Can African farmers finally win big?

• AfDB calls for increased financing for smallholder farmers in Africa.
• Agriculture Ministers back AfDB call for smallholder farmers’ financing.
• Less than 20% of African smallholder farmers use improved seeds.

The African Development Bank (AfDB) is betting big on Africa’s smallholder farmers—but will this historic financial push be enough to break the cycle of rural poverty? The bank has unveiled plans for a $500 million risk-sharing facility – designated to unlock upto $10 billion in financing for small-scale farmers and agribusinesses across the continent.

Speaking at the High-Level Conference on Scaling Finance for Smallholder Farmers in Nairobi, AfDB President Dr. Akinwumi Adesina revealed that the bank is in final discussions with its Board of Directors to launch the initiative.

If approved, it could mark a turning point for millions of farmers trapped in subsistence agriculture—but skepticism remains. Will this funding reach those who need it most, or will bureaucracy and mismanagement dilute its impact?

The stakes couldn’t be higher: with Africa’s food security and economic transformation on the line, this $10 billion gamble could either ignite an agricultural revolution—or become another missed opportunity.

AfDB chief decries poor financing to smallholder farmers

“The facility will deploy multiple financial instruments, including trade credit guarantees, first-loss coverage, blended finance mechanisms, and origination incentives to reduce the high transaction costs of serving enterprises, complemented by technical assistance,” he said.

Dr. Adesina noted that at the moment, a very limited number of smallholder farmers have access to credit, and less than 20 per cent use improved seeds. “Financial institutions often perceive smallholder farmers as high-risk borrowers due to climate variability and lack of collateral,” he explained.

He decried the fact that commercial bank lending to agriculture remains low, accounting for less than 5 percent of total loan portfolios in many African countries, despite the sector being a primary driver of economies.

“For some of you, these numbers may sound familiar; for the rest of us, they should be frustrating to hear. We must act now to change this reality,” urged Dr. Beth Dunford, Vice President for Agriculture, Human, and Social Development at the AfDB.

Seconding the AfDB view, PAFO President Ibrahima Coulibaly urged stakeholders to take bold action: “If we want to save our continent from hunger, malnutrition, and poverty, we must create jobs in the agricultural sector. There is no other sector capable of doing this.”

In his comments, Kenyan Cabinet Secretary for Agriculture and Livestock Development, Mutahi Kagwe, called for urgent implementation: “If we prioritize innovative, practical measures, we will transform agriculture into a thriving business. Let’s commit to ensuring that no farmers are left behind due to lack of finance.”

Agriculture ministers urge funding for smallholder farmers

Thanks to the AfDB initiative, a panel of agricultural ministers along with leading global and African financial experts also issued a resounding call to align financial structures with the changing needs of smallholder farmers.

They underscored the crucial role of government in creating an enabling environment for financial institutions to expand agricultural lending.

“The African agriculture ministers reaffirmed the importance of scaling up financing for smallholder farmers to enhance agricultural productivity through targeted subsidies, irrigation projects, and other financing mechanisms,” reads the AfDB report in part.

The ministers held a panel discussion on “Showcasing Current Results of Public Investment, De-risking Private Investment, and Creating Enabling Environments for Scaling Finance” at the Scaling Finance for Smallholder Farmers in Africa Conference, held earlier this month in Nairobi, Kenya.

According to the report, Kenya’s Agriculture and Livestock Development minister noted that small interventions, such as subsidies on seeds and fertilizers and comprehensive soil analysis, are crucial for increasing smallholder farmers’ productivity.

While citing Kenya’s fertilizer subsidy programme, Kagwe said; “The fertilizer subsidy intervention has been crucial and is based on a policy shift: ‘Don’t subsidize consumption — subsidize production’. If you subsidize production, you increase output significantly, and the challenges are much less than when you subsidize consumption.”

Kagwe further underscored the need to involve farmers in subsidy policy decisions to ensure maximum impact.

Similarly, Mandla Tshawuka, Eswatini’s Minister of Agriculture, highlighted the role of subsidies in boosting production and food security. He cited his government’s initiative, where farmers contribute 50 per cent of the input costs, while the government covers the rest.

“We target just one acre of land to produce maize and beans, and production has greatly improved,” he pointed out.

Furtherstill, Tshawuka acknowledged the AfDB’s support in constructing a dam on 10,000 hectares of land to provide smallholder farmers with irrigation, thereby increasing their resilience to climate change while improving agricultural output.

On his part, Abubakar Kyari, Nigeria’s Minister for Agriculture and Food Security, underscored the critical role of infrastructure in ensuring a seamless transition from production to consumption.

“Investing in water resources—such as building and maintaining dams—is essential for boosting agricultural productivity,” he stressed.

He also cited Nigeria’s AfDB-funded Special Agro-Industrial Processing Zones (SAPZ) program, which was launched to drive agricultural transformation through infrastructure development, the report said.

According to the press communique, this program focuses on enhancing value chains for key crops, including rice, cassava, ginger, and tomatoes, as well as livestock.

Additionally, each SAPZ will deliver core infrastructure such as transport, power, water and processing and facilitate improved access to finance, markets, and technology transfer, details the report.

Sharing his point of view, Dr. Musa Kpaka, Sierra Leone’s Minister for Agriculture, pointed to matching grant facilities as an effective way to provide credit to smallholder farmers.

“Under this arrangement, eligible farmers receive a one-time investment grant in the form of agricultural equipment, processing machinery, and other services,” he detailed, adding, “However, farmers must contribute at least 30 percent of the required investment, either financially or in-kind, to qualify.”

As for Guismala Hamza, Minister for Agriculture and Rural Development of the Central African Republic, he underscored the importance of formalizing smallholder farmers into cooperatives to enhance access to financing.  

He said it is through such entities thy the smallholder farmers can be formalized and thus become lendable.

Read also: Nigeria to Ban Corn Exports Amid a Biting Food Security Crisis