By Daanyaal Matthews
The African Development Bank (AfDB) has announced a $500 million investment in a financial facility designed to unlock $10 billion in financing for smallholder farmers and agribusiness enterprises across the continent.
This initiative addresses a critical gap in agricultural financing, as the majority of smallholder farmers lack access to credit. The AfDB reports that only 6% of smallholder farmers have access to credit facilities, and fewer than 20% use improved seeds—factors that significantly hinder their competitiveness in an increasingly challenging market.
The new facility aims to equip smallholder farmers with essential financial tools to enhance their ability to compete in the agricultural sector. It will introduce mechanisms such as trade credit guarantees, first-loss coverage, blended finance options, and origination incentives.
Dr. Paul Kariuki, Executive Director of the Democracy Development Programme at the University of KwaZulu-Natal and Convener at the Africa Policy Circle (APC), emphasized the importance of the AfDB’s investment, particularly in the context of food security.
“I think this is a very timely move by the African Development Bank, given the food security challenges facing our continent,” Dr. Kariuki stated. “It’s crucial for governments and regional bodies to scale up their participation and address these issues before they worsen.”
Despite Africa’s vast reserves of arable land, food security remains a pressing issue due to climate change and production barriers that have stifled smallholder farmers’ growth.
Dr. Kariuki believes this financial facility could provide farmers with the necessary resources to mitigate climate change effects and expand their enterprises, ultimately strengthening national economies both nutritionally and financially.
“With initiatives like this—where financial institutions such as the African Development Bank step in to support smallholder farmers—there is a real opportunity to enhance productivity and sustainability,” he explained. “Smallholder farmers are vital contributors to Africa’s economies, and this investment is a positive and much-needed step forward.”
Listen to the full interview here:
Photo: Afdb.org
