The African Development Bank (AfDB) and the Pan-African Farmers Organisation (PAFO) are joining forces to address one of the most pressing challenges facing smallholder farmers in Africa—access to finance.
As part of this effort, both organisations will host a high-level conference in Nairobi from March 17 to 18, 2025, bringing together key stakeholders to explore solutions for improving financial inclusion in the agricultural sector.
Smallholders farmers play crucial role in Africa’s food security and economic growth, yet many struggle to secure affordable financing for essential inputs, technology, and market expansion.
Speaking during an exclusive interview with AgroNigeria, Dr. Babafemi Oyewole, Chief Executive Officer of PAFO, emphasised that limited access to credit, savings, and insurance often forces farmers into a cycle of poverty, preventing them from making long-term investments in their farms.
He noted that the upcoming conference will focus on addressing these challenges by engaging African financial institutions and policymakers in developing viable financing models.
“One of the major barriers to smallholder financing is the perceived high risk associated with agriculture. Financial institutions are often hesitant to lend to farmers due to unpredictable weather conditions, market fluctuations, and a lack of collateral.”
Dr. Oyewole highlighted that the conference will showcase successful financing models that mitigate these risks, such as collective savings groups, risk-sharing mechanisms, and customised financial products tailored to smallholder needs.
Farmers’ organisations play a critical role in improving access to finance by leveraging collective bargaining power. According to Dr. Oyewole, PAFO and its member organisations assist farmers in negotiating better prices for inputs and outputs, preparing business plans, and linking them to financial institutions. He stressed that organized farmer groups reduce the risk perception among lenders, making it easier for smallholders to obtain credit and insurance services.
Policymakers also have a vital role to play in expanding financial access. Dr. Oyewole called for policy reforms that encourage banks and microfinance institutions to invest in smallholder agriculture.
He urged governments to implement risk-sharing programs, establish favorable land tenure policies, and provide incentives such as subsidies and tax breaks to make agricultural finance more accessible. He pointed to past initiatives, such as the Comprehensive Africa Agriculture Development Programme (CAADP) Kampala Declaration, as frameworks that should be reinforced to drive financial inclusion for smallholders.
PAFO is committed to ensuring that the outcomes of the Nairobi conference lead to tangible improvements for smallholder farmers. Dr. Oyewole stated that recommendations from the event will be implemented in collaboration with governments, financial institutions, and development partners.
He reiterated PAFO’s vision of a prosperous and sustainable African agriculture sector, emphasizing that financial inclusion is at the core of the organization’s advocacy efforts.
Reflecting on past financing initiatives, Dr. Oyewole acknowledged the progress made under AfDB’s Feed Africa strategy and other agricultural investment programs.
However, he stressed that smallholder farmers must be at the center of these initiatives to maximise their impact. He cited the 2023 Memorandum of Understanding (MoU) between PAFO and AfDB as a key step in strengthening support for farmers, ensuring that they receive the financial backing needed to scale their operations.
Looking ahead, Dr. Oyewole warned that Africa must prepare for a shift in global financial dynamics. With traditional sources of development aid declining, he urged African nations to develop sustainable domestic financing strategies for agriculture.
Furthermore, he expressed confidence that the conference would produce innovative solutions to sustain agricultural investments and prevent food insecurity.
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