09/18/2023 | Press release | Distributed by Public on 09/18/2023 18:00
Today, USAID Administrator Samantha Power and Anne Beathe Tvinnereim, the Norwegian Minister of International Development, launched a new multi-donor fund designed to unlock hundreds of millions in financing for small-and medium-sized agricultural businesses (agri-SMEs) in Africa.
Working with Congress, the United States through USAID, will provide an initial commitment of $35 million, alongside a matching contribution from Norway. With the combined amount of $70 million, Norway and the United States aim to reach a total of $200 million through additional donor contributions, which will catalyze hundreds of millions more in commercial financing by reducing the risk of investing. This fund has the potential to support 500 agri-SMEs and 1.5 million smallholder farmers, ultimately benefiting nearly 7.5 million people. In addition, the fund will support nearly 60,000 private sector jobs.
The fund was announced today at an event with Administrator Power, Minister Tvinnerim, U.S. Secretary of Treasury Janet Yellen, Kenyan President William Ruto, African Development Bank President Akinwumi Adesina, U.S. International Development Finance Corporation CEO Scott Nathan, and Acumen CEO Jacqueline Novogratz.
The fund will focus specifically on Africa, where hunger remains prominent. The opportunity to reduce poverty and hunger through investment in agriculture is enormous. Agri-SMEs are Africa's largest employer and economic engine - and the key to transforming a largely subsistence agriculture sector into a commercially-sustainable industry that can feed the continent. It's these agri-SMEs - the input suppliers, traders, agro-processors, and urban retailers - that support 95 percent of smallholder farmers in sub-Saharan Africa with the critical tools and services they need to increase productivity and become profitable. Together with the farmers they support, agri-SMEs are the driving force behind food systems in Africa. Yet, three-out-of-four agri-SMEs can't access formal bank financing, and are too large for microfinance loans that are typically less than $1,000 - creating an estimated $100 billion gap in unmet demand for financing.
The new fund is one of the ways USAID, as the lead for the U.S. government's Feed the Future initiative, is working to address food insecurity through partnership with the private sector. With financing catalyzed through this fund, agri-SMEs can reduce hunger and poverty, combat climate change, close gender gaps, and spur economic growth - creating a prosperous and more resilient future for all.