Proparco has committed $12 million to the Acumen Resilient Agriculture Fund II (ARAF II), reinforcing efforts to bridge one of Africa’s most persistent development challenges: the shortage of early-stage financing for agricultural enterprises. The investment, announced on July 16, is expected to support innovative agribusinesses across sub-Saharan Africa, expand access to markets and climate-smart technologies for smallholder farmers, and create or sustain more than 2,900 jobs. Managed by impact investor Acumen, the fund aims to back around 20 high-potential businesses that are developing commercially viable solutions to improve agricultural productivity, food security and climate resilience.
The investment comes at a time when African governments and development finance institutions are intensifying efforts to mobilise private capital into agriculture, a sector that remains central to the continent’s economic development but continues to face chronic underinvestment. According to Proparco, the latest commitment builds on its earlier participation in ARAF I and reflects growing confidence in venture capital as an important financing mechanism for businesses that are too mature for grant funding but often too early-stage to secure conventional bank loans.
The financing will enable ARAF II to invest in businesses offering practical solutions across agricultural value chains, including climate-smart farming technologies, digital agricultural services, market access platforms, financial inclusion products, sustainable input distribution and post-harvest innovations. These enterprises are expected to improve productivity while helping farmers adapt to increasingly volatile climate conditions that are disrupting agricultural production across many parts of Africa.
According to Guillaume Barberousse, Head of Proparco’s Investment Department, the investment is intended to support entrepreneurs developing scalable solutions that strengthen food security, improve farmers’ livelihoods and enhance climate resilience. The fund also meets the 2X Challenge gender-lens investment criteria, reflecting an emphasis on increasing women’s economic participation through investments that expand opportunities for female entrepreneurs, employees and farmers.
The announcement highlights the growing role that development finance institutions are playing in addressing structural financing gaps that continue to constrain Africa’s agricultural transformation. Despite agriculture contributing approximately 30% of Africa’s gross domestic product, the sector receives only 6% of total commercial bank lending, illustrating a long-standing mismatch between the sector’s economic importance and the availability of affordable investment capital.
According to the African Development Bank, Africa possesses nearly 60% of the world’s remaining uncultivated arable land, providing significant potential to increase domestic food production and agricultural exports. Yet the continent remains heavily dependent on imported food while experiencing some of the world’s highest levels of food insecurity. Population growth, climate variability, rising production costs and supply chain disruptions have further exposed weaknesses within agricultural systems that require sustained investment rather than short-term interventions.
Smallholder farmers remain at the centre of this challenge. They account for nearly 80% of agricultural production across Africa but frequently lack access to affordable finance, quality inputs, mechanisation, insurance, reliable markets and climate information. Limited financing not only affects farm productivity but also constrains agribusinesses that provide services throughout agricultural value chains, reducing opportunities for rural employment and economic diversification.
Early-stage agribusinesses are particularly affected by what investors commonly describe as the “missing middle” of agricultural finance. Many innovative companies possess commercially viable business models but struggle to secure growth capital because traditional financial institutions often consider agriculture to be a high-risk sector characterised by seasonal revenues, weather-related uncertainty and fragmented markets.
Venture capital funds such as ARAF II seek to address this financing gap by providing patient capital alongside strategic business support. Rather than focusing solely on financial returns, impact investment funds typically evaluate enterprises according to their ability to generate measurable social, environmental and economic outcomes alongside commercial performance.
Acumen, which manages ARAF II, has already assessed nearly 700 investment opportunities and invested in 14 businesses across East and West Africa through previous funds. These investments span multiple agricultural subsectors, including sustainable food production, agricultural technology, farmer services, processing and distribution. The second fund intends to expand this portfolio by investing in approximately 20 additional businesses capable of strengthening food systems while improving resilience to climate-related risks.
The emphasis on climate resilience reflects the increasing recognition that agricultural investment has become inseparable from climate adaptation. Across sub-Saharan Africa, prolonged droughts, erratic rainfall, floods and changing weather patterns continue to reduce yields, increase production costs and threaten rural livelihoods. Investments that promote climate-smart agriculture—including efficient irrigation, drought-resistant crops, digital advisory services, precision farming and sustainable supply chains—are increasingly viewed as economic necessities rather than environmental initiatives.
For African economies, strengthening agricultural finance carries implications that extend well beyond farming communities. Agriculture supports millions of jobs, contributes substantially to export earnings and provides raw materials for manufacturing industries. Improvements in agricultural productivity can reduce food import bills, improve trade balances and enhance macroeconomic resilience, particularly in countries facing foreign exchange pressures linked to rising global commodity prices.
The investment also reflects broader shifts within development finance, where institutions are increasingly using blended finance models to attract commercial investors into sectors traditionally viewed as too risky. By providing catalytic capital, development finance institutions such as Proparco can help reduce perceived investment risks while encouraging additional private sector participation.
According to industry analysts, increasing the availability of venture capital for agribusinesses could accelerate innovation across food systems by enabling entrepreneurs to scale technologies that improve efficiency, reduce waste and expand market access. Digital platforms connecting farmers to buyers, mobile-based financial services, agricultural insurance products and renewable energy solutions for food processing are among the innovations attracting growing investor interest across the continent.
Governments are simultaneously introducing complementary policy measures aimed at improving agricultural investment environments. Credit guarantee schemes, concessional lending facilities, public-private partnerships and agricultural challenge funds are increasingly being deployed to mobilise domestic and international capital while reducing financing constraints faced by agricultural enterprises.
The success of initiatives such as ARAF II will ultimately depend on whether supported businesses can achieve commercial sustainability while delivering measurable improvements in rural livelihoods. Strong governance, effective business models and supportive regulatory environments will remain critical to ensuring that investments translate into long-term economic value.
For Africa, expanding access to agricultural finance is becoming an increasingly important pillar of economic resilience. As climate risks intensify and food demand continues to grow alongside population increases, investment in innovative agribusinesses will play an important role in strengthening domestic food systems, creating employment opportunities and improving rural incomes.
Proparco’s latest investment therefore represents more than additional funding for agricultural entrepreneurs. It illustrates how development finance institutions are increasingly using venture capital to address structural market failures, mobilise private investment and strengthen sectors that remain fundamental to Africa’s long-term economic transformation. If successfully deployed, ARAF II could help demonstrate how targeted early-stage financing can unlock innovation across agricultural value chains while supporting broader objectives of food security, climate resilience and inclusive economic growth.
