news - Investing in smallholder farmer climate resilience

FMO invests in Acumen Resilient Agriculture Fund (ARAF) to support the provision of climate resilience solutions to smallholder farmers in East and West Africa.

Globally, there are an estimated 500 million smallholder farmers cultivating less than 2 ha of land, many of whom are poor, experience food insecurity, and live in highly precarious conditions. Climate change poses a significant risk to these farmers and threatens to undermine global progress toward poverty alleviation, food security, and sustainable development.

Especially in in Sub-Saharan Africa, home to almost 50mln smallholders, smallholder farmers are highly vulnerable to climate change because most depend on rain-fed agriculture, cultivate marginal areas, and lack access to technical or financial support that could help them invest in more climate-resilient agriculture. Due to severe droughts, rising temperatures, and rainfall variations, crop yields are predicted to reduce by more than 15 percent.

Impact investment firm Acumen established the Acumen Resilient Agriculture Fund (ARAF) to support smallholder farmers to enhance their livelihoods and climate resilience. The fund (target size USD 50mln) will provide financing and technical support to early-stage and early-growth agribusinesses. These businesses provide climate resilience solutions to smallholder farmers in East and West Africa.

Pieternel Boogaard, Director Agribusiness, Food and Water at FMO: “Reducing carbon emissions is not enough to reduce the impacts of climate change. There is an increasing need to invest in climate adaptation projects and the climate resilience or our (end-)clients, i.a. smallholder farmers. That is why we are proud to partner with Acumen in this innovative fund that aligns well with our strategy to invest in climate smart agriculture as well as enhance food security, support sustainability and promote inclusive development.”

ARAF will invest in the following types of companies:

• • Aggregators: companies that provide bundled solutions such as climate resilience inputs and/or affordable credit bundled with extension services or access to markets;
  • Agri Tech businesses: companies that provide digital solutions such as an online market place that connects farmers with input providers and/or offer extension support to improve farmer productivity;
  • Financial service providers: companies that provide farmers with access to innovative financial services enabling them to diversify their income base by investing in additional productive assets and making it affordable to them to purchase farm inputs.

FMO invests 7.5mln in the dedicated Agriculture fund with MASSIF (USD 5mln) and Building Prospects (USD 2.5mln), two funds FMO manages on behalf of the Dutch government.

About Acumen

Acumen is an impact investment firm with over 17 years of experience with investing in Small and Medium-sized Enterprises (SMEs) in a.o. Healthcare, Renewable Energy, and Agriculture.