How Agri-Impact Funds Plug Food Supply Gaps & Empower Developing Nations

There is a pertinent question that international stakeholders must ask in consideration of the global food crisis. What can we do to make a difference in developing countries that have the resources and commitment to fill the agri-food supply gap?

One country that rightly demands everyone’s attention is Nigeria. With its over 70.8 million hectares of arable land and year-round planting season in a temperate climate, Africa’s biggest economy has the potential to feed the world. Even though the country leads in the supply of ginger, oil palm, cocoa, millet, maize, guinea corn, cassava, wheat and other agro-commodities, the country’s agricultural sector is underperforming despite its massive potential. The major reason for this is limited access to finance for agribusinesses.

Insufficient capital, high perceived risks, and limited availability of suitable financial products are hindering growth and there is a need to inspire stakeholders to take action and improve access to finance for agribusinesses through a mobilized Agri-Impact Fund.

Why should you bother?

In Nigeria, the agricultural sector encompasses crop production, livestock rearing, aquaculture, and cash crop exports, offering substantial opportunities for growth and profitability. However, limited access to finance continues to hamper the sector's potential.

According to a 2022 report by Agri Logic commissioned by the Embassy of the Netherlands to Nigeria, Nigeria’s agricultural sector requires an estimated ₦83 trillion ($200 billion) in capital for various purposes, such as increasing productivity and expanding capacity.

Undoubtedly, adequate financing is the lifeblood that enables agribusinesses to acquire land, labour, and physical assets necessary for success, especially in meeting the food demand gap.

In the past, the Nigerian government implemented several financing schemes, including the Agricultural Credit Guarantee Scheme Fund (ACGSF), the Nigerian Agricultural, Cooperative and Rural Development Bank (now Bank of Agriculture), the Commercial Agricultural Credit Scheme (CACS), and most recently the Anchor Borrowers Programme (ABP). However, these initiatives have not achieved the desired impact, suggesting the need for a more effective and targeted approach.

Closing the Gap: The Agri-Impact Fund Solution

By pooling investor capital, a dedicated Agri-Impact fund in Nigeria can provide much-needed financial support for agribusinesses to overcome working capital constraints, adopt modern technologies, provide insurance products, and risk-sharing mechanisms and expand their operations.

As investors increasingly seek opportunities to generate positive impact alongside financial returns, stakeholders believe an Agri-Impact fund perfectly meets not just the needs of agribusinesses, but also investors. The fund will prioritize investments in organic farming, livestock farming, and processing using innovative, climate-friendly technologies.

Strengthening Value Chains and Enhancing Efficiency

In Nigeria, agribusinesses operate within complex value chains that involve various stakeholders, including farmers, processors, traders, and retailers. An Agri-Impact fund will catalyse the development of robust and inclusive value chains by financing Agri-MSMEs, facilitating market linkages, and fostering collaboration among stakeholders. By strengthening these value chains, we can enhance overall efficiency, competitiveness, and profitability for all stakeholders.

The Time is Now

With a deep retrospect on current global realities in the world about food supply, it is strongly recommended that mobilizing an Agri-Impact fund in Nigeria and other African countries is crucial to empower agribusinesses to thrive and contribute significantly to complementing food demand and boosting economic development.

The ripple effects of climate change have brought us to a realization that the time is ripe for stakeholders, including government bodies, investors, and development agencies to take action and improve access to finance for agribusinesses in Sub-Saharan Africa.

Welcome2Africa International is one of the organisations leading the charge for an Agri-impact fund, their work with stakeholders has already helped facilitate $5 billion worth of trade and investment commitments into the African continent and the proprietary W2A Agri-Impact Facility is targeting $100 million for Nigeria’s agricultural sector.