Financial Innovation Supporting Agricultural Entrepreneurship in the WAEMU

This event was organized by the FERDI's chair on Agricultural modernisation policies in Africa and the ALFA association, with the support of InVivo.

WAEMU intends to undertake a major strategic reorientation of its agricultural policy by diversifying funding sources and increasing private sector involvement as part of an integrated approach to agricultural value chains.

The regional institution has noted that the current supply of credit is often inadequate: bank loan maturities are too short, interest rates are high relative to the profitability of activities, and the standardization of financial products is incompatible with the fluctuations of agricultural activities. Furthermore, collateral loans are problematic due to the very limited assets of the stakeholders and the precariousness of property rights.  Furthermore, development institutions dedicated to the private sector may find that their risk management strategies can potentially conflict with their impact objectives. 

What solutions can overcome the mismatch between supply and demand for financing in the private agricultural sector?  How can more capital be attracted to a sector perceived as too risky ?

In partnership with the WAEMU Commission, FERDI has studied the architecture of a "blended finance" investment vehicle, which should help mitigate risk, accelerate investment profitability and amplify the positive environmental and social impacts of agricultural entrepreneurship development in WAEMU.

The conference presented and discussed the main features and feasibility of this financial instrument. It is managed by asset management professionals, mixes public, philanthropic and private resources, and is exclusively dedicated to the agriculture and livestock sector in Africa. 

Speakers. The conference brought together the various players involved, such as project leaders, business owners, investors, foundations, donors, financial institutions, public administrations and regional organisations. Together, they examined this instrument designed to support up to one hundred African agribusinesses "champion" enterprises capable of significantly stimulating the structuring of value chains, including small family farms.