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The US Agency for International Development (USAID), the Swiss Agency for Development and Cooperation, and the IKEA Foundation have announced a joint US$30mn commitment to Aceli Africa, an innovative programme that incentivises banks to lend to agribusinesses

wheat 3506758 640 1Through Aceli Africa, banks will provide loans to small and medium-sized agribusinesses. (Image source: Bruno /Germany/Pixabay)

With this commitment, Aceli Africa will unlock an additional US$700mn by 2025 for 750 agribusinesses in Tanzania, Kenya, Rwanda and Uganda.

Through Aceli Africa, banks will provide loans to small and medium-sized agribusinesses that reach underserved populations, to reach one million smallholder farmers. The programme will also inject new data, boosting government and investor confidence in African agriculture, to jumpstart lending to this undercapitalised sector for decades to follow.

Investments like the one announced will advance the mission of the US Government’s Feed the Future initiative to end global poverty and hunger by creating jobs for millions of people across Africa, and support the goal of Prosper Africa to promote a significant increase in two-way trade between the US and the African continent.

Small and medium-sized businesses account for 60% of agricultural production and trade in emerging economies in sub-Saharan Africa. However, they face an investment shortfall of up to US$65bn every year because financial institutions are reluctant to lend money to the sector. This hinders the growth of African economies and prevents people from breaking out of the vicious cycle of poverty and hunger. Closing this funding gap is crucial to inclusive growth in Africa and around the world.

Through this joint investment in Aceli Africa and other programmes under Feed the Future and Prosper Africa, USAID works with the private sector to expand and sustain long-term financing for commercial enterprises and help countries move beyond the need for foreign assistance.