A new report from the Malabo Montpellier Panel is calling for a major strategic overhaul of how Africa finances its food and agriculture sector, arguing that innovative financing is essential to bridge an annual $77 billion investment gap needed to transform the continent’s agrifood systems.
The report, titled “MONEYWISE: Policy Innovations to Finance Africa’s Agrifood Systems,” highlights the urgency of the matter as overseas development aid declines. The study notes that while government agricultural spending in Africa has grown significantly over the past three decades, its share of total government expenditure has fallen by around 55%.
According to the report, roughly $62 billion of the needed annual funding must come from the private sector, with $15 billion from public sources. This marks a critical moment for African nations to rethink how they attract capital amid growing fiscal pressures and the rising threat of climate shocks.
Case Studies Show Path Forward
The report draws on case studies from Malawi, Morocco, and Rwanda, showcasing how these countries are successfully using creative financing models to attract investment.
- Malawi’s National Economic Empowerment Fund (NEEF): This non-deposit-taking microfinance institution provides affordable loans, primarily to marginalized groups like women and youth. By using a revolving loan model, the fund sustainably reinvests repayments to support rural economic development and agricultural commercialization.
- Morocco’s Agricultural Development Fund: Morocco leverages public funds to “crowd in” private investment. The fund offers subsidies covering 70% to 100% of costs for agricultural inputs like irrigation systems, machinery, and certified seeds, encouraging private actors to participate in long-term agricultural projects.
- Rwanda’s Capital Mobilization: Rwanda has strengthened its financial sector with institutions like the Development Bank of Rwanda and the Capital Market Authority. The country also promotes a savings culture through the Rwanda National Investment Trust (RNIT) and improves financial access for smallholder farmers with Village Savings and Loan Associations.
Five-Point Action Plan
To help close the investment gap, the report lays out a five-point action agenda based on the experiences of these successful countries.
- Unlock domestic finance: Encourage local financial institutions—like banks, pension funds, and insurance providers—to invest in agrifood value chains through mechanisms such as credit guarantees that reduce risk.
- Increase awareness: Raise knowledge of new financial products and funding mechanisms among policymakers and private sector players through targeted campaigns and research.
- Build institutional capacity: Provide targeted training to government agencies and development banks to help them design and manage new financing instruments.
- Bridge the banking gap: Expand access to digital finance by addressing infrastructure deficits and promoting mobile-based solutions, especially in areas with limited internet access.
- Align financing with rural development: Ensure that agricultural financing is anchored in evidence-based National Agricultural Investment Plans (NAIPs) that align with wider rural development needs.
With the agrifood sector accounting for approximately 65% of total employment in Africa, the report’s recommendations align with the African Union’s Kampala CAADP Declaration, which aims to mobilize $100 billion in public and private investment by 2035.
