The African Development Bank (AfDB) is connecting farmers to market off-takers through Agro-Industrial Processing Zones and pledged USD 934.51 million towards this goal, supplemented by USD 938.27 million from partners. Despite an annual financing gap of USD 75 billion, the AfDB plans to promote financial access for smallholder farmers through various initiatives, including the MADE Alliance Africa and a proposed USD 500 million facility.
The African Development Bank (AfDB) is actively seeking to connect farmers with market off-takers and promote the processing and value addition of food and agricultural commodities. Dr. Akinwumi A. Adesina, President of the AfDB, emphasized the development of Agro-Industrial Processing Zones during a conference in Nairobi focused on financing smallholder farmers.
Dr. Adesina announced a significant commitment of USD 934.51 million to the Special Agro-Industrial Processing Zones, which is complemented by co-financing from partners totaling USD 938.27 million. He highlighted that there are 27 ongoing projects across 11 countries aimed at improving agricultural productivity and connecting farmers with markets.
Despite these advancements, Dr. Adesina addressed the persistent challenges faced by farmers, especially smallholder and medium-sized agribusinesses, notably the lack of access to finance. He noted an annual financing gap of USD 75 billion, alongside a perception among commercial banks of heightened risks in lending to agriculture-linked enterprises.
To mitigate these challenges, Dr. Adesina proposed innovative strategies to “de-risk” lending through absorbing incremental risks, enhancing lenders’ appetite, and tapping into private sector financing for agriculture. Additionally, the AfDB is collaborating with Mastercard on the MADE Alliance Africa initiative, which aims to integrate three million farmers in Kenya, Tanzania, and Nigeria into the digital economy with an initial commitment of USD 300 million.
Furthermore, Dr. Adesina announced plans to establish a USD 500 million facility to unlock USD 10 billion in financing for smallholder farmers and agribusinesses. This strategy will involve trade credit guarantees, blended finance, and technical assistance designed to reduce the high transaction costs associated with serving these enterprises.
The AfDB intends to work closely with the Pan African Farmers’ Organization and various financial institutions to ensure that financing is accessible to smallholder farmers and agribusinesses. During the conference, President William Samoei Ruto honored Dr. Adesina with the Chief of the Order of the Golden Heart (CGH), acknowledging his significant contributions to agriculture in Africa.
Agriculture and Livestock Cabinet Secretary Mutahi Kagwe emphasized that the conference provided a unique opportunity to prioritize farmers in discussions regarding food security and financing, aiming to translate high-level deliberations into impactful outcomes for the agricultural sector.
The African Development Bank is making considerable efforts to enhance the financial landscape for smallholder farmers through strategic investments and partnerships. The focus on Agro-Industrial Processing Zones and the commitment to de-risk financing will address significant challenges in access to funds. Collaborative initiatives, such as the MADE Alliance Africa, further illustrate the bank’s dedication to integrating farmers into the digital economy, ultimately aiming for sustainable agricultural growth in Africa.
Original Source: www.kenyanews.go.ke
