The African Development Bank is enhancing the connection between farmers and market off-takers by investing USD 934.51 million in Special Agro-Industrial Processing Zones. The President highlighted ongoing financing challenges for smallholder farmers, noting an annual deficit of USD 75 billion. The AfDB’s initiatives include partnerships to improve access to the digital economy and plans for a new USD 500 million facility to facilitate financing for agriculture.
The African Development Bank (AfDB) is intensifying efforts to connect farmers with market off-takers, focusing on the processing and value addition of agricultural commodities. Dr. Akinwumi A. Adesina, President of the AfDB, highlighted these initiatives during a recent High-Level Conference in Nairobi dedicated to scaling finance for smallholder farmers. He indicated that the AfDB has allocated USD 934.51 million to Special Agro-Industrial Processing Zones, further complemented by USD 938.27 million from partner co-financing.
Currently, the AfDB has 27 ongoing projects across 11 countries aimed at establishing these Special Agro-Industrial Processing Zones. However, Dr. Adesina noted that a significant barrier persists for smallholder farmers and agribusinesses, particularly the lack of access to financing, with an annual shortfall estimated at USD 75 billion. This challenge is exacerbated by perceptions of high risk and lower returns by commercial banks regarding agricultural lending.
To address these challenges, Dr. Adesina emphasized the need for innovative strategies to “de-risk” lending to farmers and small businesses, which includes absorbing incremental risks and attracting private sector financing. Additionally, the AfDB is collaborating with Mastercard and other partners on the MADE Alliance Africa initiative, which aims to integrate three million farmers from Kenya, Tanzania, and Nigeria into the digital economy with an initial investment of USD 300 million.
Furthermore, Dr. Adesina revealed plans to seek approval for a USD 500 million facility from the AfDB’s Board to help unlock USD 10 billion for smallholder farmers and agribusinesses. This funding strategy will incorporate trade credit guarantees and blended finance to mitigate high transaction costs. The AfDB remains dedicated to working alongside the Pan African Farmers’ Organization and financial institutions to enhance financing pathways for these farmers.
During the conference, President William Samoei Ruto awarded Dr. Akinwumi Adesina the Chief of the Order of the Golden Heart (CGH), a prestigious national honor established in 1967. Agriculture and Livestock Cabinet Secretary Mutahi Kagwe emphasized the importance of focusing discussions on farmer-centric outcomes surrounding food security and nutrition, highlighting the necessity for actionable deliverables from such high-level dialogues.
In summary, the African Development Bank is committed to facilitating connections between farmers and market off-takers, promoting value addition through Agro-Industrial Processing Zones, and enhancing access to finance for smallholder farmers and agribusinesses. By implementing strategies to de-risk agricultural lending and fostering digital integration, the AfDB aims to overcome significant financial barriers. The collaboration with various partners and the establishment of new funding facilities signify a robust commitment to advancing agricultural productivity and sustainability across Africa.
Original Source: www.kenyanews.go.ke
