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Agriculture Financing Flows in Sub-Saharan Africa
New research from TechnoServe finds that growing investment in Africa’s food sector has largely failed to reach the farmers who form the foundation of agricultural value chains, comprise the base of rural economies, and drive sustainable production.
With support from FCDO through the CASA Program, TechnoServe has published fresh analysis of how capital has been invested in Sub-Saharan Africa’s food systems–and how little of it has reached smallholder farmers.
Agriculture Financing Flows in Sub-Saharan Africa analyzed a range of sources to track investment in the sector between 2015 and 2024. The study also builds on evidence from CASA TAF, which works with agribusinesses to implement solutions to channel capital to farmers.
Detailed research covering Nigeria, Tanzania, and Mozambique found that while the greatest need for capital is at the farm level–where smallholders require access to high-quality seeds, fertilizer, irrigation, and extension services–20% or less of financing actually goes to farmers.
Rather, most investment flows to aggregators, processors, and distributors of food. In Tanzania, for example, financing meets nearly all the capital needs of large agribusinesses, while agricultural MSMEs receive just 12% of the financing they need and smallholder farmers just 2%.
Challenges on the Farm, Weaker Value Chains
This imbalance not only impacts farmers: it weakens the entire value chain. Regional analysis found that 92% of investments relied on smallholders, as they form the foundation of most value chains. However, despite playing such a critical role, these farmers rarely access the capital needed to improve their production and resilience.
The report highlights the example of an oilseed processor in Ethiopia that was operating at just 40% of its factory capacity due to low productivity among local farmers and weak relationships with suppliers. Working with CASA TAF, the processor introduced an agent-based sourcing model that strengthened relationships with farmers and enabled them to purchase high-quality seeds on credit. As a result, farmers increased their incomes, while the processor secured a more reliable supply of raw materials and increased its factory capacity utilization.
A Roadmap for Better Farm-Level Finance
While a growing number of actors are testing innovative approaches to expand financing for agricultural SMEs, the report emphasizes the need for investors and development organizations to align around a shared priority: investing at the farm level to generate financial returns, development impact, and green growth.
The study also lays out practical recommendations for making this opportunity a reality. It highlights the important role of DFI as investors in banks, funds, and agri-SMEs and their ability to catalyze change. It also stresses the importance of expanding and strengthening connections with local financial institutions. Finally, it highlights the role of technical assistance, financial innovation, and technology in reducing risk and improving the economics of farm lending.