Afreximbank, AfCFTA, WFP sign $2bn MoU to boost agriculture
In a move to strengthen Africa’s agricultural sector, Afreximbank, the African Continental Free Trade Area (AfCFTA) Secretariat, and the World Food Programme (WFP) have signed a three-year Memorandum of Understanding (MoU) to support African farmers, agro-processors, and commodity traders with a minimum of $2 billion in financing by 2025.
President/chairman of the Afreximbank board, Benedict Oramah announced this during the Farm, Food and Allied Technologies (FARMATECH) Expo 2024 in Abuja.
According to him, the initiative aligns with AfCFTA’s objectives to bolster intra-regional trade and enhance food security across the continent.
“On July 17, 2022, Afreximbank, the African Continental Free Trade Area Secretariat and World Food Programme signed a 3-year tripartite Memorandum of Understanding to disburse a minimum of US$2 billion in farming loans as well as credit lines to agro-processors and commodity traders by 2025 through various lending instruments and blended finance facilities to be channelled through the bank in support of the implementation of the AfCFTA Agreement (increase in intra-regional agricultural trade).”
The bank’s president, who was represented by Eric Monchu Intong, the acting group Managing Director of Client Relations, emphasised the crucial role agriculture plays in economic development, food sovereignty, and sustainable livelihoods in Africa
He explained that the collaboration under the MOU focuses on building the productive capacity of smallholder and commercial farmers, supporting the development of agro-processing and agro-export industries, availing climate change actions, and promoting intra-regional agricultural trade and investments.
“Agricultural financing is essential for enabling farmers and agribusinesses to secure the capital necessary for investments in technology, infrastructure, and sustainable practices.
“According to the Food and Agriculture Organisation (FAO), global agricultural investments must be significantly increased to address the rising food demand. Currently, the trade finance gap in developing countries is estimated to be approximately $150 billion annually.
“This gap not only poses a challenge but also represents an opportunity for Development Financial Institutions, such as Afreximbank, to implement tailored and bespoke financial solutions,” he said.
Speaking further, Oramah added that the MoU would channel funds through diverse lending instruments and blended finance solutions managed by Afreximbank, targeting smallholder and commercial farmers as well as agro-processing industries.
These funds aim to address several core challenges, including inadequate infrastructure, limited financial literacy, and high-risk perceptions associated with agricultural financing.
Afreximbank’s sixth strategic plan underscores industrialisation and export development, with a focus on supporting local manufacturing, value-added exports, and reducing Africa’s reliance on unprocessed commodity exports.
Highlighting Africa’s potential as a global agricultural powerhouse, he noted that the continent possesses over 60 percent of the world’s arable land. Yet, Africa’s agricultural sector only contributes 15 percent to its GDP while employing 60 percent of the workforce.
According to him, Afreximbank aims to expand this impact by promoting mechanisation, value addition, and educational reforms to empower the next generation with advanced agricultural skills.
Through tailored interventions, he said that Afreximbank also offers solutions like long-term financing, risk insurance via its AfrexInsure subsidiary, and financing for agribusiness projects.
Notable examples include a EUR 100 million sugar processing initiative in Egypt, a EUR 19.6 million dairy processing plant in Mauritania, and a $20.8 million cashew processing facility in Nigeria.
