AfDB to unlock $10bn for African farmers with new $500m facility
By Seun Ibiyemi
The African Development Bank (AfDB) Group President, Dr Akinwumi Adesina, has announced plans for an ambitious $500 million financing facility designed to unlock $10 billion in funding for smallholder farmers and agribusiness enterprises across Africa.
Speaking at the High-Level Conference on Scaling Finance for Smallholder Farmers in Nairobi, Dr Adesina revealed that the Bank’s management is engaging with its Board of Directors to formalise this transformative initiative.
The newly proposed facility aims to close the persistent funding gap that hinders smallholder farmers by leveraging innovative financial tools such as trade credit guarantees, first-loss coverage mechanisms, blended finance strategies, and origination incentives. These financial solutions will lower the high transaction costs associated with supporting agribusinesses while also providing technical assistance to enhance sustainability.
“We are on the brink of a historic breakthrough—expanding the frontiers of innovation and forging powerful collaborative partnerships to eliminate financial barriers for smallholder farmers and agribusinesses,” Adesina stated in his keynote address.
The conference, held in partnership with the Pan African Farmers’ Organization (PAFO), addressed the $75 billion annual financing shortfall faced by Africa’s agricultural sector.
Dr Adesina, who was recently awarded Kenya’s highest national honour by President William Ruto, called on the international community to take decisive action in harnessing Africa’s agricultural potential.
“Together, we must unleash the full power of African agriculture. We must transform Africa into the world’s breadbasket. And we must nourish Africa with dignity and self-sufficiency,” he declared.
Since the 2023 Dakar 2 Feed Africa Summit, significant strides have been made. Thirty-four African heads of state have pledged to advance food security and agricultural independence, while development partners have raised their initial $30 billion financial commitment to $72 billion within a year.
The African Development Bank alone has committed $10 billion, approving 77 projects worth $3.9 billion across 32 countries, with an additional $1.72 billion in approvals planned for this year.
Despite this progress, major obstacles persist. Only 6 percent of Africa’s smallholder farmers have access to credit, and fewer than 20 per cent use improved seeds and advanced farming technologies. Financial institutions often perceive smallholder farmers as high-risk borrowers, citing climate unpredictability and lack of collateral as key deterrents. As a result, agricultural lending remains alarmingly low, comprising less than 5 per cent of total bank loan portfolios in many African nations—despite agriculture being a fundamental pillar of their economies.
The AfDB’s $500 million facility aims to overcome these challenges, fostering economic transformation and positioning agriculture as a sustainable driver of Africa’s development.
