The African Development Bank (AfDB) has announced plans for a $500 million facility aimed at unlocking $10 billion in financing for smallholder farmers and agribusinesses across Africa. AfDB President Dr. Akinwumi Adesina revealed the initiative at the High-Level Conference on Scaling Finance for Smallholder Farmers in Nairobi, emphasizing its potential to close the continent’s $75 billion annual financing gap in agriculture.
The facility will introduce financial instruments such as trade credit guarantees, first-loss coverage, blended finance mechanisms, and origination incentives to reduce transaction costs and mitigate risks for financial institutions. AfDB is currently in discussions with its Board of Directors to finalize the initiative.
Dr. Adesina, who was recently honored by Kenyan President William Ruto, called for global action to transform Africa into a global agricultural powerhouse. He highlighted the progress since the 2023 Dakar 2 Feed Africa Summit, where 34 African heads of state committed to food security and sovereignty, with financial pledges rising from $30 billion to $72 billion within a year.
The AfDB has already committed $10 billion to agriculture, approving 77 projects worth $3.9 billion in 32 countries and planning an additional $1.72 billion in approvals this year. However, challenges persist, with only 6% of African smallholder farmers having access to credit and fewer than 20% using improved seeds. Agricultural lending remains low, with banks allocating less than 5% of their loan portfolios to the sector despite its economic significance.
With this new facility, AfDB aims to break these barriers, stimulate economic transformation, and position agriculture as a pillar of Africa’s development.
