AFRICA-The African Development Bank Group (AfDB) and the Canadian government have announced a special fund to support Africa’s small and medium-sized enterprises (SMEs) in the agriculture sector during the Dakar 2 African Food Summit.
According to a statement from AfDB, Canada is contributing CAD 100 million (US$73.5M) to the fund known as “The Agri-food SME Catalytic Financing Mechanism” which will be hosted by the Bank.
The fund aims to catalyze and de-risk investment for agriculture SMEs, as well as strengthen agricultural value chains and improve food security across the continent, AfDB said.
Investing in SMEs is one of the most practical ways of helping Africa, a food insecure contient, achieve food security.
“The best way to build up food security in Africa is to work with small-and-medium-sized agriculture and food businesses, ” said Anita Vandenbeld, the Parliamentary Secretary to Canada’s Minister of International Development.
Currently, these businesses are Africa’s food basket contributing around 65% in the production, processing, and transportation of food.
Despite their significant impact, they face a financing gap of more than US$180M annually, according to the Bank.
A timely intervention, the mechanism adds to the bank’s Affirmative Finance Action for Women in Africa (AFAWA) an initiative established to give female African farmers more autonomy over their agricultural careers following gender disparity in the sector.
The Agri-food SME Catalytic Financing Mechanism will particularly contribute to the goal of closing the US$42 billion access to finance gap for women-led SMEs and assist in accelerating their growth.
“We have a strong commitment to addressing the financing gap for SMEs while creating an environment that encourages private sector investments in climate-smart, gender-oriented agricultural solutions,” Said Dr.Beth Dunford, AFDB’s VP for Agriculture, Human and Social Development, said
He added that the SME catalytic Financial Mechanism will help unlock opportunities for businesses in Africa, with particular attention to SMEs dedicated to building resilience to climate change, and those that are led by or work with women.
The mechanism will also provide concessional finance and technical assistance to financial intermediaries, such as agribusinesses, micro-finance institutions, and impact funds, to enable them to make loans to agri-SMEs.
The mechanism is the bank’s first blended financing facility that is primarily aimed at SMEs that operate along the whole value chain of agriculture.