Development finance institutions (DFIs) led by the African Development Bank (AfDB) have partnered to finance $3-billion in a private sector-focused Alliance for Special Agro-Industrial Processing Zones (SAPZs) to bridge the critical financing gap in agriculture in Africa.
These zones are aimed at integrating smallholder farmers into value chains through logistics and infrastructure, and linking them to agro-industrial processors and consumer markets.
Notably, the AfDB has committed $1.1-billion of financing to the cause, Afreximbank has committed $1-billion and the Islamic Development Bank Group (IsDB) has committed $600-million. Other partners Arise Integrated Industrial Platforms and the United Nations Industrial Development Organisation will contribute the balance of financing.
The alliance will also help streamline the development and delivery of SAPZ projects, while raising funds through various investment windows for project preparation, project development and construction, as well as financing for tenant companies.
The development finance institutions involved have the common goal of enhancing agricultural value addition in Africa, as well as increasing food security.
According to the Alliance members, meeting this financing goal will deliver an additional 15 to 20 SAPZ projects in various countries across the continent and improve administrative, policy and investment incentives.
Notably, the alliance was launched at the 2023 Africa Investment Forum Market Days, which was hosted in Marrakech, Morocco, on November 8.
IsDB CEO Hani Sonbol says financing alone has never been enough to fully develop the agriculture sector in Africa; rather, strengthening food sovereignty in Africa will require a different way of thinking in terms of climate change and adaptation, self-sufficiency and how to attract private sector investment.
Each partner of the alliance brings with it a wealth of technical assistance knowledge, practical experience, tools and methodologies for development.
In particular, the AfDB has already committed $853-million to develop more than two dozen special agri-industrial processing zones in 11 countries, which has attracted $661-million more in co-financing from partners