A new financing agreement has been signed in Kigali to support the growth of agribusinesses in East Africa. The $10 million loan agreement was signed between the International Fund for Agricultural Development (IFAD) and AgDevCo Ventures on September 3, 2026. This fund aims to provide financing to early-stage agribusinesses in Ethiopia, Kenya, Rwanda, Tanzania, and Uganda. These businesses are often too small for major institutional private equity and too complex for traditional local banking.
The fund addresses a significant challenge faced by agribusinesses in East Africa. Typically, local commercial banks demand heavy physical collateral for short-term loans, which can be difficult for small businesses to provide. This has resulted in a financing gap of $65 billion for small and medium agribusinesses in Africa. The new fund uses a blended finance approach, which combines development capital with private investment to absorb initial risks.
The blended finance approach is designed to attract private investors who may be deterred by the high risks associated with early-stage agribusinesses. By providing a protective cushion, the development capital signals safety to private investors, encouraging them to invest in deals they would otherwise consider too volatile. Over a 12-year horizon, the AgDevCo-IFAD facility aims to scale 15 early-stage enterprises operating across production, input supply, aggregation, and processing value chains.
The fund is expected to have a significant impact on the lives of smallholder farmers and the broader economy. It is projected to directly benefit 128,000 smallholder farmers and generate roughly 2,900 full-time jobs, with a focus on women-led and locally-owned businesses. To access this funding, local agribusinesses must demonstrate strict institutional readiness, including clean financial records, compliant payroll systems, and clear corporate governance documentation.
The financing gap for African agriculture is estimated to be $180 billion annually. The new fund is a small but significant step towards addressing this gap. The AgDevCo-IFAD facility is designed to be patient and growth-oriented, providing capital to businesses that have the potential to drive economic growth and job creation in the region.
The fund's focus on early-stage agribusinesses is critical, as these businesses often struggle to access financing. By providing funding to these businesses, the AgDevCo-IFAD facility can help to unlock their growth potential and create new opportunities for smallholder farmers and rural communities.
The partnership between IFAD and AgDevCo Ventures is an important one, as it brings together two organizations with a deep understanding of the challenges and opportunities in East African agriculture. The fund is a positive development for the region, and its impact will be closely watched by stakeholders in the agriculture and finance sectors.
Key points
- The fund uses a blended finance approach to absorb initial risks and attract private investment.
- The fund aims to benefit 128,000 smallholder farmers and generate 2,900 full-time jobs.
- The financing gap for African agriculture is estimated to be $180 billion annually.
