African Development Bank Proposes $500 Million Facility to Boost Smallholder Farmers’ Financing

The African Development Bank (AfDB) is set to launch a $500 million facility aimed at unlocking $10 billion in financing for smallholder farmers and agribusiness enterprises across Africa. The announcement was made by AfDB President Dr. Akinwumi Adesina during the High-Level Conference on Scaling Finance for Smallholder Farmers, held in Nairobi from March 17-18, 2025.

The proposed facility is currently under consultation with the Bank’s Board of Directors and is expected to deploy a range of financial instruments, including trade credit guarantees, first-loss coverage, blended finance mechanisms, and origination incentives. These measures are designed to lower transaction costs and improve access to financial resources for small-scale farmers. 

The conference, organized in partnership with the Pan African Farmers’ Organization (PAFO), aimed to tackle the critical $75 billion annual financing gap in Africa’s agricultural sector. Speaking at the event, Adesina emphasized the need for innovation and collaboration to address the continent’s financing challenges.

“We stand on the threshold of making history by pushing the boundaries of innovation and building extensive collaborative alliances to bridge the financing gap faced by smallholder farmers and agribusinesses,” said Adesina.

He also highlighted progress made since the 2023 Dakar 2 Feed Africa Summit, where 34 African heads of state committed to ensuring food security. Financial pledges from development partners have surged from $30 billion to $72 billion in less than a year, with the AfDB committing $10 billion. To date, 77 projects worth $3.9 billion have been approved, with an additional $1.72 billion in the pipeline. 

The AfDB has launched several initiatives to enhance smallholder farmers’ productivity and resilience, including:

• Technologies for African Agricultural Transformation (TAAT): Reached 25 million farmers with high-yield, climate-resilient crops, increasing Africa’s food production by 120 million tons.
• African Emergency Food Production Facility: A $1.5 billion initiative supplying 459,000 tons of seed and 2.8 million tons of fertilizer to 12.3 million farmers, yielding 37.6 million metric tons of food.
• Special Agro-Industrial Processing Zones: An investment of $934.51 million, co-financed with $938.27 million, supporting 27 projects in 11 countries.
• Affirmative Finance Action for Women in Africa (AFAWA): Approved $2.52 billion for 24,000 women-led businesses.
• African Fertilizer Financing Mechanism: Facilitated trade credit guarantees in nine countries, supplying 125,193 metric tons of fertilizer to 776,971 smallholder farmers.
• Inputs Supplier Risk Sharing Program: A $600 million initiative de-risking input supply chains in Uganda, Kenya, Tanzania, Ghana, and Zambia.
• Mobilizing Access to the Digital Economy (MADE) Alliance Africa: A $300 million partnership with Mastercard to integrate 3 million farmers into the digital economy. 

Despite agriculture being a key economic driver, only 6% of African smallholder farmers have access to credit, and less than 20% use improved seeds. Bank lending to agriculture remains low, making up less than 5% of total loan portfolios in many African nations.

AfDB Vice President for Agriculture, Human, and Social Development, Dr. Beth Dunford, urged for collective action: “For some of you, these numbers may sound familiar; for the rest of us, they should be frustrating to hear. We must act now to change this reality.”

PAFO President Ibrahima Coulibaly stressed the importance of investing in agriculture for economic growth: “If we want to save our continent from hunger, malnutrition, and poverty, we must create jobs in the agricultural sector.”

Kenyan Agriculture and Livestock Development Cabinet Secretary, Senator Mutahi Kagwe, emphasized the need for urgency: “If we prioritize innovative, practical measures, we will transform agriculture into a thriving business. Let’s commit to ensuring that no farmers are left behind due to lack of finance.”

A panel of global and African financial experts echoed these sentiments, calling for structural reforms to align financial systems with the needs of smallholder farmers. The AfDB remains committed to mobilizing resources and partnerships to enhance Africa’s agricultural sector, with a vision of turning the continent into a global breadbasket.