Around 5% of financial credit reaches African agriculture, a sector central to GDP, employment and food security. Yet momentum is building. This year alone Ecobank (€300m with Proparco), Coris (€80m via EBID) and KCB (two facilities worth ~$197m) each secured major DFI backing for agri-finance, while 16 financial institutions in May formed an Africa AgriTrade Coalition to scale up agri trade finance. Without DFI risk-sharing, agri finance can be uneconomic: some studies suggest lending to the segment is eight times less profitable than banks’ average business lines with NPLs 40% higher. Farmer surveys indicate products are meanwhile often unaffordable and unsuited to crop cycles and cash flows. How can competing banks form consortia, together with agtechs, insurers, Village Savings and Loan Associations (VSLAs), cooperatives, DFIs and governments to help the smallholder-driven agri sector become commercially viable?
Key points:
- How can banks build profitable agri finance models through agtech, DFI and community partnerships, then scale to a point where risk-sharing is no longer needed?
- What are the winning components of profitable and affordable crop- and livestock-specific products aligned to harvest cashflows?
- How should banks treat agtech-led smallholder data on farm size, yield, fertiliser use, and crop photos to develop effective data-driven lending models?