The Global Agriculture and Food Security Program (GAFSP) announced on Sunday (26 October) the first allocation under its new Private Sector Financing Window to the African Development Bank (AfDB), providing $14 million in risk-reduction capital aimed at unlocking $200 million in private-sector investment to enhance food security in low-income countries.
Launched in 2024, the Business Investment Financing Track is GAFSP’s second-generation private-sector funding line. It blends the program’s grants and concessional financing with multilateral development bank resources to catalyze private-sector investment for smallholder farmers, producer groups, agribusinesses, and startups.
This first allocation will support the creation of an Agricultural Input Risk-Sharing Mechanism — a $200 million fund managed by the AfDB, including $10 million in risk-capital.
An additional $4 million in grant funding will support technical assistance to help mobilize up to $200 million in private-sector lending to agricultural small and medium enterprises (SMEs) in Ethiopia, Uganda, Tanzania, Malawi, and Zambia. The mechanism will encourage local banks to extend credit to agricultural input suppliers.
Small farmers and early-stage agribusinesses in fragile, low-income countries often face limited access to credit, insurance, and investment capital due to high perceived risks. The Agricultural Input Risk-Sharing Mechanism, to be implemented by the African Trade and Investment Development Insurance Agency (ATIDI) — a pan-African institution offering political risk and credit insurance — aims to bridge this gap by providing guarantees to financial institutions and encouraging commercial banks to lend to underserved agricultural enterprises.
“This first allocation shows the commitment of funders to work together under a new model to address a longstanding challenge in smallholder finance: risk,” said Natasha Hayward, Manager of the Global Agriculture and Food Security Program.
The funding will help expand access to certified seeds, organic fertilizers, soil enhancers, mechanization, and other inputs that strengthen resilience against extreme heat, water scarcity, and other climate impacts. More than 1.5 million smallholder farmers and 500 agricultural traders and cooperatives are expected to benefit.
GAFSP provides financial and technical resources — including grants, blended concessional finance, technical assistance, and advisory services — to the world’s poorest countries in support of agriculture value chain projects.
Source: O País
