The African Development Bank (AfDB) has unveiled plans to launch a groundbreaking $500 million financing facility aimed at unlocking $10 billion for smallholder farmers and agribusinesses across Africa. This initiative, announced by AfDB President Dr. Akinwumi Adesina at the High-Level Conference on Scaling Finance for Smallholder Farmers in Nairobi, will utilize various financial tools such as trade credit guarantees, blended finance mechanisms, and first-loss coverage. The goal is to reduce the high transaction costs of serving agricultural enterprises and offer much-needed technical assistance.
This new facility is part of a broader effort to address Africa’s significant $75 billion annual financing gap for agriculture. The AfDB is collaborating with key partners like the Pan African Farmers’ Organization (PAFO) to create innovative solutions that can bridge this gap and foster growth in the agricultural sector. Dr. Adesina emphasized that this initiative is a historic step towards unlocking the full potential of agriculture in Africa, and he called for global collaboration to help make Africa the world’s breadbasket.
The African Development Bank has already made substantial progress in supporting African agriculture, particularly smallholder farmers. Since the 2023 Dakar 2 Feed Africa Summit, financial commitments to food security have increased significantly, with the Bank pledging $10 billion to support agriculture-related initiatives. Additionally, the Bank has approved numerous projects focused on enhancing agricultural productivity, including the Technologies for African Agricultural Transformation (TAAT), which has reached 25 million farmers, and the African Emergency Food Production Facility, which has provided vital resources to millions of farmers.
Despite these efforts, challenges remain. Only 6% of African smallholder farmers have access to credit, and many face significant barriers such as climate variability and lack of collateral. To address these challenges, Dr. Beth Dunford, Vice President for Agriculture, Human, and Social Development at the Bank, emphasized the need for urgent action to improve access to financing for the agricultural sector.
Key initiatives such as the Special Agro-Industrial Processing Zones and the Affirmative Finance Action for Women in Africa (AFAWA) program have already made strides in supporting smallholder farmers. These efforts, coupled with the new financing facility, are aimed at transforming the agricultural landscape in Africa, creating jobs, and ensuring food security. Stakeholders, including African governments and financial institutions, are being urged to align their efforts and create a more enabling environment for agricultural lending.
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