ACELI Africa showcased in IC Forum 2025 on Local Private Sector Support
Access to finance remains among the biggest challenge for most SME’s working in the agriculture and food sector in Africa. Around 60% of the population is working in agriculture, but the sector remains highly underfinanced. In East Africa only 3-4% of the financial sector share goes towards agriculture and the food sector. Supporting local private enterprises with adequate finances and sound technical assistance are keys to achieve the SDGs, especially in a time as conventional development assistance is increasingly questioned. An interesting session was held on this topic during the recent IC Forum 2025, organized by SDC in Switzerland.
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Introduction
Small and Medium-sized Enterprises (SMEs) are a vital part of economies worldwide, representing a large portion of businesses, employment, and value added, and are key drivers of job creation and innovation. This is also the case for most of the developing countries as well as for the agriculture and food sector. Despite that over 60% of the labour force works in the agriculture and food sector, the sector remains cruelly underfinanced. In East Africa alone the finance sector covering agriculture and food is between 3-4% and the annual financial gap is estimated to be around 60 billion USD. Beside lack of finance, SMEs in agriculture and food lack of specific support such as tailor-made capacity building programs. There is also little attention by policy makers to this sector, despite its huge capacity to create jobs, especially for the many youths in the global South, which are looking for economic opportunities. However, there are some interesting projects and organisations, which have successfully tackled this problem.
Impact Investors to achieve the SDGs
During the last IC Forum 2025, organised in February by SDC in Zurich, a highly qualified and highly interesting panel discussion, moderated by ambassador Christian Frutiger, head of the thematic cooperation of SDC showcased different projects and organisations with promising results in the promotion of the local private sector. The first example came from Nepal with the Mandala Agri Fresh start-up offering solutions for small scale farmers on post-harvest management techniques in the vegetable sector. Among the biggest challenges mentioned by the representative of the company was to convince farmers that by adopting the proposed simple and cheap technology the return on investments was assured. Mandala Agri Fresh received tailor made and essential support from Swisscontact, represented as well in the panel discussion through his CEO, Philippe Schneuwly who explained successful approaches in the collaboration with Swiss private companies in TVET . Another inspiring example was presented by Andreas Kirchschläger from the ELEA Foundation, a philanthropic impact investor. Similar as in Switzerland, start-ups in the South need initially support via training, capacity building and also finance. Philanthropic impact investors are essential as they can assume higher risks as well as less return-on-investment perspectives as normal impact investors, which are not philanthropic. Additionally, to finance, SMEs need also trainings and capacity building programmes, a knowledge, which Switzerland can provide.
Blended finance through ACELI Africa
Another eloquent example on successful SME support came from Tanzania, with the representative of EFTA Tanzania who is providing agriculture machines to farmers and is getting support from local banks with loans facilitated by the blended finance project ACELI Africa. ACELI Africa is a market incentive facility designed to make agricultural SMEs more attractive to lenders, while aligning lenders’ portfolios with development goals. SDC is among the pioneer bilateral donors supporting ACELI. Through specific instruments such as first loss cover, originating incentives as well as through impact bonuses for nutrition, environment, women and youth investments, ACELI triggers more financial support from local banks and impact investors in the agri-food sector in selected countries of East Africa (Kenya, Tanzania, Uganda, Rwanda and Zambia). Started in 2020, ACELI has been able per 2024 to partner with 43 lenders across the different countries and trigger 1’590 loans for a total amount of 124 million USD, with an average loan size of 78’000USD with positive impacts on 641’000 farmers and employees of SMEs (60% of women).
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