Linking technical assistance to blended finance for agriculture

Published on

October 23, 2017
By

On behalf of IDH and Alliance for a Green Revolution in Africa (AGRA), Enclude has recently completed a report analyzing trends and lessons learned about how technical assistance can contribute to scaling investments in the agricultural sector. 

Agricultural transformation will be a key impact driver for development in Africa, and an essential part of achieving the Sustainable Development Goals (SDGs). In a context where public resources are increasingly under pressure, channelling more private investment into agriculture will be critical to achieve this goal. Blended finance, a facility structuring approach in which public development funds are leveraged to attract (additional) nonconcessional capital, will be required to transform the agricultural sector in Africa. Though blended finance has been increasing over the past years, only 3% of the value of blended finance initiatives is going to the agricultural sector. Addressing both the capital and capacity needs of smallholder farmers and SMEs - the backbone of the agricultural sector in Africa - is crucial to achieve agricultural transformation. In the light of the risks pertaining to agriculture, blended finance has the potential to play a crucial role.

TA is a capacity solution that can attract and support private investment and financing for agriculture by managing risk and reducing transaction costs. At the same time it ensures that other constraints hindering the growth of the agricultural sector that cannot be financed from private sources are addressed to create the right enabling environment. Targeted and coordinated TA, together with well-designed blended finance facilities, needs consolidated support to catalyse sustainable, inclusive growth in smallholder supply chains. 

About the Author(s)

Agra
Learning Lab Partner

Alliance for a Green Revolution in Africa (AGRA) facilitates FISFAP, an initiative that aims to reduce food insecurity and increase the incomes of about 700,000 smallholder farmers in Kenya, Tanzania and Ghana by February 2020 by working with financial institutions and agriculture value chain actors.

Press release: AGRA and The MasterCard Foundation partnership 

Learning Lab Contributor

IDH drives sustainability from niche to norm; by convening companies, civil society organizations, governments and others in public-private partnerships. Together with our partners, we design, co-fund and prototype new economically viable approaches to realize green & inclusive growth at scale. Our approaches are designed to drive sustainability in commodity sectors and sourcing areas, while delivering impact on the Sustainable Development Goals. IDH is supported by multiple European governments, and works together with over 500 companies, 35 civil society organizations and 40 governments, in 11 sectors and 11 landscapes, worldwide.

 

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