The African Development Bank is focused on connecting farmers to market off-takers via Agro-Industrial Processing Zones, committing over USD 934 million towards this cause. Challenges persist, especially regarding financial access for smallholders, with an annual financing deficit of USD 75 billion. The Bank is exploring innovative solutions, including partnerships with organizations aimed at integrating farmers into the digital economy.
The African Development Bank (AfDB) is dedicated to linking farmers with market offtakers to enhance the processing and value addition of food and agricultural goods. This initiative is primarily implemented through the establishment of Agro-Industrial Processing Zones, as noted by Dr. Akinwumi A. Adesina, President and Chairman of the Boards of Directors of the African Development Bank Group.
During the two-day High-Level Conference on “Scaling Finance for Smallholder Farmers” held in Nairobi, Dr. Adesina announced the AfDB’s commitment of USD 934.51 million towards the Special Agro-Industrial Processing Zones, which has been bolstered by an additional USD 938.27 million in co-financing from partners. Currently, 27 projects in this category span across 11 countries.
Despite these advancements, challenges persist, particularly regarding access to finance for smallholder farmers and agribusinesses. There remains an annual financing gap of USD 75 billion for these groups, and data reveals that commercial banks perceive higher risks associated with lending to agriculture-related small and medium enterprises.
To address this, Dr. Adesina emphasized the need to “de-risk” lending to these sectors by sharing risks, thereby enhancing lenders’ willingness to finance agriculture. The AfDB is collaborating with Mastercard to create the “Mobilizing Access to the Digital Economy” (MADE Alliance Africa), which aims to integrate three million farmers from Kenya, Tanzania, and Nigeria into the digital economy within five years.
Furthermore, he confirmed plans to consult the AfDB’s Board of Directors regarding the establishment of a USD 500 million facility designed to unlock USD 10 billion for smallholder farmers and agribusiness enterprises. This initiative will utilize strategies like trade credit guarantees, blended finance, and technical assistance to reduce transaction costs.
The AfDB’s commitment to collaborating with the Pan African Farmers’ Organization, development partners, and financial institutions reflects its dedication to unlocking financing avenues for smallholder farmers. Additionally, at the conference, President William Samoei Ruto honored Dr. Akinwumi Adesina with the Chief of the Order of the Golden Heart (CGH), recognizing his significant contributions.
In conclusion, the African Development Bank is making significant strides to connect farmers to markets and enhance value addition to agricultural products through its Agro-Industrial Processing Zones. However, financial accessibility remains a major hurdle, necessitating strategic initiatives to attract investment in agriculture. The proposed funding facilities and partnerships with organizations like Mastercard are pivotal steps towards empowering smallholder farmers and agribusinesses in Africa.
Original Source: www.kenyanews.go.ke
