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The International Fund for Agricultural Development (IFAD) and AgDevCo Ventures Limited, a subsidiary of AgDevCo, have signed a $10 million loan agreement to address financing gaps facing early-stage agricultural businesses across Africa.
The announcement is part of AgDevCo Ventures, which has reached a first close of $49 million to invest between $1 and $3 million in farming and agri-processing companies throughout East Africa.
The agreement will combine IFAD funding with AgDevCo’s long-term, risk-tolerant capital and technical assistance to help promising agribusinesses scale their operations, improve productivity, access new markets and strengthen environmental and social practices.
“Africa’s food systems need a broader range of financing solutions that match the realities of agricultural businesses at different stages of growth. Our partnership with AgDevCo demonstrates how blended finance can unlock investment for promising enterprises, strengthen rural economies and create opportunities for women, young people and small-scale farmers across the continent,” said Donal Brown, IFAD Associate Vice-President for Department of Country Operations.
The International Fund for Agricultural Development (IFAD) is an international financial institution focused exclusively on transforming rural economies. It invests in rural communities to strengthen food security, prosperity and stability.
The initiative will initially focus on Ethiopia, Kenya, Rwanda, Tanzania and Uganda, supporting up to 15 early-stage agricultural enterprises across production, agricultural inputs, aggregation and processing.
The programme aims to encourage additional private investment by reducing the risks associated with financing early-stage agribusinesses, which often struggle to secure suitable funding despite their potential to create jobs and strengthen food supply chains.
According to AGRA, Africa faces an estimated annual agricultural financing gap of around $180 billion, including approximately $65 billion for small and medium-sized agribusinesses.
The IFAD-AgDevCo initiative is expected to benefit nearly 128,000 smallholder farmers and create about 2,900 full-time jobs over 12 years. It will prioritise locally owned businesses and women-led enterprises to promote more inclusive rural economic growth.
AgDevCo is a specialist investor in African agriculture with $400 million under management. The organisation provides long-term debt and equity to African agribusinesses to support job creation, food security and market access for smallholder farmers.
Since its establishment, AgDevCo has made more than 88 investments across African agriculture and agri-processing.
Last month, Small Foundation also announced its support for AgDevCo Ventures providing patient finance to early-stage agribusinesses across East Africa.
