The African Development Bank is connecting farmers to market off-takers to enhance food processing and value addition through Agro-Industrial Processing Zones. Dr. Akinwumi Adesina announced a commitment of USD 934.51 million, with co-financing to counter a USD 75 billion financing deficit faced by smallholders. The Bank collaborates with various partners to improve digital access for farmers and plans to unlock USD 10 billion in funding for agriculture.
The African Development Bank (AfDB) is making significant strides in connecting farmers with market off-takers to enhance the processing and value addition of agricultural products. Dr. Akinwumi A. Adesina, the President of AfDB, announced the initiative through the development of Agro-Industrial Processing Zones during the High-Level Conference on “Scaling Finance for Smallholder Farmers” held in Nairobi.
AfDB has committed USD 934.51 million to its Special Agro-Industrial Processing Zones initiative, bolstered by an additional USD 938.27 million in co-financing from partners. There are currently 27 ongoing projects across 11 African countries, aimed at supporting farmers and agribusinesses in gaining better access to markets.
Despite these advancements, the primary challenge endures: access to finance remains limited for smallholder farmers and agribusinesses. An annual financing deficit of USD 75 billion affects these entities, while a survey of 35 lenders revealed concerns around perceived risks and lower returns related to lending in the agricultural sector.
To combat these issues, Dr. Adesina stated the necessity of finding effective measures to “de-risk” lending to farmers and agribusinesses, thereby increasing access to private sector financing. Collaborations with partners like Mastercard to establish the “Mobilizing Access to the Digital Economy” (MADE) Alliance Africa have also begun, aimed at integrating three million farmers from Kenya, Tanzania, and Nigeria into the digital economy within five years.
Moreover, AfDB plans to consult with its Board of Directors to facilitate a USD 500 million fund that could unlock up to USD 10 billion in financing for smallholder farmers and agribusinesses. This initiative will utilize trade credit guarantees and blended finance to alleviate high transaction costs associated with serving these enterprises.
The commitment of AfDB to work alongside the Pan African Farmers’ Organization along with other development and financial partners underscores the urgency of unlocking financial support for smallholders. At the conference, President William Samoei Ruto recognized Dr. Adesina’s contributions by awarding him the Chief of the Order of the Golden Heart, marking a significant honor since its inception in 1967.
Agriculture and Livestock Cabinet Secretary Mutahi Kagwe highlighted the conference’s unique opportunity to focus discussions on the farmer, shifting from theoretical aspects of food security to concrete solutions that directly impact the agricultural community.
The African Development Bank’s ongoing efforts to enhance the connectivity of farmers to market off-takers and facilitate value addition through Agro-Industrial Processing Zones mark a substantial advancement in supporting the agricultural sector. Yet, the persistent challenge of limited access to finance requires innovative solutions to promote lending. By collaborating with various partners and establishing strategic funding mechanisms, AfDB aims to significantly improve financial inclusion for smallholder farmers and agribusinesses, ultimately fostering agricultural development across the continent.
Original Source: www.kenyanews.go.ke
