GAFSP, AfDB Launch $200M Facility to Boost Food Security and Agribusiness Finance in Africa

The Global Agriculture and Food Security Program (GAFSP) has announced a landmark partnership with the African Development Bank Group (AfDB), marking the first allocation from GAFSP's new Business Investment Financing Track — a private sector financing window launched in 2024 to catalyze investment across Africa's agricultural value chains. The allocation provides $14 million in de-risking and grant capital, designed to unlock up to $200 million in private-sector financing aimed at improving food security and resilience in low-income African countries.

A Milestone in Blended Finance for Food Security

This new investment represents a transformative model for financing agriculture, blending donor funds with multilateral and private capital to address one of the sector's biggest challenges: access to affordable finance for smallholder farmers and agribusinesses.

The $14 million allocation includes $10 million in de-risking capital for the establishment of the Agro-Inputs Risk Sharing Facility (AIRSF) — a $200 million fund hosted by the African Development Bank — and $4 million in grants for technical assistance and capacity-building support.

The initiative will focus on five low-income countries — Ethiopia, Uganda, Tanzania, Malawi, and Zambia — and is expected to benefit over 1.5 million smallholder farmers and 500 agro-dealers and cooperatives.

"This first allocation demonstrates the appetite for funders to work together in this new model to solve an age-old challenge of finance for smallholder farmers: risk," said Natasha Hayward, Program Manager for GAFSP. "By blending GAFSP donor funds with multilateral and commercial finance, every Program dollar will leverage many more in private investment, multiplying the positive impact on food security and resilience to rising temperatures and unpredictable weather patterns."

Addressing Africa's Agrifinance Bottleneck

Smallholder farmers and early-stage agrifood enterprises form the backbone of Africa's food systems, producing up to 80% of the continent's food supply. Yet, they remain largely underserved by financial institutions due to perceived high risks, lack of collateral, and limited access to credit or insurance.

The Agro-Inputs Risk Sharing Facility seeks to bridge this financing gap by incentivizing local banks and lenders to provide credit to agro-input dealers and small agribusinesses. It will be implemented by the African Trade & Investment Development Insurance (ATIDI), a leading pan-African institution that provides political risk and credit insurance to investors.

Under this model, the facility will provide partial credit guarantees to commercial banks, sharing potential losses and thereby reducing lending risk. This mechanism will encourage financial institutions to extend loans to high-impact but underserved sectors, including input suppliers, cooperatives, and farmer groups.

"By targeting agro-input dealers and smallholder farmers, this facility intends to strengthen the entire value chain — from input supply to market access — building food systems able to withstand market shocks and environmental pressures," said Philip Boahen, African Development Bank Coordinator for GAFSP. "With the establishment of the Agro-Inputs Risk Sharing Facility, we are planting the seeds of a more food-secure Africa."

Catalyzing Private Sector Investment Through Risk-Sharing

The Business Investment Financing Track (BIFT), introduced by GAFSP in 2024, represents the program's second-generation private sector financing window. It mobilizes resources through blended concessional finance, combining grants and risk mitigation instruments with loans and equity from development banks and private investors.

By offering de-risking capital, the track aims to catalyze private investment in agribusinesses operating in fragile and low-income economies. The current allocation to the African Development Bank is expected to unlock up to $200 million in new private lending, supporting the growth of small and medium-sized enterprises (SMEs) in the agricultural inputs sector.

Strengthening Food Systems and Climate Resilience

The financing will enable farmers and agribusinesses to access a range of critical inputs — including certified seeds, organic fertilizers, soil enhancers, and mechanization tools — that improve productivity and climate resilience. These inputs will help producers better withstand heat stress, water scarcity, and other effects of climate change, while supporting regional food security and economic recovery.

Through this initiative, GAFSP and AfDB are not only expanding access to agricultural finance but also advancing the objectives of the Comprehensive Africa Agriculture Development Programme (CAADP) and the Kampala Declaration on Accelerating Africa's Food Systems Transformation, which emphasize investment in innovation, resilience, and inclusivity.

Technical Assistance and Institutional Strengthening

The $4 million technical assistance component will provide training and advisory support to banks, agro-dealers, and smallholder groups to ensure effective utilization of funds and sustainable lending practices. The grants will also finance activities to:

• Build the capacity of local financial institutions in agricultural lending and risk assessment;

• Provide financial literacy training to smallholder farmers;

• Support the digitalization of loan monitoring and agri-credit systems; and

• Promote gender inclusion, ensuring that women farmers and entrepreneurs benefit equitably from new financing opportunities.

This integrated approach — combining finance, capacity-building, and institutional strengthening — is designed to create self-sustaining financial ecosystems that can continue serving the agriculture sector beyond the life of the project.

A Collaborative Effort for a Food-Secure Africa

The GAFSP-AfDB partnership exemplifies the power of multilateral collaboration to tackle structural barriers in agricultural finance. It leverages the African Development Bank's deep regional presence, technical expertise, and track record in agriculture and rural development, alongside GAFSP's experience in mobilizing global donor resources for food security.

The Bank's existing agricultural portfolio already supports large-scale investments in irrigation, digital agriculture, agro-processing, and market access — and this new facility complements those efforts by focusing specifically on financial inclusion and private sector engagement.

The initiative also aligns with AfDB's Feed Africa Strategy, which seeks to transform Africa into a net food exporter by investing in technology, infrastructure, and market linkages that empower farmers and agri-SMEs.

Looking Ahead: Scaling Up Impact

The Agro-Inputs Risk Sharing Facility is expected to serve as a model for replication across other regions, with plans to expand coverage to additional African countries once early implementation results are assessed. Its blended-finance structure and partnership-based approach could attract further donor contributions and commercial participation, amplifying its reach and sustainability.

In the long term, the initiative aims to build resilient and self-sustaining food systems, reduce dependence on imports, and promote inclusive rural development.

"By de-risking private investment in agriculture, we are shifting the paradigm from aid to empowerment," said Hayward. "The real transformation happens when local entrepreneurs, farmers, and financial institutions become the drivers of Africa's food security future."

With this pioneering initiative, GAFSP and the African Development Bank reaffirm their shared commitment to accelerating Africa's agricultural transformation, empowering smallholder farmers, and strengthening the continent's capacity to feed itself sustainably.