Norway and the US have each committed $35 million to a new agriculture fund that will target African SMEs.
The pair hope to attract further donations from development finance institutions and philanthropists to reach a total of $200 million.
The fund will seek to reduce the risk of commercial financing into the continent’s food production industry and aims to catalyze at least a further $200 million.
A statement from USAID said the development finance vehicle has the potential to support 500 agricultural SMEs and 1.5 million smallholder farmers, ultimately benefiting nearly 7.5 million people.
“Agri-SMEs are Africa’s largest employer and economic engine – and the key to transforming a largely subsistence agriculture sector into a commercially sustainable industry that can feed the continent,” said the statement.
“It’s these agri-SMEs – the input suppliers, traders, agro-processors, and urban retailers – that support 95 percent of smallholder farmers in sub-Saharan Africa with the critical tools and services they need to increase productivity and become profitable.
“Together with the farmers they support, agri-SMEs are the driving force behind food systems in Africa. Yet, three-out-of-four agri-SMEs can’t access formal bank financing and are too large for microfinance loans that are typically less than $1,000, creating an estimated $100 billion gap in unmet demand for financing.”
Separately, the US International Development Finance Corporation – working in collaboration with USAID – said it has committed more than $1 billion to strengthen global food security, two years ahead of its schedule.
“In 2021, we pledged $1 billion in food security investments over five years. I am proud to report that not only did we meet our goal, but we did it years ahead of schedule and, as we face a continuing crisis in food security, we at DFC are ready and on track to do it again,” said DFC CEO Scott Nathan.
Nathan added: “We’re helping smallholder farmers in the world’s most vulnerable communities access equipment, training and inputs so they can produce more food, while also strengthening their ability to store and distribute it. Our goals must be ambitious as we work with the private sector to bring more produce to market and bolster food security.”