African Development Bank Enhances Market Access and Financing for Farmers
The African Development Bank is working to connect farmers to market off-takers and enhance food processing through Agro-Industrial Processing Zones. A total of USD 934.51 million has been committed, alongside co-financing. However, a significant financing gap remains for smallholder farmers, prompting discussions on innovative lending solutions and digital integration efforts.
The African Development Bank (AfDB) is actively enhancing connections between farmers and market off-takers to facilitate the processing and value addition in the food and agricultural sectors. At the two-day conference on “Scaling Finance for Smallholder Farmers” held in Nairobi, Dr. Akinwumi A. Adesina, President of the AfDB, highlighted the organization’s development of Special Agro-Industrial Processing Zones (SAIPZ).
The AfDB has allocated USD 934.51 million towards these zones, which is complemented by an additional USD 938.27 million in co-financing from partners. Dr. Adesina noted that 27 projects are currently underway across 11 countries. However, he pointed out that smallholder farmers and agribusinesses still experience a significant challenge in accessing finance, facing an annual deficit of USD 75 billion.
A recent study by 35 lenders revealed a perception of high risks and lower returns associated with providing loans to agriculture-linked small and medium enterprises. Dr. Adesina emphasized the need for innovative solutions to “de-risk” lending to these entities, suggesting that increasing lenders’ risk appetite is crucial to attracting private sector investment in agriculture.
Additionally, the AfDB is collaborating with Mastercard on the “Mobilizing Access to the Digital Economy” (MADE Alliance Africa), aiming to integrate three million farmers from Kenya, Tanzania, and Nigeria into the digital economy with an initial commitment of USD 300 million. Dr. Adesina also indicated plans to consult with the Board of Directors for a USD 500 million facility to unlock USD 10 billion in financing for smallholder farmers and small agribusinesses, utilizing trade credit guarantees and technical assistance.
The AfDB remains dedicated to partnering with the Pan African Farmers’ Organization to enhance financial access for smallholder farmers. Furthermore, during the conference, President William Samoei Ruto awarded Dr. Adesina the Chief of the Order of the Golden Heart (CGH), recognizing his contributions to the sector. Mutahi Kagwe, the Agriculture and Livestock Cabinet Secretary, highlighted the conference’s focus on converting abstract discussions around food security into actionable benefits for farmers.
The African Development Bank’s initiatives, through the establishment of Special Agro-Industrial Processing Zones and strategic partnerships, aim to significantly enhance farmers’ access to markets and financing. Despite the challenges posed by limited financial resources, the Bank’s commitment to innovative risk management solutions and digital integration for farmers indicates a comprehensive approach to fostering agricultural growth and sustainability in Africa.
Original Source: www.kenyanews.go.ke
