ACCRA (Elevation News) — Across Africa, smallholder farmers produce nearly 80 per cent of the continent’s food, yet they remain among its most under-financed producers. For decades, limited access to affordable, suitable credit has been the missing ingredient for scaling climate-smart, productive farming.
Now, a new generation of investment models is taking shape, blending concessional funding with private capital to share risk and unlock new financial flows for those who feed the continent. If scaled successfully, this approach could change the fortunes of millions of smallholders and transform Africa’s fight against hunger.
The challenge is vast. Smallholders face a US$170 billion annual financing gap, while receiving less than one per cent of global climate finance, despite being among the most exposed to the impacts of climate change. As droughts intensify, temperatures rise, and floods destroy crops, Africa remains the only region where hunger continues to increase. Without urgent action, the divide between potential and reality will only widen.
The barriers to agricultural finance lie on both sides of the equation. For lenders and donors, smallholders are often seen as high-risk, vulnerable to weather shocks, lacking collateral, and operating in weak financial ecosystems. Many banks are not equipped to offer the small, flexible, and seasonal loans farmers need.
On the other hand, many farmers remain outside the formal banking system. Without credit histories, financial literacy, or even bank accounts, they struggle to engage confidently with lenders. The result is a broken chain, one that keeps farmers poor and limits food production, even as demand grows.
An under-financed agribusiness ecosystem compounds the problem. Local suppliers of seeds, fertilisers, and machinery also struggle to access capital, leaving farmers without the inputs needed to adapt to climate shocks or boost productivity.
While donor programmes and government initiatives have helped bridge some of these gaps, most efforts remain fragmented and small-scale. With commercial lending to agriculture covering only about five per cent of total demand, Africa needs a new, coordinated approach to mobilise finance at scale.
One such solution is the Business Investment Financing Track (BIFT), a next-generation private-sector finance platform from the Global Agriculture and Food Security Program (GAFSP). Building on lessons from GAFSP’s earlier Private Sector Window, the BIFT offers risk-absorbing concessional finance and below-market loans blended with development bank capital to unlock private-sector investment.
Its first allocation to the African Development Bank will establish the Agro-Inputs Risk Sharing Facility (ARSF), a new mechanism designed to channel finance directly to agricultural companies and cooperatives that serve smallholder farmers.
With an initial investment of US $10 million and an additional US $4 million in technical assistance from BIFT, the ARSF is expected to leverage up to US $200 million in commercial loans for small- and medium-sized agribusinesses across Ethiopia, Uganda, Tanzania, Malawi, and Zambia.
The initiative will reach more than 500 agro-dealers and cooperatives, improving farmers’ access to certified seeds, organic fertilisers, soil enhancers, and mechanisation. In total, the facility aims to benefit over 1.5 million smallholder farmers, strengthening value chains and building more resilient rural economies.
Risk-sharing facilities have already proven effective in other parts of Africa. Programmes by the Alliance for a Green Revolution in Africa (AGRA) in Ghana and Nigeria, for example, demonstrated how reducing lender risk can unlock millions in agricultural investment. BIFT builds on these lessons, scaling them through GAFSP’s global network of development finance institutions.
This approach aligns closely with continental frameworks such as the Comprehensive Africa Agriculture Development Programme (CAADP) and the 2025 Kampala Declaration on Food Systems Transformation, which call for bold, Africa-led efforts to boost investment, strengthen nutrition, and build resilience to climate shocks.
BIFT could also complement the World Bank Group’s AgriConnect initiative, which seeks to mobilise governments, donors, and private investors to expand access to finance and create jobs in agribusiness.
At a time when global aid budgets are shrinking, the BIFT model shows how every development dollar can do more by leveraging limited public funds to attract much larger volumes of private capital. By blending concessional and commercial finance, the initiative can build sustainable agricultural markets, drive local innovation, and reduce dependence on short-term aid.
The message is clear: when Africa’s farmers and rural enterprises are empowered to lead, they can feed their communities, drive economic growth, and create opportunities for future generations.
Banking on smallholders is not just a moral imperative; it is a strategic investment in Africa’s food security, climate resilience, and shared prosperity. By planting the seeds of finance today, the continent can harvest a future where no African goes hungry.
