AGRA, a farmer-centred, African-led, and partnerships-driven institution, has joined hands with Aceli Africa to enhance capital flows to SMEs in the agriculture sector and support a financially inclusive agricultural transformation across Africa.
Aceli Africa is a market incentive facility that offers financial incentives to mitigate risk and compensate lenders for the transaction costs of serving high-impact agricultural SMEs.
The organization plans to support its 25 lending partners in mobilizing US$700 million in financing for agri-SMEs by 2025 with a focus on SMEs that are gender inclusive, improve food security, and practice climate-smart agriculture.
To formalize the partnership, the two parties have signed a letter of intent committing to jointly work together to test and scale up innovations that substantially drive down the cost and risk of financing SMEs in the agriculture space.
“AGRA firmly believes that it is vital to unlock the potential of SMEs for agricultural transformation across Africa.
“This partnership with Aceli is a step in this direction, as the increased capital flows and technical assistance will enable the SMEs to unleash their potential and offer better services to smallholder farmers,” Vanessa Adams, Vice president Strategic Partnerships with AGRA.
The partnership will also work on implementing digital solutions to make financial record keeping and reporting more efficient and reliable which will improve the bankability of the SMEs.
In statement, Vanessa Adams, Vice president Strategic Partnerships with AGRA says, “AGRA firmly believes that it is vital to unlock the potential of SMEs for agricultural transformation across Africa".
The initiative will ride on AGRA’s leading role as a convener and advocate, and Aceli’s data-driven approach to mobilizing private sector lending, addressing the longstanding barriers that limit the flow of capital to agricultural SMEs.
“Aceli Africa shares AGRA’s vision for an inclusive and sustainable agricultural transformation that creates economic opportunities, builds a resilient regional food system, and stewards the natural environment. Achieving this vision is only possible if we can unlock the growth and impact potential of agricultural SMEs,” said Aceli Africa CEO Brian Milder.
With the announcement, AGRA and Aceli Africa have made the first call for an Innovation Challenge for sustainable, scalable, and innovative business development solutions to improve the quality of financial statements among agricultural SMEs.
“As AGRA we want agricultural SMEs to grow and for that growth access to finance is key. Our partnership with Aceli Africa seeks to address the root cause of the lesser return on Agri SME finance by investing in innovations that reduce the cost and risk of financing smaller SMEs,“ said Hedwig Siewertsen, Head Innovative Finance.
Through the collaboration, Aceli and its network of private sector lending partners will also contribute to AGRA’s work to connect SMEs to capital providers through the Agribusiness Deal Room to support SMEs.
Sub-Saharan Africa has a quarter of the world’s arable land but only produces 10 per cent of its agricultural output. One of the main factors attributed to low productivity is lack of financing.
Recently, a coalition of multilateral development banks and development partners i.e., AfDB, IFAD, Islamic Development Bank Group, Bill & Melinda Gates Foundation and, Arab Bank for Economic Development in Africa, have pledged to offer US$17 billion support to increase food security.