Responsible Agricultural Investments Leveraging (RAIL) by IFAD
The International Fund for Agricultural Development IFAD is a key partner for Switzerland in the efforts to lift smallholder farmers out of poverty. SDC supports the IFAD-led Agricultural Business Capital Fund to finance responsibly African farmer organisations, small and medium agribusiness enterprises, and rural financial intermediaries. The Fund will lead to higher incomes and more jobs notably for youth and women as well as increased food security, contributing to improved livelihoods of an estimated 430’000 smallholder households applying more sustainable farm practices.
Agriculture & food security
Employment & economic development
Agricultural financial services
- International Fund for Agricultural Development
11 million African youth are expected to join the labour force each year over the next 10 years. Undernourishment is on the rise at significant levels already. Agriculture is increasingly hit by climate change. These three key challenges can only be addressed by significant inclusive and sustainable climate-resistant growth of agriculture. Farmer organisations and agribusiness enterprises require capital to improve productivity, quality and supply chain participation of the smallholder households.
However, they are largely excluded from the local banking sectors because of the high risks faced by the farmers and agricultural businesses. The IFAD-initiated ABC Fund will help to finance smallholder farming and agribusiness operations worth of around CHF 784 million already by end of 2023. SDC’s contribution to this is catalytic in raising further capital by the ABC Fund, and is critical to attract substantial amounts of private capital. Drawn from on its long standing experience in the development of the Responsible Agricultural Investment Principles, SDC’s involvement will assure the highest possible social, environmental and governance related investments standards of the ABC Fund.
Improve livelihoods of around 430’000 smallholder households in Sub-Saharan Africa - and their roughly 1’900’000 household members - in local agriculture and agribusiness value chains, notably for youth and women, while promoting sustainable and climate-resilient farm practices by the end of 2023.
A successful initial phase of the IFAD-led Agricultural Business Capital (ABC) Fund with continuous growth of responsible investments and supporting technical assistance is projected to improve the livelihoods of around 940’000 smallholder households and roughly 4’300’000 household members at a fund size of CHF 240 million by 31.12.2028.
Direct beneficiaries: around 90 local farmer organisations and small and medium-sized agribusiness enterprises as well as 90 rural financial intermediaries (micro finance institutions) lending to the former by the end of 2023.
End beneficiaries: impacting on around 430’000 smallholder households with less than 2 hectares and on roughly 1’900’000 household members being low-income and vulnerable people by 31.12.23.
The three main outcomes of the ABC Fund and its Technical Assistance Facility are:
1) Higher rural employment and access to inclusive business opportunities notably for youth and women.
2) Improved business performance of local farmer organisations and rural agribusiness small and medium-sized enterprises, and smallholder households along agribusiness value chains.
3) Increased access to responsible finance for local farmer organisations and agribusiness enterprises, and smallholder households.
Key outputs of the Agri-Business Capital (ABC) Fund and the Technical Assistance Facility are:
1) Around 95 direct and 90 indirect investments approved and around CHF 185 million disbursed by ABC Fund by 31.12.23.
2) The investments follow the responsible agricultural investment principles of the Committee on World Food Security as monitored through sample case studies.
3) Effective Technical Assistance to enhance business operations and environmental, social, and governance performance of 98 investees delivered by 31.12.23.
4) ABC Fund raises considerable additional capital from public and private investors by 31.12.23.
Results from previous phases: Experiences from IFAD’s Loan & Grant Programme at around CHF 1,6 billion revolving loan and CHF 100 million grants deployed in 80 countries reveal that the substantial under-capitalisation is very often the key bottleneck for inclusive agricultural/ rural growth. The experiences of agricultural/ rural loan funds of the European Commis-sion and others also confirm this. The financing needs of the around 270 million smallholder households in the South (excl. China) is estimated to exceed CHF 200 billion.
|Directorate/federal office responsible||
United Nations Organization (UNO)
|Budget||Current phase Swiss budget CHF 9’300’000 Swiss disbursement to date CHF 9’300’000|