Private Sector Financing Programme

Private Sector Financing Programme to catalyze investment in small-scale agriculture

Increasing IFAD’s impact on food security and rural poverty requires moving beyond routine interventions and traditional partners. In recent years official development aid for agriculture has stagnated at around US$10.5 billion per year and is far from answering the funding needs to end hunger. At the same time, in Africa alone 440 million youth will be entering the job market in the next two decades and need opportunities.

Small-scale farmers and rural micro, small and mid-size enterprises (MSMEs) are one solution: they are the backbone of global agriculture and food systems. But they lack access to the markets, services, and financing they need to grow and be sustainable. Their needs are known, but most investors lack the knowledge and capacity for reaching small-scale farmers and rural MSMEs.

Bridging this gap requires an investor with a deep understanding of the agriculture sector and rural communities. IFAD’s Private Sector Financing Programme (PSFP) is a financing facility designed to promote increased investment into small-scale agriculture. The facility offers financing directly to operating companies as well as financial intermediaries on-lending, investing or offering services to small farmers, rural poor and MSMEs. The key features of the PSFP are:

• Instruments offered: Debt, equity, risk mitigation, such as guarantees and risk sharing facilities. Both regular and blended finance structures are considered.
• Geographic focus: Countries where IFAD operates with focus on Lower Income Countries, Lower Middle Income Countries, and countries in fragile situations.
• Thematic focus: Youth employment, women’s empowerment, environmental sustainability and climate resilience of small scale farmers and producers and poor rural communities.
• Project characteristics: IFAD sources investment opportunities from its portfolio of sovereign projects as well as from partners. Projects are screened against key criteria - alignment with IFAD mandate and country strategy, impact, risks, ESG and additionality.
• Leverage: For every dollar IFAD invests, we seek to achieve important leverage by catalysing private sector investment

As the only international financial institution focused on rural transformation IFAD offers PSFP partners:

• Rural expertise: deep experience working with, training and organizing small-scale producers and rural communities and MSMEs
• Long-term vision: Allows IFAD to invest patient capital in investments with a longer-term horizon
• Global footprint: Local presence in 40 regional hubs and country offices
• Higher-risk appetite: Focus on smaller investments and to crowd-in investors to small-scale agriculture
• Impact measurement: Robust impact measurement frameworks and ability to deliver results
• Trusted partner: convening power and long-standing relationships with governments