Transforming Agriculture by Linking Technical Assistance to Blended Finance for Agriculture: Trends and Lessons from Africa

Agricultural transformation will be a key impact driver for development in Africa, and an essential part of achieving the Sustainable Development Goals (SDGs). In a context where public resources are increasingly under pressure, channelling more private investment into agriculture will be critical to achieve this goal. Blended finance, a facility structuring approach in which public development funds are leveraged to attract (additional) nonconcessional capital, will be required to transform the agricultural sector in Africa. Though blended finance has been increasing over the past years, only 3% of the value of blended finance initiatives is going to the agricultural sector. Addressing both the capital and capacity needs of smallholder farmers and SMEs - the backbone of the agricultural sector in Africa - is crucial to achieve agricultural transformation. In the light of the risks pertaining to agriculture, blended finance has the potential to play a crucial role.