Statement by Gilbert F. Houngbo, President of IFAD, on the occasion of the ABC Fund launch
Location: FAO HQ, Rome, Italy
15 February 2019
Excellencies, Ladies and Gentlemen,
I am extremely pleased to be part of this launching of the Agri-Business Capital Fund – the ABC Fund -- with our partners today.
We are arriving at the end of what we consider to be the first leg of a journey that started back in 2012 with IFAD's first private sector strategy.
If it takes time for a good idea to mature and become reality, it also takes partners. I would like to thank Luxembourg, the EC, the ACP and AGRA for their strong commitment and for bringing their own expertise and resources to this initiative.
Ladies and gentlemen,
We all know that the demand for financing for smallholder farmers is immense − estimated at US$200 billion in sub-Saharan Africa, South and South-East Asia, and Latin America.
Credit provided by financial institutions and value chain actors currently only totals an estimated US$50 billion, leaving a US$150 billion financing gap.
We also know that investors are increasingly looking for investment with an impact. For part of the financial community, return is a key but is not the only incentive anymore.
Also, dozens of millions of young rural people are arriving on the job market every year. In Africa alone, we know that 10 to 12 million youngsters come to the market every year. The growing demand for food is also an opportunity.
But rural SMEs, young people, and agribusinesses need to access capital if they are to invest, grow and create jobs.
This is where the ABC Fund comes in.
The fund will offer loans to rural SMEs and farmers’ organizations which are currently not served by financial services.
They are considered too remote from cities, too small, too risky and too costly to invest in.
But we do not believe so. We trust their hard work, their entrepreneurship and also their appetite for success.
We are convinced that they can be an engine for development in their communities and create work for young people and particularly young women.
But for this to happen, we have to completethe second leg of the journey.
We have on board experienced impact investors, Bamboo Capital Partners and Injaro investment which will be managing the ABC Fund.
IFAD will work closely with the fund manager to identify attractive and impactful investments opportunities in promising SMEs. We estimate about 70% of IFAD projects include a value chains component.
Ladies and gentlemen,
Today's launch of the ABC fund is an important step for all of us. This initiative will serve a group of actors which are still too often left out but that have a huge potential– I mean small farmers, I mean the cooperatives, I mean their organizations, and the rural SMEs.