African Development Bank, Government of Canada announce funding facility to grow agriculture small and medium enterprises
The African Development Bank Group and the Government of Canada have established a new special fund to support Africa’s small and medium-sized enterprises (SMEs) in the agriculture sector.
The Agri-food SME Catalytic Financing Mechanism aims to catalyze and de-risk investment for agriculture SMEs, as well as strengthen agricultural value chains and improve food security across the continent. The two organisations made the announcement at a press event on 27 January held during the Dakar 2 Africa Food Summit.
“At the Africa Food Summit, we have seen a strong commitment to addressing the financing gap for SMEs and creating an environment that encourages private sector investments in climate-smart, gender-oriented agricultural solutions,” Dr. Beth Dunford, the Bank’s Vice President for Agriculture, Human and Social Development told reporters. “The Agri-food SME Catalytic Financing Mechanism will help unlock opportunities for these businesses in Africa, particularly for women and youth,” she said.
Canada contributed CAD 100 million ($73.5 million) to fund the mechanism, which is hosted by the African Development Bank. Small and medium agri-businesses produce, process or transport around 65% of Africa’s food, yet they face a financing gap of more than $180 million annually.
The mechanism will provide concessional finance and technical assistance to financial intermediaries including agribusinesses, micro-finance institutions and impact funds. The finance and assistance aim to enable the intermediaries to make loans to agri-SMEs working with women, and businesses that build resilience to climate change.
The Agri-food SME Catalytic Financing Mechanism will add to the Bank Group Affirmative Finance Action for Women in Africa’s (AFAWA) goal of closing the $42 billion access to finance gap for women-led SMEs and to accelerate their growth.
The Mechanism represents the Bank’s first blended financing facility to specifically target SMEs...Read more on Ecofin Agency.