Proparco said on Thursday, July 16, that it had invested $12 million in the Acumen Resilient Agriculture Fund II (ARAF II), a venture capital fund investing in innovative, early-stage agribusinesses in
sub-Saharan Africa.
The investment builds on Proparco’s support for ARAF I and aims to improve smallholder farmers’ access to markets, financing, agricultural services and climate-smart solutions. Managed by impact investor Acumen, the fund targets high-potential companies whose solutions can strengthen climate resilience, food security and farmers’ incomes.
According to Proparco, the French development finance institution, the investment is expected to help create or maintain more than 2,900 jobs and improve rural communities’ access to essential services. ARAF II also qualifies under the 2X Challenge’s gender-lens investment criteria and seeks to advance women’s economic empowerment.
“Through our investment in ARAF II, Proparco is supporting entrepreneurs who are developing practical solutions to strengthen food security, improve farmers' livelihoods and enhance climate resilience across Africa,” said Guillaume Barberousse, head of Proparco’s Investment Department.
Funding Gap Holds Back Agricultural Innovation
The investment comes as limited access to financing remains one of the main obstacles to Africa’s agricultural transformation. According to the African Development Bank, Africa is home to nearly 60% of the world’s uncultivated arable land but remains heavily dependent on food imports and is the continent hardest hit by food insecurity.
Although agriculture accounts for about 30% of Africa’s gross domestic product, the sector receives just 6% of bank lending. The funding gap particularly affects smallholder farmers, who account for nearly 80% of the continent’s agricultural output.
In response, several African countries are introducing or expanding instruments to attract more private capital. Guarantee funds, challenge funds, public-private partnerships and concessional financing are among the tools being used to reduce risks for investors and improve access to credit.
ARAF has assessed nearly 700 investment opportunities and backed 14 companies across East and
West Africa. ARAF II plans to invest in about 20 more businesses whose solutions can strengthen food security and help African agriculture adapt to climate change.
