The announcement was made during the launch event of the Agri-food SME Catalytic Financing Mechanism (ACFM) at Dakar 2 Summit, which concludes on Friday.

Dakar 2 is being held under the chairmanship of the President of the Republic of Senegal and the Chairperson of the African Union Macky Sall, the government of the Republic of Senegal and the AfDB Group, under the theme “Feed Africa: Food Sovereignty and Resilience.”

The ACFM initiative is projected to provide concessional finance and technical assistance to financial intermediaries including agribusinesses, micro-finance institutions and impact funds.

This effort aims to enable the intermediaries to make loans to agri-SMEs working with women, as well as to those that build resilience to climate change.

In a press briefing, the two sides said that ACFM is meant to catalyse and de-risk investment for agricultural SMEs, make SMEs more bankable and make banks more agriculture-friendly.

It also aims to strengthen agricultural value chains and improve food security across the continent.

“At the Africa Food Summit, we have seen a strong commitment to addressing the financing gap for SMEs and creating an environment that encourages private sector investments in climate-smart, gender-oriented agricultural solutions,” said Beth Dunford, the AfDB’s vice president for agriculture, health and social development.

Dunford explained that ACFM is anticipated to help unlock opportunities for these SMEs in Africa, particularly for women and young people.

The government of Canada contributed $85 million to this mechanism, which is housed at the AfDB.

Small and medium agri-businesses produce, process or transport around 65 percent of Africa’s food, according to the AfDB.

Yet, these businesses face a financing gap of more than $180 million annually.

The ACFM will contribute to the AfDB’s Affirmative Finance Action for Women in Africa (AFAWA) target of closing the $42 billion access-to-finance gap for women-led SMEs to accelerate their growth. 

It also represents the bank’s first blended financing facility to specifically target SMEs operating across the agricultural value chain.

“The best way to build up food security in Africa is to work with small and medium-sized agriculture and food businesses. Through a shared commitment between Canada and the African Development Bank, the Agri-food SME Catalytic Financing Mechansim will advance resilient growth and climate adaptation.  It will also help African SMEs to pursue climate smart models, and support women by shifting attitudes that perpetuate gender gaps in financial inclusion,” Anita Vandenbeld, Parliamentary Secretary to Canada’s Minister of International Development sated during the press briefing.

The two sides announced that the ACFM, as a multi-donor trust fund, is open to and welcomes the participation and contribution of other development partners.