Small and medium agricultural enterprises (agri-SMEs) are Africa’s largest employer and economic engine—and the key to transforming food systems and improving food security for the continent. Yet three out of four agri-SMEs can’t access formal bank financing, and are too large for microfinance, creating an estimated $100 billion gap in unmet demand for financing.
How can donor governments, development finance institutions, African governments, and the private sector catalyze action to strengthen food value chains in Africa through innovative financing, and better support small and medium agricultural enterprises?
The event is co-hosted with the United States Agency for International Development (USAID) and the Royal Norwegian Ministry of Foreign Affairs.
This special Leadership Panel on strengthening food value chains was held September 18, 2023 at the World Economic Forum's New York headquarters.
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Speakers: William Samoei Ruto, President of Kenya, Office of the President of Kenya; Scott Nathan, Chief Executive Officer, U.S. International Development Finance Corporation; Samantha Power, Administrator, US Agency for International Development (USAID); Rebecca Enonchong, Founder and Chief Executive Officer, AppsTech;Janet L. Yellen, Secretary of the Treasury, US Department of the Treasury; Jacqueline Novogratz, Founder and Chief Executive Officer, Acumen; Børge Brende, President, World Economic Forum Geneva; Anne Beathe Tvinnereim, Minister of International Development, Norway Government; Akinwumi Ayodeji Adesina, President, African Development Bank (AfDB).
Podcast transcript
Klaus Schwab, World Economic Forum Great honour to welcome you all of this really important session. We will talk about mobilising finance for agriculture in Africa and administer I Minister of Power. Thank you very much for having taken this initiative because it touches in some way our hearts. A fool has many in Africa and of course a nexus between food, water and environment is so crucial today. So we have perhaps see issues, but we look also at two opportunities which Africa offers we should not forget. So to see employment in Africa is related to agriculture. And if we look at see arable land which is used in Africa, it's still a minimum of what could be used and potential which is available if people buy. It's a necessary support and finance. And Madam Secretary, I am so honoured that you come to support the World Economic Forum's office here and we are looking very much forward to your introductory speech. The floor is yours.
Janet Yellen, US Secretary of the Treasury Thank you so much. Good afternoon, everyone, and my thanks to Administrator Power and her team. The administrator has been a leading voice on food security on behalf of our administration, including through the Feed the Future Initiative. I'm glad to be able to join her President Ruto and president Adesina today. Over the past three years, the successive shocks of COVID-19, Russia's war on Ukraine and extreme climate events have had a devastating impact on food security. Around a 10th of the global population currently faces severe food insecurity. The Food and Agriculture Organisation projects there will be about a 120 million more chronically undernourished people in 2030 due to the pandemic and war. In coming years, we will face the mounting effects of climate change, new sources of conflict and fragility, and more threats to global health. And each successive shock will exacerbate the underlying drivers of food insecurity. And each will hit harder those who are already food insecure.
Janet Yellen, US Secretary of the Treasury I know that President Ruto and many other African leaders spoke powerfully about the nexus between climate change, agricultural productivity and food security at the Africa Climate Summit earlier this month. The impacts of food insecurity on individuals and communities are acute. Hunger and poor nutrition undermine health and educational outcomes and well-being. Food insecurity also has economy wide impacts, contributing to lower productivity that holds back economic growth. And this means food security matters, both morally and for the global economy. The United States has provided nearly 13.5 billion dollars in humanitarian and development assistance since Russia's invasion of Ukraine to address the global food security crisis. We have also helped lead multilateral action. The Black Sea Green initiative enabled Ukraine to continue exporting green to low income, food insecure economies. Russia's withdrawal from the initiative is devastating for countries such as Afghanistan, Ethiopia, Lebanon and Yemen, which relied on these shipments, as well as for grain importers anywhere exposed to price volatility caused by Russia's actions. Going forward, we will maintain our strong support for Ukraine, call for Russia to reverse course and mobilise our partners to take further action.
Janet Yellen, US Secretary of the Treasury But we must also collectively do more than respond in moments of crisis. We must build resilience to them and this will reduce the need for future humanitarian assistance. It will support sustainable economic growth. In my remarks today, I'll focus on the need to accelerate investments in food and agricultural systems, particularly by the private sector. I'll emphasize the importance of equipping international financial institutions to deploy additional financing for these investments, and I'll address our longer term work to evolve the multilateral development banks.
Today, fiscal constraints limit too many governments' abilities to make investments that fuel sustainable growth. The private sector can step in to fill this gap. We need private sector investments in technological innovations and to facilitate market access for players across local, national and regional food and agriculture value chains, including smallholder farmers, producers, distributors and retailers. Investments in small- and medium- sized enterprises, which play a crucial role in these value chains, are particularly key.
Of course, governments need to provide favourable policy environments, ones that are predictable, transparent and incentivise the right kinds of investments. And the Biden administration is supporting this approach through the US-Africa Strategic Partnership on Food Security, which focuses on promoting opportunities for transformative government and private sector investment. Increased investment also depends on leveraging the international financial institutions. We've seen significant progress since international financial institutions came together to launch the IFI action plan to address food insecurity in May of 2022. Food security and agriculture related lending across these institutions increased to almost $15 billion in 2022, and that's an over 60% increase from an annual pre-war average of just over $9 billion.
As of June, the World Bank achieved $22 billion in new lending commitments, well surpassing its $12 billion action plan target, and the International Monetary Fund has disbursed $1.8 billion through its food shock window. Going forward, the international financial institutions will continue to play a vital role in strengthening food security through policy advice and supporting countries' investments in sustainable and resilient food systems.
We should institutionalise the coordination and coherence that the Action Plan provided, and we are currently working with the international financial institutions to do just that.
There are also existing specialised multilateral tools we should leverage. We're proud to be the largest donor to the Global Agriculture and Food Security Program, which provides much needed grants, concessional loans and blended finance, as well as technical assistance to low income countries and producer organisations. And we're currently working alongside other donors to enhance the program's ability to mobilise and deploy private capital, which will allow it to work more effectively with facilities like the one being launched today.
The International Fund for Agricultural Development focussed on alleviating rural poverty in the face of changing climate is also critical. The fund has increased rural incomes, expanded production capacities and improved market access for millions of individuals, over half of whom are women. We are currently working with other fund members toward a successful replenishment, but even focusing on medium- and long-term investments in agriculture, in addition to crisis, response is not sufficient. Pandemics, lower income. Conflict disrupts supply chains. Climate change poses risks to entire agricultural systems. So combatting food insecurity also depends on broader efforts to address these global challenges. And this requires evolving the multilateral development banks (MDBs), which are a central pillar of our international economic system. We've already made significant progress on reforms related to the World Bank's mission and vision, its incentives, operational model and financing capacity. And we estimate the MDBs as a system could unlock $200 billion in new lending capacity over the next ten years through balance sheet measures. Series are already being implemented or are under consideration.
This additional financing can be directly deployed to advance priorities like food security. And President Biden is requesting funding that would enable the bank to provide $27 billion in new resources for projects to address climate change. Fragility and pandemics, some of the core drivers of food insecurity and to support immediate crisis response in the poorest countries.
Well, today's event is an opportunity not just to again highlight the importance of food security, but to renew our commitment to a particular path forward. There will always be crises to which we should respond with timely and substantial assistance. But short-term responses, however effective, will never bring about a world without food insecurity.
Short term assistance can't prevent the next drought or ward off the next pandemic, and these challenges will continue to drive food insecurity, threatening the lives, livelihoods and well-being of those around the world. Supporting individuals and communities depends on thinking longer term. To put in place policies and make investments that build systems and not just storage silos. Systems that will allow people around the world to endure coming shocks without going hungry and to live healthy and prosperous lives. Thank you so much.
William Samoei Ruto, President of Kenya Thank you very much for this opportunity to share my thoughts with this important gathering and to thank the World Economic Forum for presenting us this opportunity. And for all the friends who've come to share this moment with us. Let me thank Borge Brende, president of the World Bank -- of the World Economic Forum. Maybe it will be World Bank on one day for hosting us in this event with a wonderful alliance with the most resent tongue in Africa's collective thinking about the nexus between investment potential, opportunity, technology and transformation.
Secretary Yellen: I have listened very keenly to your statement and with great appreciation for your insightful opening remarks, which points us to the kinds and levels of interest and commitment that will motivate us to engage more deeply with investors to make Africa not only self-sufficient but also a competitive player in global food systems and agricultural value chains, not just for Africa, but to also participate in the global arena.
Thank you. Dina Esposito, assistant administrator for the Bureau for Resilience and Food Security in the U.S. and deputy coordinator. Feed the Future for inviting me to take part in this very important event.
I further take this opportunity to extend special thanks to the government of the United States and Norway for their patience, commitment and focus with which they have worked with us on this journey to explore and to also pursue the best pathway to agricultural transformation and sustainable food security in our continent.
The world, ladies and gentlemen, is grappling with unprecedented challenge and global food insecurity of historic proportions precipitated by the COVID 19 pandemic. The profound disruptions in supply chains, widespread unemployment and escalating poverty that have profoundly impacted communities and countries across the globe.
These hardships are further compounded by the environmental factors, notably the devastating drought in many parts and many parts also suffering from floods at the same time. In Kenya, we had the worst drought in 40 years. The recent invasion in Ukraine has led to soaring prices of essential commodities such as food, fuel and fertiliser, amplifying the plight of vulnerable countries and communities. Concurrently, the escalating threat of climate change continues to exert immense pressure on our food systems and overall food security.
As of the end of 2022, approximately 31.8 million people in East Africa are in dire need of emergency food assistance, including a distressing 6.1 million children under the age of five. However, through our National Drought Management Authority, we have taken substantive measures to alleviate the impact of these adversities with our drought contingency plan and emergency response. We successfully provided critical assistance to 1.7 million Kenyans, investing a total of $150 million with the generous support of many development partners in Kenya, which we appreciate.
By 2030, Africa's population will have grown from what we have at the moment about 1.2 billion, all the way to almost 2.4, 2.5 billion by 2050. Africa, on the other hand, holds by far the greatest share of unutilised arable land. Globally, at around 61% of agriculture remains the biggest employer also in the continent, accounting for between 70 and 80% of livelihoods and by far the biggest contributor to the GDPs of many countries. Agricultural productivity in Africa is currently the lowest in the world, with severe implications on nutrition and food security. The numerous cases of hunger constitute a humanitarian crisis, highlighting the anti-utilisation of our continent's immense potential for high productivity and surplus food production. In fact, it is a paradox. The account of Africans suffering starvation amid plenty is parallel to the account of Africa's poverty in the midst of resource abundance and underdevelopment in the middle of huge potential.
The people who must feed and give jobs include millions of highly skilled and motivated young people struggling to find opportunities on a continent endowed with the greatest mineral resource, wealth and green energy potential anywhere in the world. At the recently concluded Africa Climate Summit in Nairobi, the leadership of our continent established a clear consensus regarding the road map, navigating from crisis to potential and ultimately to opportunity. This roadmap, set out in the Nairobi Declaration, makes the case for a win-win collaborative intervention with a global community to unlock sufficient resources to invest in capabilities and technologies, with the goal of transforming Africa's abundance of potential into a global surplus production that will not only drive green growth, but also provide shared prosperity.
To this, the Nairobi Declaration proscribed the recalibration of the international financial institutions to facilitate debt restructuring, make affordable finance available to low income countries and direct large scale investment to climate positive and competitive opportunities in Africa. Ultimately putting millions of youth to work and produce sustainably for both Africa and the world. The broad principles of the Nairobi Declaration apply to our agriculture and food systems, a sector that has a highly detailed, granular data profile that easily defines the opportunities for investors. A case in point, for example, is the agreement we signed yesterday between Kenya and FFI. For FFI to provide green fertiliser using our geothermal energy resources as part of sorting out the problem and the challenges that have come our direction because of the conflict in the middle of Europe that has constrained supply of fertiliser to our part of the world. I think it was said "adversity is the mother of all invention." We are beginning to re-imagine how we can not rely on fertiliser from elsewhere, but to begin to think about how we can use our resources to provide not just fertiliser but green fertiliser that not only expands our food production capacity but reduces carbon footprint that comes with it.
Briefly, enhancing Africa's overall agricultural productivity is a tremendous investment opportunity, which not only feeds Africa and the world, but also employs African youths and increases smallholder incomes. Investment in agriculture in Africa is the surest way to reduce poverty, especially rural poverty, prevail significant GDP growth and promote strong export performance. It will provide opportunities also to make sure that we create opportunity. We create jobs in in our part of the world. To stem the unnecessary tide of migration that is fuelled by lack of opportunities in different parts of the world.
Private investors should contribute at least 75% of the 21.4 billion required for agriculture in Africa to play its transformative role. But that private sector requires sovereigns to de-risk their investment. There needs to be a conversation as to how do we reconfigure. Because part of what we agreed in the Africa Climate Summit in principally number one, how do we get the countries that are already in debt distress? How do we how do we support such countries to breathe in order to even have the opportunity to think about climate action, about agriculture and about other things. So extend their tenure? This is our proposal, extend their tenure of sovereign debt and provide also for maybe a ten-year grace period.
Number two is we need to rethink about the financial markets, the instruments operating in the financial markets, whether they are credit rating agencies, whether it is sovereign debt analysis and whether it is risk analysis. These are instruments that have not evolved. They have remained static and they continue to assign high risk even where there is no high risk. And sometimes they even assign low risk where there is high risk.
A case in point and allow me to say this is the financial crisis in 2007. It came as a result of very high risk having been assigned very low risk, and we ended up in a financial crisis. So there is, too, a need to rethink, to re-imagine and to reconfigure that whole space around the financial markets. And finally, we need to see how we can, as Madam Secretary Yellen said, how we can work with the MDBs and how we can work with our international financial architecture, number one, to provide concessional financing for sovereigns. And two, whether we cannot rethink again and see the same way we had a conversation about SDRs to deal with COVID, isn't it time we had a conversation about SDRs to deal with climate change? And this time around, think about it differently. That will give those who need the money the most more money than those who need the money the least.
I think these are proposals we have put on the table. We will be having a conversation as we go forward in this forum and in other fora all the way to COP28. The announcement by the governments of the US and Norway of a new multi-donor fast flows fund with a target of US dollars 200 million designed to unlock hundreds of millions more in financing for Africa Agri SMEs is a very welcome development. I think they deserve.
In Kenya, we recognise the power of SMEs as catalysts for bottom up transformation programs. This understanding has led to the establishment of a dedicated ministry that focuses on formulating optimal strategies, as was said, that we need proper policies that promote instruments, that promote skills training and capacity building. Our aim is to ensure that financial models such as cooperative societies and various financial inclusion funds, including the well-known Hustler Fund. I discussed this with Samantha when she was in Nairobi to facilitate economic participation for a significant number of informal sector people -- farmers, traders, businesspeople -- particularly smallholder farming households, youth and women.
We are eager and prepared to discuss and explore ways to attract private investment for small- and medium-sized agricultural businesses. The larger employers, the largest actually employers in our continent. These enterprises are critical to supporting our farmers and delivering safe, nutritious food for our people. The potential impact of private sector investment is simply immense, and we we hope we can work together to unlock that space.
For instance, let me give a few examples. Synergy A company converting waste into fertiliser, fuel and animal feed is set to expand its production, benefitting 10,000 farmers and creating 300 new jobs. Sunculture, a US solar irrigation company plans to expand its pay as you go model, making technology accessible to over 10,000 farmers.
In addition, Del Monte' investment of US dollars 5.5 million in a fresh fruit packaging facility and sourcing from 2000 Kenyan farmers showcases the kind of interventions needed by farmers as well as farmers across Africa in technology and other areas. I know I have run out of time. Just give me a minute.
Crowd You're able to multitask.
William Samoei Ruto, President of Kenya I'm not just speaking for myself. I'm speaking for 1.4 billion people. So. I am pleased to announce that Kenya is fully prepared to collaborate with partners and investors, particularly in the agricultural sector, and we are actively working to cultivate a conducive environment for investment. We are doing this not just in Kenya but across our region. As you are aware, we have already consolidated our region into one single market under the African Continental Free Trade area that is already beginning to trade amongst ourselves and to make it easier for investors to find their way into our continent and to work with us without barriers, without roadblocks. That makes it easier for all of us to work together. Finally, there is so much to say and to celebrate about the exciting possibilities that are being opened up and created in this forum, as well as commitments that both France in the US and Norway are leading the way into the future with others, which we hope they will come along. And we look forward to working together. The private sector in that case should look as an example to the inspiration given by both these two great friends to mobilise quickly to reap the first mover advantage in a brave new world of African agricultural transformation. I thank you.
Borge Brende, World Economic Forum Thank you very much, Mr. President. Thank you for your leadership. Well, I have a little bit of change of scenery. Those who will have 3 minutes video from us, HD and then we will hear from the two leaders that put the money on the table for the agriculture and the food system. So please stay seated. I'm told there will be a video and then they'll introduce the next panel. Okay.
Film: The smallholder farmers have got an important role to play in Zambia. These are the backbone of the nation in Africa. Small and medium agricultural businesses are the continent's largest employer. They play a crucial role in supporting smallholder farmers and helping communities feed themselves. My name is Celia Abandon. I'm the managing director for Silver Group of Companies. It is deliberate that we chose to be working with very small farmers. Our relationship with them is very, very, very good because we feel we are connected to them.
We are paying them. We empower them because of businesses like Sylvia's. Smallholder farmers in Zambia can connect their crops to larger markets. Bringing food costs down while increasing supply. Farming is actually the stronghold for the Zambian economy, and if every farmer can maximise their capacities of farming, I think that will be a better place economically.
My name is Judith and. I am as I mean, I live in Lusaka, in Sri Lanka District, where I live on a farm. When we met with Sylvia, we spoke and she showed interest in the products and she started buying of all my products. So I was encouraged. She provided a market for me and I was excited about that. Despite the crucial role they played, three out of four small and medium agricultural enterprises across Africa cannot access bank loans, yet are too large to access microfinance. Creating $100 billion gap in financing that leaves businesses like Sylvia's behind. Bridging this gap is critical. These businesses can change the lives of farmers and their families and across the continent. They can drive economic growth, create jobs and fight hunger and poverty. But we need to help these businesses access the financial resources they need to thrive.
Government must partner with banks and investment funds to support this crucial sector together and help into venues like Sylvia and farmers like Judith. Feed the future. We feel that we are lifting them up so that together we can all be proud of what we have done.
Borge Brende, World Economic Forum And thank you. Now we're coming to the first of the panels. We'll have Samantha Power, the administrator of USAID, with us. We have the relevant minister from Norway on the bill, too, today. And we have the moderator, Rebecca Enonchong, founder and CEO of Apps Tech. Very much looking forward to also hear the story about this investment and we'll reconvene in Davos. I told the president where we will then come with additional pledges from other countries, too, I hope.
Rebecca Enonchong, AppsTech Well, thank you very much. We only have 20 minutes and so much to say. So I'm going to start with you. Administrator Power. So normally when we talk about when we think about PPP, we're thinking about big companies and governments and big governments. But as we saw in the video, we're looking at, you know, at agriculture, and we're dealing more mostly with small businesses. How are you trying to support these small businesses?
Samantha Power Administrator, USAID This is a sector that needed more attention than it has been getting, and this is the beginning of tailoring that attention and imagine what it would mean. You know, when you think about who are these agribusinesses, Right? These are the people who might be transporting the products from point A to point B or bringing them to market. It might be the people that are providing the seeds and the fertiliser or the extent even some of the extension services that might once have been done by the by the state. Scaling that, you know, turns a smallholder farmer into an entrepreneur, into a business person. That changes everything. That means money for school, for the kids. It means not imagining another subsistence farmer, the next generation. So this idea and I really have to give credit to my sister here who was, you know, stewing on this and thinking about, you know, something bold and ambitious in this niche. But I think in coming together and in naming a structural gap that if we filled -- President Ruto talked about all the arable land that goes on untilled. And we know that that the performance at this point is suboptimal because we see it in all the land that could be producing that isn't. We see it in all the young people who could be working in agribusinesses if they could expand in the way that many of these entrepreneurs, like the one you just saw up on the screen, would love to expand but just can't get the capital. And so how many young people with this youth bulge, you know, could be helping design marketing plans and running social media campaigns and also bridging some of the rural urban divides that exists in so many countries these days. So this is a big idea, trapped now in a medium-sized initiative.
So we want to take this big idea. And first, we need we need to hear a lot more from from the African farmers themselves, from the African agribusinesses, from the African leaders, and learn about how to tailor, you know, what's the best way to prioritise when you can't do everything. But we want what we think is a big idea to take the form of a very big initiative. But real thanks to Norway for for making this possible, giving us an excuse to to move things a little more quickly at USAID than we're used to doing. So thank you for that and thank you for the question. But this is different. It's not the Wal-Marts and the Starbucks. It's agro businesses that are Kenyan. And the knowledge of the land comes from Kenya and the knowledge of where the next big opportunity lies is Kenyan and following that lead. And that that kind of partnership is going to be so important.
Rebecca Enonchong, AppsTech You said something about "it's not microfinance" and it's so nice to hear for once that we're not talking about African women in agriculture and microfinance because we need the real money, not the micro money. And so I love the fact that that that this is a this is looking at financing agriculture in a different way. And I'd like to know, how is it different? How like from a from a technical standpoint, how is this financing instrument different from the ones we've seen before? Other than the size, other than the amount, how are we structuring it differently than what we've seen before? Well, I'm sorry, and I'm asking you, but a minister. Yeah.
Anne Beathe Tvinnereim, Norway Government First of all, let me say I'm so excited about this instrument. Firstly, of course, because this is one of the solutions to a problem that we have seen increased since 2014, which is the increasing food insecurity of the world. But also because we know that the ag sector is should be can be the motor of economic growth in Africa. And we've seen so -- and there are so many last opportunities when we have not invested in the value chains, the local and the regional value chains.
We know that there are 33 million small scale farmers in Africa. Most of them are only producing for their own families. The same time, the African continent imports at least 50 billion U.S. dollars worth of foodstuffs every year. Imagine the possibility for job creation and economic growth. So this is really, really exciting. Now to your question, how does this differ? Well, like Samantha said, we have detected a gap where some agri SMEs fall between the cracks. What we are doing is that we are we are putting up a fund that will support investment funds that again, in turn invest in agri SMEs.
And these investment funds are, you know, they have the knowledge on the ground of the region, of the sector. They are able to detect the estimates that can grow at scale but are still too small to get, you know, the capital from the banks. And it can also provide knowledge, technology transfer, giving strategic advice to the SMEs in question. So it really is filling a gap. And the FASA fund is will be, I mean, it's it's we provide donor money. So this is a way of de-risking private capital, making sure that donor capital can co-finance investments and take potential first loss. And the idea behind that, I mean, we've seen we've have these kinds of mechanisms before. I mean, so people would ask, what's new? We've done it in other sectors. We do a lot of it in energy, but we know that the risk in the ag sector is considered very high. And this mechanism provides first loss money from donor capital to a sector that has been, if I may say, to a certain extent, neglected.
Rebecca Enonchong, AppsTech So the investments are planned to be between about 200,000 USD and 5 million USD. And so that's the gap that you're trying to address.
Anne Beathe Tvinnereim, Norway Government That's what we detected when we started working on this mechanism.
Rebecca Enonchong, AppsTech Okay. And and then so what would be next? What's next for the FASA Fund? What's the next step? You said $35 million each.
Anne Beathe Tvinnereim, Norway Government Yep. It's a good. Start, but it's not enough.
Rebecca Enonchong, AppsTech It's not enough. So what's the next step?
Anne Beathe Tvinnereim, Norway Government Well, the next step now is to find a fund manager. So any interested organisations out there, you know, there will be a call for proposals. And then of course, we need to scale up the investment and in the ramp up to Davos, we're thinking in really pushing it up, you know, during the next few months getting more interest of donors on the table because there are lots of opportunities out there in the African sector.
Rebecca Enonchong, AppsTech And the timing. So, you said before Davos, but what what's your time-frame?
Anne Beathe Tvinnereim, Norway Government We're setting it up now and then. Then we we are inviting more donors on board. So, no time to lose.
Rebecca Enonchong, AppsTech So administrator power and let's talk about impact. Sure. What tell us about how you perceive the real impact on the ground of of the FASA Fund.
Samantha Power Administrator, USAID I mean, I think as as my colleague was saying, we have programmes like this and, you know, you can even see it. none of us want to belittle microfinance. I mean, we see what microfinance can unlock for the small scale farmer, often the female small scale farmer. But what we, I think are have done and maybe you could say in different places have dabbled in and that we're now trying to centralise and brand and make a thing that people can rally around is this broader approach that centres on SME agribusinesses that are themselves the vehicles by which those small scale farmers again can scale what they're doing can expand their businesses.
And it's not as if these longings don't exist, you know, in the small scale farmer potentially about how much more land they think they could grow if they only had X, they only had Y. But also in the SMEs that already exist about how about how they see, you know, how much more they could be doing to, you know, work with processors to take crops and turn them into fruit juices or, you know, into products on the value chain in a very different part of the value chain or, you know, what it would take to, you know, have more efficient transportation and how much that could support efforts to widen the profit margins for the small scale farmers, for the middlemen and for the for the agribusinesses. So the demands are all out there. I think what we have to work through is does it make sense to launch this in a couple of countries first? You know, how do we grow the fund? You know, we we are incentivising investment funds by saying that we will bear this first loss. Is that enough? You know, I mean, these conversations are now going to going to take hold. We have the great Scott Nathan here from DFC, the Development Finance Corporation, who in his panel may get to speak to some of this because DFC has done so much actually in the food security space by making a dedicated push under his leadership in President Biden's leadership. But I think what's cool about having development agencies involved as well is that, you know, we're also there. I mean, this is the kind of thing we've been doing for some time, is helping farmers get their goods to market. You're helping them write business plans, helping them think about social media and you know what their market share is and this and that. So, you know, as SMEs then get access to to cheaper capital, get to pursue some of their growth dreams and proposals, we're right there with them as well with that feed the future expertise. So I think that also might set this apart from a more traditional investment fund that lives apart from the public sector. And that's that can be at its best the magic of the public private.
Rebecca Enonchong, AppsTech So what would you want this room to leave with? What what do you want them to --?
Samantha Power Administrator, USAID It depends if it's the people with the money or the people with enthusiasm?
Rebecca Enonchong, AppsTech Both. Right.
Samantha Power Administrator, USAID Spread the word. I think. I mean, we you know, this has come together pretty quickly and we're really excited about the partnership with WEF. I think that already puts us in a position, you know, where government officials, to benefit from incredible expertise. USAID already has a fantastic partnership with U.S. on trade facilitation, the Global Alliance for Trade Facilitation. That could work a little bit like this. I mean, in that instance, their network of companies tell them what's getting in the way of trade, including agricultural trade. We USAID working probably with Norway in a lot of the places in the regulatory space, on customs, on domestic resource mobilisation. We learn from WEFs network of companies what is needed in order for those barriers to come down and for trade to increase. It's like it's again, we're they are doing the kind of wonky public sector stuff. They're learning what's actually happening in the real world that's diminishing the impact on livelihoods. And so we think both in terms of actually investing in this fund with their vast network, knowing again that others will be bearing the first loss, but also being out in the world and helping us identify where the greatest potential exists for agribusinesses, which agro businesses are going to raise their hands, you know, at the non local level. And then how do we use our collective leverage to find those local players that are just ready, bursting with ideas and potential and just missing that break that that we hope this can give them?
Rebecca Enonchong, AppsTech Madame Minister: Any final words from you?
Anne Beathe Tvinnereim, Norway Government Well, you know, we know that we need all hands on deck to solve the great challenges of our time, which is food insecurity. Climate's reaching the SDGs, and as donors, we recognise that private sector perceives a high risk. There is a higher risk in investing in some of these these markets. But we know that the opportunities are there. And you know, by introducing mechanisms like this and, you know, saying that we will we will continue like Samantha says, we will continue to work on framework conditions, on the policies, but also being in there for the long haul with partnerships to take down the risk in the actual markets that can actually improve lives and and livelihoods. So let's just get the job done.
Rebecca Enonchong, AppsTech Yes. Well, thank you very much.
Samantha Power Administrator, USAID And to be clear, it's FAFSA financing for agricultural SMEs in Africa. Say it with me.
Rebecca Enonchong, AppsTech And there are brochures, right? There's a table with the brochures right by the door. So when you leave, please grab one and it'll tell you a lot more about the programme. Thank you. Thank you. Yeah.
Borge Brende, World Economic Forum Thank you very much to Samantha and Anne Beathe for your leadership. And we have a Mr.. Hassan from Canada here with us to development Minister, and he is very eager on this. I spoke to him earlier today about agriculture. So you might have someone joining your club already for for Davos, He has a budget of 8 billion annually. Just so you know. I looked it up. President Adesina from the African Development Bank, Scott Nathan, the CEO of the Development Finance Corporation, DFC, also very powerful and founder and CEO for Acumen. Jacqueline Novogratz. Jacqueline Yes, that's what I thought. Please join me here.
Borge Brende, World Economic Forum Thank you. We'll continue to keep the great momentum. And I think we're really all excited about this. And I was thinking that, you know, this is the day also that the Secretary-General has called for the SDGs, today and tomorrow. And I don't think there is any examples of countries moving out of poverty, eradicating poverty without also have being successful when it comes to food production and agriculture. You have to increase the productivity and you have to also have food systems that do work. And the opportunities in Africa are just great. 61% of the non-cultivated but arable land in the world is still in Africa. So coming to you first President Adesina, you also have resources, economic resources at the African Development Bank. Where you see this initiative and how do you see unlocking the necessary investments in agriculture as also the Development Minister was saying, you know, some of these farmers are too big to be microfinanced, but they are then too small to be part of the normal scheme, but they can in the future be really amazing. Food producers, great for livelihood and also creating all the jobs for the youth bulge.
Akinwumi Ayodeji Adesina, AfDB Well, thank you very much. It's good to see you. And thank you, Professor Klaus. And thank you for all of the WEF family. It's good to be here. And congratulations to Samantha and her dear sister and Beth on the launch of the FASA.
I want to say that Pharcyde needs to be fast tracked. So we can make it. We can scale it up. But, you know, congratulations to you, because it's a very key area. Of course, because I recall, If you look at his size of the food and ag market in Africa, by 2030, it's going to be, what, $1 trillion? So that's really where the wealth is. And I used to be minister of agriculture in Nigeria way back before I became president of the bank. And so this is all music to my ears because I've always said it. But the billionaires of Africa are not going to come out of oil and gas sector. They're going to come from the poor agricultural sector. You don't smell gas. You don't you know, you don't you don't drink oil. But everybody eats two or three times a day, Right? So food is the place. Okay. Now, when they also look at it, it's good, right? I mean, you know, and agriculture is very cool anyway. So it's a very sexy, cool profession.
So but I also think that the thing to bear in mind is how we cascade all of this within the bigger picture of what's the goal, what's the vision of Africa when it comes to agriculture? You know, President Ruto was talking about the fact that agriculture, I mean, Africa has 65% of the arable land left to feed the world. What potential is fine, but nobody eats it, right? They've got to be able to unlock the potential. And we are doing that at the bank in three ways that I would like this initiative to help to fit in to and help to to scale up.
First is Secretary Yellen talked about the case of the Russian war in Ukraine. And what I meant for food security in Africa is how the African Development Bank would very quickly launch a $1.5 billion initiative to make sure that Africa can feed itself is not about begging for food. It's about getting seeds in the ground, in your bowl and actually growing your own food. And it's working extremely well. Today. We have supporting we are supporting 24 million farmers to produce 38 million metric tons of food valued at $12 billion. And by the way, that is 8 million metric tons of food, more than what Africa will lose from importing from either Russia or Ukraine. So it's all about Africa having the pride and the dignity of producing the food, it's not being canned. There's no reason why it shouldn't. So that money is there and that is working in about 34 countries.
Second, this initiative just cascaded into our bigger agenda. And you are there and in Senegal, where we had a Feed Africa summit and USAID was there also. And and what are we trying to do? We were basically trying to say, okay, all these farmers, small businesses, agro dealers, seed companies, but larger companies and all of that, how do we bring them together under a plan to make sure Africa can become self-sufficient in food. Look, as far as I'm concerned, Africa may not be able to make manufacturing aeroplanes. So that's fine. But there's absolutely no reason why Africa cannot feed aeroplanes with food all across this world. You know, what Africa does with agriculture is going to determine the future of food in the world. We can't do that if we don't have a plan to finance it. And so what we did was we brought together our heads of state and government. We have 34 heads of state and government. We've got a president of Ireland joined us before this game with his wife as well, which is cool for us to have. And we put together a food and agricultural delivery compacts. Those contracts essentially set out how are we going to make sure that Africa becomes totally self-sufficient or unlock its full potential agriculture. In five years, we can be running around this cycle for another 10-15 years. Okay.
Now, the good part of it is that we were able to to raise $72 billion to support 44 countries to be able to implement that food. Many of you are here but are also supporting that. So, again, I'm trying to say that the big FASA so we can cascade it and take it to scale within this bigger agenda that we are actually working on in Africa.
And the last thing I want to say on this is Samantha was talking about the seed companies that the fertilizer companies. Well, most of the time that lending gets done in agriculture, it gets done in an open platform. So you're lending to somebody producing tomatoes but you're not lending somebody buying tomatoes, so it rots on the field. You have embedded transaction costs in that. It makes it very, very difficult.
So what we are doing, if are these here, Alvaro is here we are with Islamic Development Bank. We've launched a $1.6 billion effort on special agro industrial processing zones. So in that sense, this are new agricultural zones that are enabled with power water, roads, infrastructure, additional things and get companies there. So you transpose that food and our companies from the from the urban areas where they are all then there are no funds there into these rural areas. I enable with infrastructure. Well what's going to happen to this initiative and commercial financing is as follows First, the lending will be done in a close model because you're lending to somebody. You can transport your lending to somebody that I storing, you lend to somebody that's processing food, you have lent to somebody that is connected to the value chain.
Therefore, the risk of loss, it's very low. I mean, when I was running agriculture in Nigeria, people used to tell me, Oh, if you lend to agriculture, you lose money. Well, I brought together 20 chief risk officer of all the banks in Nigeria, and I asked them, give me the probability distribution that you will lose money. They said 90% will lose money. I said, Well, if we de-risk you and we had a post-loss arrangement and we fix the actual value chains end to end, what would be a lost weight? Somebody say 10%? Well, everybody shut them down and say, no, can't be more than 5%. Here's what I want to say and to encourage you, Samantha, to go big. We're on a first-loss program with the Central Bank of Nigeria, $350 million. We leverage $3.5 billion. Four years: Non-performing loans, less than 1%. Okay, less than 1%. And we were able to raise and expand the share of bank lending that went to agribusinesses and agriculture enterprises from 0.7% to 5%.
So I think that basically what I'm trying to say is there are a lot of opportunities to cascade this what you're doing, the experience on the ground to say that we can actually use this. And I want to highly commend both Norad, the Minister and also Samantha for this effort. Let's cascade it. And I'm sure that we can really make it really work at scale. So congratulations again.
Borge Brende, World Economic Forum Thank you. Thank you. President Adesina. I know, Scott Nathan. You're the head of the DFC. I know that you're also very much into this undertaking. I know that the DFC has already invested a lot in food security. So, interesting to see. What are your plans? Will you deliver us the two ministers already have indicated?
Scott Nathan, DFC Well, thanks for setting expectations so high. Thank you for having me here today. Thanks to the World Economic Forum for the convening and especially congratulations to Norway and my colleagues at USAID, Samantha. And I see Isobel Coleman in the audience as well, great partners for the Development Finance Corporation. And this is a fantastic initiative. We're we're really pleased to be able to be here to join in this meeting. It's great to be on the stage with Jacquelyn, a member of our Development Advisory committee and a close partner in the development finance world. So thank you.
Really, the Development Finance Corporation is all about mobilising capital to the private sector. That's our mission and initiatives like FASAt, which are about shifting risk in order to help mobilise are the kind of tools that we love to take advantage of. We do invest in investment funds. Samantha mentioned that. I mean, a great example is One Acre, a fund that's bringing financing for logistics and to smallholder farmers in sub-Saharan Africa. They're reaching one and a half million farmers right now. We think that they're going to be able to more than double that in short order. We've put in $20 million into that. They should be able to take advantage of this facility to extend their reach even more. It's the kind of thing that at DFC and at other development finance institutions, this kind of leverage is really what matters to be able to have even a modest amount of money. But this is a great start. It allows a huge amount of leverage for the private sector.
We support financial institutions all over the continent, all over the world who are lending to small holder farmers who are thinking about not just helping with fertiliser, fuel, seeds in the ground, but also logistics. I completely agree that wastage is one of the hidden hidden taxes on this issue that causes food insecurity. So the extent that we can work on cold chain logistics, storage, we're doing that in India, we're doing that all over Africa. But as you mentioned in the current environment, with food insecurity after Russia's terrible invasion, further invasion of Ukraine, we pledged as the Development Finance Corporation to increase our food security investments to $1 billion over five years. And I'm really pleased to announce tonight for the first time, as we're getting close to our fiscal year that we've met that goal already, we've managed in two years instead of five. And this is a big focus for us. And as we work on fine tuning our institution, agriculture, food security is one of our top priorities and we're organising our team around that. Our goal is to do it again. We're hoping in the next few years to do another billion in food security, working with innovative projects like this that are celebrating and announcing today is a great way to do that. So thanks again for having me.
Borge Brende, World Economic Forum So if I heard you right here, you pledged another billion here.
Scott Nathan, DFC Now, we will definitely do another billion and I hope will be in the next couple of years.
Borge Brende, World Economic Forum Congratulations. Thank you. Jacqueline, I know you been very much into entrepreneurs and innovation and we're seeing also a change in the zeitgeist in Africa. More young people are getting into agriculture and they use different tools than the previous farmers. They use iPads, they use technology, and they eye for optimising fertilisers and all this. So when you're from your viewpoint, how much do you think entrepreneurship and innovation will play a role in food security in the years to come?
Jacqueline Novogratz Founder and Chief Executive Officer, Acumen Well, thanks, and it's really wonderful to be here with my wonderful colleagues and I've known for a very long time and and Administrator Power is Isobel. And USAID and Norway. I love what you are doing. It is so critical and I clearly am someone who believes that entrepreneurs have to actually drive so many of our solutions. And and that means we have to make markets work, particularly for low income people who have been overlooked and underestimated for too long.
I run an organisation called Acumen, and for 22 years we've been investing across the spectrum of capital. So from very early stage angel investing through what we call patient capital, fully philanthropic backed, 10- to 15-year investments and entrepreneurs that are trying to solve the problems of poverty across agriculture, energy, education, health care. Although agriculture is becoming a much larger part of what we do our 150-odd companies have conservatively impacted over a half billion people. So we've had a front row seat to what it actually takes to go into broken markets and support entrepreneurs to help build new real opportunities and sometimes create overall systems. What I love about the first loss is not only that it makes some capital available, but it really crowds in a lot of private sector capital that entrepreneurs need so desperately. And I would say as you're looking at structuring, it's so important to accompany those entrepreneurs along their journeys to an ecosystem approach. And so we start many times with a fellowship Acumen Academy Accelerators that help hone entrepreneurs' business plans. We have a and Acumen Angel who built a business plan called essentially Zebra Crop House. And it has created a network of warehouses to enable smallholder farmers, almost all women, to become more resilient to climate crisis and have storage facilities. It's really early days and we always we don't know if they'll succeed or fail, but we can help them actually build.
They're using a lot of smart pads, etc., but it's really the business model. It's helping them with talent. It's helping them actually see what the other business models and connect them to an ecosystem.
Then we've built something called that Agriculture Acumen Resilient Agriculture Fund. It's essentially a $60 million fund that might be instructive to describe because it started with 50% first loss that allowed us to crowd in the private capital on top. But it has a side-by-side $7 million technical assistance facility, not just for management assistance, but to help build the kind of tools you're talking about so that farmers can communicate to one another to the company, measure their impact in ways that have been game changing.
When you think about then therefore the patient capital and the growth capital that the Resilience Fund provides, there's probably no better than a company called Ethio Chicken. These stories are long term, which is also an important piece of it. This is a 13-year story. We started off with our patient capital. We were the first institutional investor in Ethio Chicken in Ethiopia when it was two guys who had never really held it like chicken in his life, but they had this big audacious dream that they were going to take on the Ethiopian chicken industry, which was fundamentally broken.
As the institutional investor, we accompanied them with our social capital, our networks, our access to grants, financing in some terms, and help them build a business model to reach millions of people across Ethiopia. And then the for-profit impact fund with the first loss capital was able to scale it. And just to give you an indication of how these tiny beginnings can really grow, Ethio is now in six African countries on its way to ten under different names, mostly Zuma, including Rwanda, Kenya, Ghana, Cote d'Ivoire, Uganda, and this year has employed 2,000 direct staff members, 16,000 agents who buy 50 million day-old chicks that they sell to millions of farmers who this year have chickens that will produce 5 billion eggs. So if you're looking at agricultural resilience, you are looking at significant income across a wide network of people. Ethiopia credits this single company for helping to reduce childhood malnutrition by 11%. To your point, 16,000. Entrepreneurs, most of whom make more than $10,000 a year already. And I am hoping an African unicorn. But it started literally with us putting in a couple hundred thousand dollars and betting on two entrepreneurs who may or may not have made it.
Borge Brende, World Economic Forum Thank you. We have 2 minutes left.
Jacqueline Novogratz, Acumen Okay.
Borge Brende, World Economic Forum For the whole panel. 15 seconds.
Jacqueline Novogratz, Acumen I just think what you're doing is glorious. Number two, what we need is capital. Yes. We also need to take a different approach to how we accompany our entrepreneurs and build ecosystems. And one of the things we're proud of with World Economic Forum is to be part of the Global Social Entrepreneurs Alliance. Because -- you said it -- it will take all of us. And and capital is one part of it. But entrepreneurs, I believe, are the solution.
Borge Brende, World Economic Forum Thank you. As you know, the social entrepreneurs spend a lot of us, our chairperson Hilde Schwab is there on the front row, too. So President Adesina and Scott, you have one minute each for closing remarks.
Scott Nathan, DFC All right. I'll be more brief than even a minute. I again, want to congratulate Norway and USAID on this innovative program. But we need to set our ambitions even higher, take this project bigger, have more projects. It's what we're trying to do at our institution. The problem is very solvable, and we only can do that through working with entrepreneurs, working locally, but having these kind of innovative structures to draw on capital. So thank you. It's really great to be a part of today. Thank you.
Akinwumi Ayodeji Adesina, AfDB I just want to say that what Jackie was saying about the youth is so important. But I hope that this initiative will help to do that. And we are launching from the bank. In fact, we've launched what's called youth and championship investment banks, but our new financial institutions in Africa, that will ensure that we have access to the kind of growth capital you're talking about. And so for the business of young people, the life cycle model, so this can actually help to de-risk a lot of the financing that goes to many of those loans. And lastly, you can't talk agriculture in Africa without women because they run it, right? Women run Africa. Right. And so basically, we have a program at the bank, which again, I want to plug into this, which is the affirmative finance action for women, where we have actually we're mobilising $5 billion for women businesses. Most of those are going to be in agriculture sector. So I think we should try and make sure that this is also something that talks and supports women and also supports quite a lot the young people in agriculture. But kudos to you. And I would be that to to work with you. And also hopefully I'll be like Nathan, I look at money I can put into it as well.
Borge Brende, World Economic Forum Thank you very much to the panel. We are at 7:00. That's a Swiss organisation like. So we need to be all Swiss time too. But I think this has been a really, really great session. I felt that I was part of something important and I can see also on others that we felt we were part of something that they can have very positive consequences not only for Africa but the world, and that's the way it should be. So big thank you to the Norwegian Minister, to also administrator power and to this great panel. So have a good evening.