What: Dakar 2 Feed Africa Summit Press Briefing / Launch of the African Development Bank's Agri-SME Catalytic Financing Mechanism
Who: African Development Bank and Government of Canada
When: Wednesday, 25 January 2023; 18:00 - 18:30 GMT
Where: African Development Bank Press Room, Dakar, Senegal Abdou Diouf International Conference Center (CICAD), Diamniadio
On the sidelines of the Dakar 2 Feed Africa Summit, the African Development Bank Group and the Government of Canada will host a media briefing to launch the Bank's Agri-SME Catalytic Financing Mechanism on 25 January at 15:50 GMT.
Among the key themes of the 25-27 January Dakar 2 Feed Africa Summit is a clarion call to bolster support for agriculture small and medium enterprises (SMEs), which are the backbone of African economies. Despite their potential, agri-SMEs are burdened by an unmet financing need of about $100 billion annually. Women-led and operated small and medium enterprises are disproportionately and negatively impacted by this funding gap, especially with the adversities of climate change.
To address this critical issue, the African Development Bank and the Government of Canada last year announced the Agri-SME Catalytic Financing Mechanism - a blended finance facility that will catalyze and de-risk investment into small and medium agri-businesses and strengthen food systems across the continent.
With an initial contribution of $85 million from the Canadian Government, the Mechanism will provide concessional finance and technical assistance to financial intermediaries. This includes agribusinesses, commercial banks, micro-finance institutions and impact funds, so they can make accessible loans to agri-SMEs working with women and those that build resilience to climate change.
The Agri-SME Catalytic Financing Mechanism is a pioneering initiative with several unique features:
It combines the three core pillars of a transformative catalytic financing response outlined at the 2021 UN Food Systems Summit: availing concessionary capital, providing technical assistance to make small and medium enterprises more bankable, and working towards clear impact metrics.
It sets out to achieve three impact areas: building inclusive and efficient markets for investments in underserved agri-SMEs in Africa; increasing women's empowerment along the agri-food value chains in Africa; and increasing climate resilience actions across agri-food chains in Africa.
It focuses on supporting financial intermediaries and large agribusinesses in their investments in agri-SMEs by co-financing with the Bank and other related funds to reduce the risk of lending to agri-SMEs and attract significant private sector capital to drive an inclusive and sustainable agricultural transformation in Africa.
The Agri-SME Catalytic Financing Mechanism's Technical Assistance Facility is dedicated to fostering the development of sustainable and bankable projects for agri-SMEs by providing grants to support the building of relevant capacities for both the agri-SMEs and the financial institutions that invest in them.
The Agri-SME Catalytic Financing Mechanism is structured as a multi-donor trust fund and welcomes the participation and contribution of other development partners with aligned priorities. In this regard, United States Agency for International Development (USAID) has recently directed $5 million to advance the technical assistance work of the Fund.
Call to Action:
Emerging from this Summit, the Bank looks forward to supporting countries to develop financing frameworks to implement the Summit's Presidential Food and Agriculture Delivery Compacts. The Bank will mobilize and deploy concessional resources, such as through the Agri-SME Catalytic Financing Mechanism, to de-risk agricultural lending and encourage the private sector to increase their commitments and capacities to support gender-leaning and climate-smart agri-SMEs.
The Agri-SME Catalytic Financing Mechanism is open to the participation and contribution of other donors. We invite other development partners with aligned priorities to join us as we continue to mobilize blended finance to de-risk agri-SMEs and leverage the much-needed investments for this sector. The Bank welcomes enquiries and conversations on how we can jointly continue to mobilize blended finance to de-risk agri-SMEs and leverage much-needed investments for this sector.
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