An impact fund with an innovative approach for attracting much-needed capital to the rural areas of developing countries will be launched at the annual meeting of Member States of the International Fund for Agricultural Development (IFAD)
IFAD, along with the European Union, the African, Caribbean and Pacific Group of States (ACP), the government of Luxembourg and the Alliance for a Green Revolution in Africa (AGRA), will launch the Agri-Business Capital (ABC) Fund to help rural entrepreneurs in the agricultural sector access the finance they need to grow their businesses and create jobs for poor rural people, in particular, young people.
The aim of the ABC Fund is to generate private sector investment in rural small and medium-sized enterprises (SMEs), farmers' organisations and smallholder farmers' groups which often find it hard to access finance from traditional institutions who view them as too risky.
“Small and medium-sized enterprises can be an engine for development and offer rural communities a pathway out of poverty and hunger, but only if they can access the resources they need,” said IFAD President Gilbert F Houngbo. “The launch of the ABC Fund is an important step to realise the huge potential of small farmers, their organizations, and most importantly young people.”
It is estimated that more than half of the 1.2bn young people in the world live in rural areas. Young people are two to three times more likely than adults to be unemployed. In Africa alone, 10-12mn young people enter the job market every year.
Neven Mimica, European commissioner for International Cooperation and Development, emphasised the potential impact of the ABC Fund investments on smallholder households.
“Smallholders and rural businesses are not getting the investment they need from the private sector! ABC Fund will help us address this gap, improve their access to capital and consequently the lives of 700.000 rural households,” he said.
In line with its focus on promoting private-sector development, Patrick I. Gomes, ACP secretary-general, highlighted the transformative effect the ABC fund could have in poor rural communities.
Paulette Lenert, Luxembourg’s minister for development cooperation and humanitarian affairs, said, “In line with the Addis Ababa Action Agenda on Financing for Development, Luxembourg has been very active in the field of sustainable impact investment and innovative financing mechanisms.”