The $200 million will be mobilised through a new fund launched on 18 September 2023 by Samantha Power, Administrator of the US Agency for International Development (USAID), and Anne Beathe Tvinnereim, Norway’s Minister for International Development. This funding mechanism will be progressively capitalised to stimulate investment in agricultural growth in Africa. “This multi-donor fund will unlock hundreds of millions of dollars in financing for small and medium-sized agricultural enterprises (agri-SMEs) across the continent. Three out of four agri-SMEs do not have access to formal bank financing and are too large for microfinance loans, which are generally less than $1,000, creating an estimated $100 billion gap in unmet demand for financing,” says USAID.
Of the $200 million fund, the United States of America, through USAID, has announced an initial commitment of $35 million. Norway will contribute $70 million.
Reducing food insecurity
The fund will also be supported by “additional contributions from donors”, according to USAID. Overall, the agricultural investment fund should benefit 1.5 million small-scale farmers grouped around 500 agri-SMEs, as well as almost 7.5 million people. For the record, it is these agri-SMEs that provide 95% of small farmers in sub-Saharan Africa with the essential tools and services they need to increase their productivity and become profitable.
The financial commitment from Norway and the United States of America should also enable farmers to increase their agricultural yields. This will help reduce the food insecurity that is gaining ground in Africa. This situation is partly due to climate change, particularly drought.
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In Madagascar, for example, rainfall is scarce in the southern part of the island, plunging 500,000 people into a nutritional crisis in Androy and Anosy, according to a report published on 10 February 2020 by the Food and Agriculture Organization of the United Nations (FAO) and the Madagascan Ministry of Agriculture. Furthermore, the World Food Programme (WFP) indicated in 2022 that at least 20 million people are at risk of famine due to the worsening drought in Kenya, Somalia and Ethiopia.
In addition to drought, other causes of food insecurity include poor agricultural and food practices, conflict, poverty linked to economic shocks and inequality. The new investment fund launched by Norway and the United States of America will support the creation of nearly 60,000 jobs in the private agricultural sector in Africa.
Inès Magoum