DFIs Unveil $3bn Investment to Bridge Africa’s Agric Value Addition Finance Gaps

Gilbert Ekugbe

The African Development Bank (AfDB), Development Finance Institutions (DFIs), private sector and development-oriented technical partners have unveiled $3 billion investment facility in their bid to bridge critical financing gaps and enhance agricultural value addition in Africa.

According to the founding members of a new private-sector focused Alliance for Special Agro-Industrial Processing Zones (SAPZ), the move would transform Africa’s underdeveloped rural areas into agro-industrial corridors of prosperity and help to streamline the development and delivery of SAPZ projects.

The alliance was launched at the 2023 Africa Investment Forum Market Days in Marrakech, Morocco.

The new commitments consisted of $1.1 billion by the AfDB; $1 billion by Afreximbank; $300 million by the Islamic Development Bank Group (IsDB) and $600 million from Arise Integrated Industrial Platforms (Arise IIP) and its partners.

The President of the AfDB, Dr. Akinwumi A. Adesina, said that the alliance would raise funds through various investment windows for project preparation, project development and construction, and financing for tenant companies.

“The beauty of this alliance is that it brings together a lot of different, diverse players — is just a start and others will join us,” said AfDB’s Vice President for Agriculture, Human and Social Development, Dr. Beth Dunford.  

The AfDB boss stated that the SAPZ stimulate structural transformation in agriculture by connecting rural and urban development through the zone’s ecosystem, stressing that these zones integrate smallholder farmers into value chains through logistics and infrastructure, linking them to agro-industrial processors and consumer markets.

On his part, the President and Chairman of the Board of Directors of Afreximbank, Prof. Benedict Oramah, welcomed the emergence of the alliance and suggested that to attract the private sector, the creation of continental regulatory bodies that countries could respect should be considered. “Projects of this nature are very visible,” he explained.

The members of the alliance said that meeting this financing goal would deliver an additional 15 to 20 SAPZ projects in various countries across the continent and improve administrative, policy and investment incentives.

The CEO of the International Islamic Trade Finance Corporation and acting CEO of the Islamic Corporation for the Development of the Private Sector, Mr. Hani Sonbol, who is representing IDB’s President, Dr. Muhammad Al Jasser, said;  “strengthening food sovereignty in Africa will require us to think differently in terms of investment. We look for self-sufficiency, climate change and adaptation, and how to attract private sector involvement.”

The Chief Executive Officer of the Arise IIP, Gagan Gupta, underlined the need for infrastructure around the zones that reflects the need of these communities, including housing, transportation, health and extension services.

“These zones rely on the governments for policy frameworks, supporting infrastructure, and training and vocational centres,” he said.

The United Nations Industrial Development Organisation (UNIDO) would bring on its wealth of technical assistance knowledge, practical experience, tools and methodologies to the alliance.

“We have a lot of experience in developing, planning and implementing industrial parks and special economic zones,” said UNIDO Managing Director of the Directorate for Sustainable Development Goals, Innovation and Economic Transformation, Mr. Gunther Beger.

According to Berger, “the Alliance presents a completely new approach to transform Africa’s agro-food system. This is a much-needed partnership of financial institutions, public and private sector players.”  

Across the continent, the AfDB has already committed $853 million to develop more than two dozen Special Agro-Industrial Processing Zones in 11 countries as the investment has attracted $661 million in co-financing from bank partners.

The Senior Special Advisor to Dr. Adesina, Professor Oyebanji Oyelaran-Oyeyinka, said that the SAPZ is a tool designed to achieve the twin objectives of structural transformation and rural development through agro-industrialisation.

Prior to the panel discussion, the Minister of Industry and Trade, Kingdom of Morocco, Mr. Ryad Mezzour, called on large private sector companies to become tenants in SAPZ.

“You need a company that can bring the others – that integrates this area.”

Rwanda’s Minister of State for Treasury, Richard Tusabe, said: “Special Agro-Industrial Processing Zones will give us a chance to mass produce the food we need to feed our population. We need to feed our people — is no shortcut.”

The Africa Investment Forum draws African heads of government, investors, transaction sponsors and development financial institutions. The forum also includes boardroom sessions that showcase billions of dollars in agribusiness, transport and energy deals, among other critical sectors, to investors.