IFC's Food System Development Program

Three quarters of the world’s poor live in rural areas and rely wholly or partially on agriculture for their livelihoods. The bulk of farmland in the world is managed by such smallholder farmers and small-scale agricultural entrepreneurs, who despite their central role in the economy often struggle with low productivity, limited access to markets for inputs as well as outputs, lack of access to adequate risk management tools, and limited access to the necessary finance to grow and prosper.

IFC’s Food Systems Development Program (FSDP) is an advisory initiative in partnership with the German Federal Ministry for Economic Development and Cooperation, BMZ, to support sustainable rural transformation in Africa. Through an integrated, private investment-led and market-oriented approach, the program supports access to agricultural finance and value chain development to benefit smallholder farmers, farmer organizations, and micro, small and medium enterprises in the agricultural sector.

Despite significant progress in agricultural finance in recent years, financial services providers are unable to meet the $240 billion demand of rural households for agricultural and non-agricultural finance. Financial services providers have historically been unwilling or unable to serve smallholder farmers and small-scale agricultural entrepreneurs because of their lack of collateral and formal land rights, seasonality and irregular cash flows, high transaction cost associated with smaller loans, high non-performing loans due to limited transaction traceability, and systemic risks such as floods, droughts, and pest.

The Food System Development Program assists financial institutions and agricultural value chain actors in Africa to develop innovative financing solutions to address historic challenges in the provision of agricultural finance. The program focuses on building financial services partnerships along the value chains and to leverage digital technology to build and test new tools, processes, and financial products to meet the needs of smallholder farmers and smaller scale entrepreneurs in the agricultural industry.

The program also pursues an extensive research and learning agenda, harnessing and sharing insights gained in program projects for the industry and the public good.