Germany partners Incofin IM and KfW to launch €40m Agri-Finance Liquidity Facility for African farmers

German Development Minister Gerd Müller has announced the launch of Agri-Finance Liquidity Facility (“ALF”) , a new initiative of the ministry with Incofin IM and German bank KfW.

The Agri-Finance Liquidity Facility (“ALF”) is a debt facility investing in sustainable agri-enterprises in mainly Africa and Latin-America, funded by KfW/BMZ and managed by Incofin IM as the Alternative Investment Fund Manager.

With a size of EUR 40 million, the facility will support actors in the sustainable agri-food value chain in developing and emerging countries to maintain their operations during and after the Covid-19 crisis. The capacity for investments has been extended to other agri-finance lenders and their investees in order to be as broad and inclusive in its impact as possible.

To offset the pandemic’s negative impacts on the sustainable agricultural production sector, KfW approached Incofin IM to develop a proposal for an emergency liquidity facility initially targeted for investees of the Fairtrade Access Fund (FAF).

After reviewing the proposal, it was jointly decided to expand the focus of the facility to other agri-finance lenders, principally members of the CSAF (Council of Smallholder Agricultural Finance), and their investees to be as broad and inclusive in its impact as possible. This will allow the facility to be as much inclusive as possible and to generate further impact.

Covid-19 disrupted global food systems, testing the resilience of farmers who already receive the least value for their contributions to agri-food value chains. Many farmers, forced to harvest with significantly reduced personnel, lost quality and volumes of their crops.

As household budgets shrank, the sustainability of a product lost its strength as a purchasing argument. Fairtrade sales suffered a blow. On average, this meant a drop of more than $500 in smallholder farmers’ annual incomes, representing a substantial impact on their household economies.

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