AGRA, Standard Bank Partnership Opens Up Millions in Affordable Loans to African Farmers and Entrepreneurs
In a bold bid to catalyse growth amidst the global credit crunch, AGRA and Standard Bank announced in Accra this week a programme that will avail $100 million in affordable loans to smallholder farmers and small and medium-sized rural, agricultural businesses in Ghana, Mozambique, Tanzania and Uganda. AGRA and its country partners will provide a US$10 million loan guarantee fund, and in turn, Standard Bank will make US$100 million available for lending over the next three years.
Lack of access to finance is a major obstacle that prevents farmers from investing in good seeds, fertilisers and small-scale irrigation needed to raise farm productivity and generate profit. As a result, their yields remain one-quarter below the global average, leading to dependency on food imports and chronic food insecurity. Similarly, little or no commercial financing has been available to entrepreneurs seeking to build businesses that could boost Africa’s food production and increased profits.
African banks have typically avoided lending to smallholder farmers and to the agriculture sector because of high perceived risks by banks, farmers’ lack of collateral; the high costs of servicing rural areas; and production risks that come from unreliable rainfall, lack of irrigation, crop diseases, and price volatility.
AGRA’s Chairman Kofi Annan praised today’s announcement but stressed that more partnerships and donor support are needed.
“As the world’s leaders respond to the global financial crisis with bail-out measures, we should recognise the power of local financial innovations to create change on the ground. If we are to achieve a uniquely African Green Revolution that takes the continent into a new era of sustainable development, tens of billions of dollars a year will be needed. Creative and innovative public-private partnerships like the one announced today have the potential to contribute billions of dollars toward our goal.”
A memorandum of understanding governing the partnership was signed by Chief Executive of the Standard Bank Group, Mr. Jacko Maree; AGRA’s president Dr. Namanga Ngongi; and Minister of Agriculture of Mozambique, His Excellency Soares Nhaca, who is also a board member of the Millennium Challenge Account Mozambique, which is the first country partner of programme. Ghana’s Millennium Development Authority (MiDA), whose board was recently formed under the new government, also committed to join the partnership. A $2 million dollar commitment to the programme was announced by Ghana’s new Minister of Food and Agriculture, Hon. Kwesi Ahwoi.
For a link to the press release visit here.
For a link to the fact sheet on the partnership, please visit here. (PDF 2MB)
For more information on innovative financing for African agriculture, please visit here. (PDF 388 KB)
Announcement News
Agence France Presse: Donors launch new fund for Africa's small farmers (PDF 40KB)
Daily Graphic: $100m Boost for Agric (PDF 76KB)
Daily Graphic Editorial: Well Done, AGRA, Standard Bank (PDF 3.8MB)
Daily Nation (Kenya): Standard Bank in $100m Africa farm loans deal (PDF 572 KB)
The Guardian (UK): Bank to lend $100 million to small farmers in four countries (PDF 120 KB)
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About the Alliance for a Green Revolution in Africa (AGRA)
AGRA is a dynamic partnership working across the African continent to help millions of small-scale farmers and their families lift themselves out of poverty and hunger. AGRA programmes develop practical solutions to significantly boost farm productivity and incomes for the poor while safeguarding the environment. AGRA advocates for policies that support its work across all key aspects of the African agricultural value chain from seeds, soil health and water to markets and agricultural education.
AGRA's Board of Directors is chaired by Kofi A Annan, former Secretary-General of the United Nations. Dr Namanga Ngongi, former Deputy Executive Director of the World Food Programme, is AGRA's president. With support from The Rockefeller Foundation, the Bill & Melinda Gates Foundation, the UK's Department for International Development and other donors, AGRA works across sub-Saharan Africa and maintains offices in Nairobi, Kenya, and Accra, Ghana.