Private Sector Financing Programme (PSFP), a new financing programme launched by the UN’s International Fund for Agricultural Development (IFAD), has announced its first loan of US $5million to a Nigerian social impact enterprise, Babban Gona to boost small-scale farmers.
The Private Sector Financing Programme (PSFP) aims to spearhead an increase in much-needed private investment in small and medium-sized enterprises (SMEs), farmers’ organizations and financial intermediaries servicing small-scale farmers, which are too often neglected by investors. It will provide loans, risk management instruments (such as guarantees), and equity investments.
Babban Gona has a strong background in successfully moving small-scale farmers from subsistence to a more market-orientated model. The loan is set to support 377,000 small-scale rice and maize producers in Nigeria with a comprehensive package of training, quality inputs, and marketing services.
Access to financial services
Babban Gona will also store and sell the harvest on behalf of its farmers when prices are higher. They aim to create up to 65,000 jobs for women and 66,500 jobs for youth by 2025. By committing these funds, the PSFP aims to stimulate larger contributions from other investors and help Babban Gona meet its target to raise US $150 million to reach millions of small producers.
Lack of financing and access to financial services prevents rural SMEs and small-scale farmers from harnessing opportunities offered by a growing demand for more diverse and nutritious food globally. SMEs involved in food processing, packaging, transport and marketing are essential to small-scale farmers, providing them with services, inputs, and market opportunities, which contribute to increasing their income and employment.
IFAD aims to mobilise US $200 million for the PSFP from public, private and philanthropic sources to leverage a total of US $1 billion in private investments. This will improve the lives of up to 5 million small-scale farmers. The PSFP will focus its investments on job creation, women’s empowerment, building farmers’ resilience and accelerating climate change mitigation.
