The African Development Bank (AfDB) has obtained $14 million from the Global Agriculture and Food Security Program (GAFSP), as part of the first allocation of its new private sector financing window. This support aims to catalyze up to $200 million of private investments in favor of food security in several low-income African countries.
In a statement released on Sunday, October 26, the AfDB indicates that the financing includes a $10 million envelope for a risk-sharing mechanism for agricultural inputs, and an additional $4 million for technical assistance. This mechanism will be deployed in Ethiopia, Uganda, Tanzania, Malawi, and Zambia, to strengthen access to credit for small and medium-sized agricultural enterprises.
The mechanism, hosted by the AfDB and implemented by ATIDI, will provide guarantees to local banks to encourage them to finance agricultural input suppliers in economies where risk still limits access to credit.
According to the Bank, this initiative could benefit more than 1.5 million small-scale farmers and 500 agricultural cooperatives and traders, while strengthening resilience to climate shocks and market volatility. It is part of a broader momentum to mobilize private capital to bridge the estimated $75 billion annual financing gap in African agriculture, a sector that represents about 30% of the continental GDP but only receives 6% of bank credit.
At the same time, the AfDB is preparing to launch a $500 million facility to mobilize up to $10 billion for small-scale farmers and agricultural SMEs on the continent, confirming its ambition to make agricultural financing a major lever for inclusive growth.
