IFC, german ministry for development, partner to strengthen supply chains for smallholder farmers

IFC and BMZ, the German Ministry for Economic Cooperation and Development, launched a new program today that will leverage greater private sector investments to support the food production value chain across Africa and increase access to finance for rural farmers and businesses.

The Euro 21 million Food Systems Development Program, focuses on giving food producers, ranging from smallholder farmers to small and medium-sized agri-businesses in Africa, greater opportunities to improve their incomes. IFC's technical assistance will strengthen agricultural value chains from farm to market.

Photo: ©IFAD/Clarissa Baldin

Supply chain disruptions caused by the COVID-19 crisis have highlighted weaknesses in the food supply system and created an opportunity to explore technology-based solutions that will make the sector more efficient, adaptive, and resilient. Meanwhile, global demand for food will grow by 50 percent by 2030 due to population growth and dietary shifts. This could exacerbate food insecurity for some countries if no action is taken. African countries, in particular, are at high risk of facing severe food insecurity by 2030.

“The battle against hunger can only be won by joining forces to leverage expertise and learn mutually from experience. BMZ and IFC coming together to build stronger supply chains for African famers is an example of that theory in action,” said Sérgio Pimenta, Vice President for the Middle East and Africa at IFC. “This program is designed to leverage IFC's relationships with commercial agribusinesses and financial institutions to bring a comprehensive solution for entire value-chains, from farm to the fork. The impact could not come at a better time.”

Together with BMZ, IFC will support the expansion of technical and business management capacity for smallholder farmers, farmer organizations, and rural SMEs in communities. The program will also support the digitization of transactions and payments, helping to expand access to a broad range of financial services.

“Through this financing and the cooperation with IFC, we achieve two things at once: Since 2014, our special initiative One World without Hunger could already improve the incomes of 1.6 million smallholder farmers through the Green Innovation Centres. Until 2024, we want to reach 3.2 million people, which this program supports,” said Michael Krake, Director General, Global Health, Private Sector, Trade, Rural Development. “We are also supporting IFC to increase its agrifinance portfolio. Both of these areas are important contributions to achieve SDG2, zero hunger and a green recovery in agriculture after the COVID-19 pandemic.”

The agriculture sector is up against major challenges: Resource scarcity and climate change, complex value chains, and lack of suitable infrastructure, trade barriers and limited access to finance and inputs. There are tremendous opportunities for the private sector to address these challenges for more sustainable and inclusive food production.

IFC will bring a combination of private and blended finance solutions as well as advisory services to support the program. The program complements IFC's existing partnership with BMZ, Norway and the Netherlands to support the G-20 Compact with Africa.​

This article was originally published by IFC.