Agrifi: investment in smallholder agriculture and agribusiness micro/ small/medium enterprises

Agrifi is a new initiative that increases investment in smallholder agriculture and agribusiness micro/ small/medium enterprises (MSMEs) to achieve inclusive and sustainable agricultural growth.

Agrifi will be launched in 2016, together with interested parties and European Financial Institutions.

Neven Mimica, European Commissioner
for International Cooperation and Development

Real or perceived high risks often prevents investments in agriculture from taking place. What we need therefore, is to reduce this risk, and increase available finance. What we are proposing is a twin track: First, reducing risk on the producer side – meaning business and advisory services, skills, technology and innovation. Second – providing greater risk-bearing finance through blending. With these objectives in mind, the EU is preparing a new Agriculture Financing Initiative – to be launched next year. AgriFI is precicely aimed at increasing investment in smallholder agriculture and agribusiness enterprises. Remark by EU Commissioner Mimica at a Side event: Catalysing private sector engagement and resources for development: the EU and African perspective, Addis Ababa

A central feature of Agrifi is that the provision of EU grants will mobilise additional public and private investment. This additional investment is needed to enhance the development impact of investment projects and achieve impact at scale.

• Agrifi responds to the lack of financing mechanisms adapted to farmers and agri-entrepreneurs, particularly for smallholders and agribusiness MSMEs. 
• Agrifi will be backed-up by a robust component of technical assistance and value chains analysis capacity, to support decision making on investment, to enhance business development and advisory services for farmers and agri-entrepreneurs and to monitor the actions for accountability purposes. 
• Agrifi addresses this situation by providing greater risk-bearing capacity through public money, to encourage project promoters and attract private finance to viable investments which would not have happened otherwise. 
• Agrifi is therefore about addressing a market failure and it finances those actions that have a clear development impact on those who would normally not be reached. This includes smallholders with limited market orientation, vulnerable farmers, women and young farmers and entrepreneurs

Background:

Catalysing private engagement and resources for development - the EU’s role
© European Union, 2015
24 pages

In May 2014 the European Commission adopted its Communication on “A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries”. This sets out the role of the private sector as being at the forefront of international development in its partner countries. It proposes a series of actions in areas where the Commission believes it can add value and effectively complement actions by the EU Member States and other development partners.

15 July 2015. Catalysing private sector engagement and resources for development: the EU and African perspective, Addis Ababa. 

• This side event took place on  in the margin of the Third International Conference on Financing for Development (13 – 16 July 2015). It focused on the need to work for the development of the private sector and to engage with the private sector to achieve development goals. 
• The event looked specifically at the role of blending in particular in the agricultural and energy sectors. 
• The side event was organised jointly by the European and African Union Commissions and gathered representatives from the UN, AU, EU, EIB, other European Finance institutions as well as European and African private sector. 
• The event followed up from the 5th EU Africa Business Forum held in 2014 in Brussels.