In Africa, the food environment is dominated by smaller companies, especially in retail and distribution. Small and medium-sized input suppliers, off-takers, processors and distributors along the food value chain are key drivers of job creation and regional economic growth. But the growth of these small and medium-sized enterprises (SMEs) is highly constrained by lack of access to finance. A 2018 survey of 107 SME respondents (agri-food enterprises) in Africa found a funding gap of nearly USD 200 million.
The reasons for the lack of financial services for SMEs in Africa include obstacles related to the companies themselves, such as their low level of formalisation, lack of managerial skills, and lack of equity, as well as obstacles related to the financial services industry, including unfamiliarity with nutritious value chains as an investable sector, and difficulty segmenting clients and accurately assessing risk.
GAIN’s new Nutritious Food Financing programme aims to both influence existing investment funds which could better support nutritious foods value chains, and also to create a new investment fund which will specifically target nutrition. It aims to:
- Regularly undertake landscape and market analyses and write seminal reports on Nutritious Foods Financing.
- Convene stakeholders, run pitch competitions and deal rooms to influence the financial services industry.
- Develop impact metrics for measuring commercial investments in nutrition.
- Develop and maintain an investable pipeline of SMEs producing nutritious foods.
- Set up a new investment fund to bridge the gap between lenders and SMEs that produce and distribute nutritious foods.
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