Climate smart and women empowerment
Canada contributed CAD 100 million (US$73.5m) to the fund, which will be hosted by the AfDB.
The mechanism will provide concessional finance and technical assistance to financial intermediaries, such as agribusinesses, micro-finance institutions and impact funds, to enable them to make loans to agri-SMEs.
Particular attention will be the SMEs dedicated to building resilience to climate change, and those that are led by or work with women.
In fact, the mechanism adds to the bank’s Affirmative Finance Action for Women in Africa’s (AFAWA) goal of closing the US $42bn access to finance gap for women-led SMEs and to accelerate their growth.
“The best way to build up food security in Africa is to work with small-and-medium-sized agriculture and food businesses,” said Anita Vandenbeld, Parliamentary Secretary to Canada’s Minister of International Development.
“Through a shared commitment between Canada and the African Development Bank, the Agri-food SME Catalytic Financing Mechanism will advance resilient growth and climate adaptation.
“It will also help African SMEs to pursue climate smart models and support women by shifting attitudes that perpetuate gender gaps in financial inclusion.”
Call for more participation
The fund represents AfDB’s first blended financing facility to specifically target SMEs operating across the agricultural value chain.
It mobilises public funds to de-risk agricultural financing; crowds in support to make SMEs more bankable; and collaborates with providers of capital to make banks more ‘agriculture-friendly’.
Structured as multi-donor trust fund, the AfDB is calling on other development partners to contribute.
Through co-financing participation, the fund will increase the quantum of attractive capital de-risking agri-SMEs and leverage more private sector finance toward impactful agri-food sector investments.
The Dakar 2 Summit, held under the theme Feed Africa: Food Sovereignty and Resilience, is a high-level conference hosted by President Macky Sall of Senegal and the African Development Bank Group.
Thirty-four heads of state attended, along with agriculture and finance ministers, Central Bank governors, private sector representatives, farmer organisations and development partners to mobilise high-level political will and financial resources toward Africa’s agricultural transformation.
