FMO invests US$7.5m in ARAF to support climate smart agriculture

AFRICA – Dutch development bank FMO has invested US$7.5m in the 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.

Impact investment firm Acumen established the Acumen Resilient Agriculture Fund (ARAF) to support smallholder farmers to enhance their livelihoods and climate resilience.

The fund with its total target size of US$50m will provide financing and technical support to early-stage and early-growth agribusinesses.

According to 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.e. 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.”

One of the companies that ARAF will invest in include Aggregators who provide bundled solutions such as climate resilience inputs and/or affordable credit bundled with extension services or access to markets.

The other targeted company include Agri Tech businesses 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;

ARAF will also invest in Financial service providers 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 will invest the US$7.5m in the dedicated Agriculture fund with MASSIF (US$5m) and Building Prospects (US$2.5m), two funds FMO manages on behalf of the Dutch government.

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