AfDB to Connect Farmers to Market Offtakers for Value Addition
The African Development Bank (AfDB) is taking significant steps to connect farmers with market offtakers while promoting the processing and value addition of food and agricultural commodities. This initiative aims to strengthen agricultural value chains and improve market accessibility for farmers.
Dr. Akinwumi A. Adesina, President and Chairman of the Boards of Directors of the African Development Bank Group, emphasized these efforts during the two-day High-Level Conference on “Scaling Finance for Smallholder Farmers” in Nairobi. The conference, which commenced yesterday, provided a platform to discuss innovative financing solutions for smallholder farmers.
Adesina highlighted that AfDB is achieving this goal through the development and implementation of Special Agro-Industrial Processing Zones (SAPZs). The bank has committed USD 934.51 million to these zones, with an additional USD 938.27 million secured from co-financing partners. Currently, there are 27 active SAPZ projects spread across 11 countries, aimed at enhancing agricultural productivity and increasing farmers’ income through value-added processing.
Despite these advancements, Adesina acknowledged that access to finance remains a significant challenge for smallholder farmers and small and medium-sized agribusinesses. An annual financing deficit of approximately USD 75 billion persists in the sector, limiting growth opportunities.
Furthermore, data from 35 financial institutions indicate that commercial banks perceive lending to agriculture-related small and medium enterprises (SMEs) as high-risk and low-return, discouraging investment in the sector. Addressing this issue requires innovative financial solutions to “de-risk” lending and increase financial institutions’ willingness to support farmers and agribusinesses.
Adesina proposed strategies such as absorbing incremental risks to enhance lenders’ risk appetite and leveraging private sector finance into the agricultural sector. He stressed the need for blended finance models, trade credit guarantees, and first-loss coverage to lower transaction costs and improve access to credit for smallholder farmers and SMEs.
The AfDB is also collaborating with Mastercard and other stakeholders on the “Mobilizing Access to the Digital Economy” (MADE) Alliance Africa. The first phase of this initiative includes a USD 300 million commitment over five years, aiming to integrate three million farmers in Kenya, Tanzania, and Nigeria into the digital economy.
Additionally, the bank is consulting with its Board of Directors to establish a USD 500 million facility intended to unlock USD 10 billion in financing for smallholder farmers and agribusiness SMEs. This facility will include a mix of financial instruments, including trade credit guarantees and origination incentives, designed to enhance financial accessibility and reduce operational costs for farmers.
Adesina reaffirmed AfDB’s commitment to working closely with the Pan African Farmers’ Organization, its subsidiary farmers’ groups, development partners, and financial institutions to unlock financing solutions for smallholder farmers and agribusiness enterprises.
During the conference, President William Samoei Ruto conferred Kenya’s highest honor, the Chief of the Order of the Golden Heart (CGH), to Dr. Akinwumi Adesina, making him the 20th recipient of this prestigious award since its establishment in 1967. The honor recognized his contributions to Africa’s agricultural transformation and economic development.
Kenya’s Agriculture and Livestock Cabinet Secretary, Mutahi Kagwe, also addressed the conference, emphasizing the significance of placing farmers at the center of policy discussions. He highlighted the importance of transitioning high-level dialogues on food security, nutrition, subsidies, and financing into tangible solutions that directly benefit farmers. Kagwe urged stakeholders to ensure that financial commitments translate into impactful agricultural outcomes, ultimately improving the livelihoods of farmers and fostering food security across Africa.
AfDB to Connect Farmers to Market Offtakers for Value Addition
