Boosting small and medium-sized enterprises and creating jobs for rural youth
In developing countries, millions of small and medium-sized enterprises (SMEs) don't have access to capital to grow their business. The unmet demand for financing from smallholder farmers is estimated at US$170 billion in sub-Saharan Africa, South and South-East Asia, and Latin America.
Another compelling challenge is the growing number of young people looking for work. Today’s young generation is the largest ever - estimated at 1.2 billion. A significant percentage of them live in rural areas. In Africa alone, 10 to 12 million young people enter the labour market every year. They need opportunities and an alternative to migration.
Investing in rural SMEs and agri-businesses is essential to spur productivity, improve incomes and livelihoods and importantly create jobs, in particular for the youth.
An innovative impact fund
Originally sponsored by IFAD in 2019, the ABC Fund is an independent private investment fund. It is managed by Bamboo Capital Fund with Injaro Investments Limited, as investment advisor. It has received contributions from the European Commission, the Organisation of Africa, Caribbean and Pacific States, IFAD, Luxembourg and the Alliance for a Green Revolution in Africa. The IFAD investment was made possible thanks to financial support from the Swiss Development Cooperation.
This impact fund proposes an innovative approach for attracting much needed capital to rural areas and to underserved segments of agribusiness value chains in developing countries. In particular it catalyses blended capital and provides technical assistance to investees through a dedicated facility.
The ABC Fund provides loans and equity investments adapted to the needs of rural SMEs, farmers' organizations, agri-preneurs and rural financial institutions.
It particularly targets commercially viable ventures that can help create employment, in particular for youth and women, and improve rural livelihoods. The fund also prioritizes climate-smart projects that promote sustainable production.
The objective is to mobilise EUR 200 million from public and private investors over the next ten years. It is estimated that some 900,000 households would benefit from ABC Fund interventions.
The ABC Fund benefits from a unique pipeline of projects. Building on their unique portfolios of programmes, IFAD and AGRA work with the fund manager to identify attractive and impactful investments in promising SMEs.
IFAD has 40 years’ experience in rural areas, an extensive field presence, a strong expertise with agri-businesses and local and national networks.
In a continuation of its efforts to help small-scale farmers and micro-, small and medium size rural enterprises in developing countries create jobs and increase incomes, IFAD announced today it will make an investment of US$9 million (€8.4 million) into the Agri-Business Capital (ABC) Fund, a blended capital impact fund.
An impact fund with an innovative approach for attracting much needed capital to the rural areas of developing countries will be launched today at the annual meeting of Member States of the International Fund for Agricultural Development (IFAD).
The Agri-Business Capital Fund (ABC Fund) invests in smallholder farmers and rural small and medium-sized enterprises in developing countries to support sustainable and inclusive agricultural value chains.