Agriculture is a leading source of employment & GDP in Africa but under-invested by private sector & government • 70% of Africans depend on agriculture for livelihoods and ag accounts for 25% of GDP • BUT < 4% of national budgets go to agriculture (v. 10% CAADP target for gov’t spending) • <5% of commercial lending to agriculture sector • Agricultural finance gap of $180B/year in Africa (75% of total market size) • 30%+ is for small & medium enterprises (SMEs) in the “ missing middle ”
Investing in SMEs along agricultural value chains will benefit smallholder farmers, create jobs & strengthen food security Distribution & Post-Harvest Processing Inputs Primary Consumption Production Africa’s food imports <30% of industrially Only 20% of African yields for 20-50% of crop expected to triple to milled maize in African farmers staples ~1/3 global lost from farm to $100B+ by 2025 Africa is fortified use improved seed avg market Financing inclusive SMEs along agricultural value chains leads to • Higher & more stable farmer incomes • Job creation • Opportunities for women & youth • Food security & nutrition • Economic growth & resilience
• Founded in 1999, nonprofit to address market failure • Loans ($100k-$2M) & financial training to agricultural SMEs in Africa, Latin America, and Indonesia • Scale - $100M lending/year to 200 businesses reaching 600,000 farmers - Historically, $1.4B lending, 500 businesses, 1.2M farmers • Impact: - Enterprise growth (25%/yr) & resilience - Market access, increased & more stable incomes (~20%)
Example: Sorghum Pioneer Agencies (SPA), Kenya • Founded in 2009 by Beatrice Nkatha, 1 st loan from in 2015 • SPA provides inputs, credit, agronomic extension, harvest services to farmers (avg. 0.5 ha/farmer) • Market access: East African Breweries, World Food Programme, regional buyers • Since first loan, revenues have doubled, SPA now buys $1M annually from 8k farmers, 55% women • Farmers report income gains of 60%
Council on Smallholder Agricultural Finance (CSAF) Pre-competitive alliance of financial institutions to share learning and develop industry standards & best practices for lending to agricultural SMEs globally CSAF Members & Affiliates 2017 Lending across sourcing to from 794 63 2.2M $716M BUSINESSES COUNTRIES FARMERS DISBURSED (35% WOMEN)
Smaller loans are less likely to be profitable than larger loans 29% 2% 13% 64% 84% 89% Non-profitable Profitable $100k $10k $1k Net profit / (loss) Break-even 0 ($1k) ($10k) ($100k) $10k $100k $250k $500k $1M $2M $10M Loan size Source: data from nine members of the Council on Smallholder Agricultural Finance covering 3,500+ loans totaling $2.3B
Catalyzing a competitive marketplace for agricultural SME finance in Africa
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