Aceli Africa is a new market incentive facility to mobilize $700M in lending to agricultural SMEs and improve livelihoods for over 1 million smallholder farmers and enterprise employees by 2025.
The design and implementation of Aceli Africa is based on lending data and stakeholder insights gathered over the past two years. These findings are detailed in their new report: Bridging the Financing Gap: Unlocking the Impact Potential of Agricultural SMEs in Africa.
An estimated three in four agricultural SMEs in Sub-Saharan Africa lack access to finance. This leaves an annual financing gap of $65 billion for agricultural SMEs across the continent, significantly constraining their growth and impact.
Unlocking capital for agricultural SMEs will increase crop purchases and generate a host of other benefits: improved farm productivity and higher incomes for smallholder farmers, more jobs particularly for women and youth in value-added processing, reduced food waste and more nutritious food available for local consumers, and more environmentally sustainable and climate-smart agricultural practices.
In partnership with Dalberg Advisors, Aceli Africa set out to document the economics of agri-SME finance and design solutions to bridge the financing gap. They analyzed loan-level data from 31 lenders on 9,104 transactions totaling $3.7 billion. Key findings include:
- Risk in agri-SME lending is at least 2x as high as other sectors
- Returns in agri-SME lending are 4-5% lower than returns in other sectors
- Credit guarantees that only address risk are not sufficient to expand lending to higher risk, lower return market segments (e.g., new borrowers, food crop value chains)
Informed by this data and extensive input from a range of impact investors, commercial banks, and other lenders, Aceli Africa has designed financial incentives aligned with impact objectives.
Aceli Africa was conceived by the Council for Smallholder Finance (CSAF), an industry alliance of impact investors with decades of collective experience lending in agriculture, and is now housed at GDI.