Agricultural finance is essential for sustainable development, but bridging the investment gap requires scalable solutions. This funding gap is mainly attributed to the higher risks related with of the agrifood sector as risky due to factors such as stronger price volatility, weather uncertainty or borrowers’ lack of collateral, combined with prohibitive transaction costs associated with small loans and relatively thin margins for the majority of the actors across the agricultural value chains. Against this backdrop, blended finance solutions have emerged to mitigate some risks and enhance investors’ return, with the objective to attract more capital to fill the funding gap and finance the transformation of agrifood systems.
In this context, the EU invested €30 million first-loss capital in the Africa Agriculture and Trade Investment Fund (AATIF), which is a fund based in Luxemburg and initiated by KfW on behalf of the German Federal Ministry of Economic Cooperation and Development (BMZ). AATIF provides loans to local financial institutions active in the agrifood sector as well as to agribusiness corporates and agri SMEs. The fund aims to improve food security, improve employment and boosting income in Africa’s agricultural sector. AATIF seeks to drive poverty reduction and economic sustainability by financing economically sound projects and attracting private and public capital.
The InfoPoint session aims to share insights on the use of EU blending instruments in the agricultural sector to de-risk investments, mobilize private capital, and promote sustainable agricultural growth. It will also explore how the Global Gateway initiative and the EFSD+ financing tool can further unlock investments across diverse agricultural value chains.
Agriculture remains a cornerstone of African economies, yet the sector faces persistent financing challenges. Smallholder fFarmers, agribusinesses, and financial institutions struggle to access suitable financial solutions capital at scale that are fit for purpose for the businesses, limiting productivity, value chain development, and food security. Blended financeSector specific investment funds — strategically combining public and private investment — offers a powerful tool to unlock sustainable financing for agriculture along crowding in private sector capital if structured as blended finance instruments.
This InfoPoint session, which is co-organized with AATIF and the FAO Investment Center , will showcase AATIF’s impact through firsthand experiences from an agribusinesses and financial institution that have leveraged its support. It will detail how the interplay between investment capital and technical assistance can act catalytically to support the de-risking of investment opportunities, equip companies with tools and capacity needed to manage their growth as sustainable businesses. It will also provide key insights and lessons learned in designing and implementing EU blended finance instruments for agrifood systems.
AATIF will discuss risk-return dynamics and how public-backed junior funding and guarantees catalyze commercial capital for agriculture, presenting two case studies of investee companies. The FAO Investment Centre will share key lessons learned from designing and implementing blended finance vehicles, highlighting as well key trends, challenges, and opportunities for scaling sustainable agricultural investment.
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Language: English
Q&A session languages: English
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