The agriculture sector is a key part of Norfund’s strategy to create jobs and improve lives by investing in companies that promote sustainable development.
Successful investments in the agriculture sector and value chain help to combat poverty by creating jobs, boosting incomes, promoting climate change adaptation and enhancing food security. Agriculture is a demanding sector where risk is high and financial returns are often limited. There is therefore a great need for more risk capital than what is available in the market.
By investing directly in companies that produce and process food, Norfund helps to increase production efficiency and ease farmers’ access to local markets and export. Combining a partner company’s own production with contract cultivation by smallholder farmers often gives them more secure market access, increased competence and inputs such as seeds and fertilizer.
Norfund has 24 direct investments within the food and agriculture sector with total commitments of NOK 2,955 million.
In 14 of the companies Norfund has invested directly in, Norfund has a board position. Through active ownership, the fund contributes to increased expertise in addition to much-needed capital. Norfund also aims to enhance the sustainability and development effects of our investments in the sector through our Business Support facility. 15 of the Norfund investees within the food and agriculture sector have received such support.
By the end of 2023, about 120 000 small-scale farmers were associated with the companies in Norfund’s Scalable Enterprise portfolio. When considering those who reported gender breakdown, 37 percent of the small-scale farmers are female.
Giving access to loans to farmers
Most traditional banks in Africa have a low share of loan portfolio lending to primary agricultural and food and agricultural value chain clients. Through investments in the development of banks and microfinance institutions that reach out to this sector, more farmers can get access to loans to invest in anything from new tools and seed varieties to artificial fertilizers and irrigation systems, thereby increasing their productivity. Such investments have become even more needed to adapt farms and businesses to a changing climate.
Arise is Norfund’s main vehicle for large scale equity investments in banks in Africa. The platform, which Norfund owns together with FMO, the Dutch DFI, and Rabobank, one of the world’s largest agricultural banks, has minority stakes in nine financial institutions based in eight countries, with an additional presence in over 33 countries across the continent. Arise sees great potential in the agricultural lending segment and is engaged in active dialogue with partner banks to realize more of this. By the end of the 2023, Arise provided around 10 billion NOK in primary agricultural lending.
