Africa’s Agribusiness Gap: Financing the Missing Middle
The farms that feed Africa cannot feed African finance. In sub-Saharan Africa, nearly two-thirds of people work in agriculture, but the sector receives under 10% of bank credit in most countries. Small farms produce about 80% of the continent’s food, yet majority of agribusiness struggle in unlocking financing necessary to scale. This reveals the existing gap that defines Africa’s “missing middle”.
A Continent of Potential, Starved of Investment
African agribusiness should be booming. The continent holds 60% of the world’s uncultivated arable land, nevertheless, spends $78 billion a year importing food. Its food and agriculture market, worth about $280 billion today, could triple to $1 trillion by 2030 as populations and incomes rises. But while demand surges, supply struggles. Agricultural productivity is pitiful – value added per worker remains less than half the global average.
Chart 1 shows how farming still dominates national output across every region of Africa. In West Africa, agriculture contributes more than a quarter of the total output, while in East Africa it is about one-sixth. The data demonstrates that agriculture remains both the backbone of employment and a key driver of GDP.
Chart 1: Agriculture, forestry, and fishing as a share of GDP by region, 2019–2024. (Source: World Bank 2024; author analysis)
The Missing Middle: Why It Matters
An African farm worker’s output lags behind Asian counterparts that the continent’s vast workforce fails to translate into competitive abundance. Africa’s farms are numerous and its opportunities enormous, even so its agribusiness sector remains underdeveloped and underfinanced compared to Asia or Latin America.
This underdevelopment is partly structural. African agriculture is dominated by either millions of tiny subsistence farmers or a handful of large enterprises, with very little in between. Mid-sized agribusinesses such as local processors, storage providers, or regional distributors are conspicuously missing. In Asia and Latin America, these small and mid-tier firms helped transform raw farm output into higher-value products and rural jobs. In Africa, by contrast, such firms remain scarce and stunted. The result is a gaping “missing middle.” These agribusinesses are too large for microfinance and informal loans, yet too small or risky to secure conventional bank lending. Lacking the growth of a robust mid-tier, African food value chains remain fragmented and inefficient, from farm gate to market stall.
Structural Barriers: Finance, Capacity, Data, Talent
Why does the missing middle persist? Financing is the first hurdle. There are an estimated , ranging from small processors to trucking firms, with an annual credit need of about $90 billion. But over 80% of that demand, some $75 billion per year goes unmet. Commercial banks, the primary financiers, supply only around 11% of the credit these agribusinesses require. The rest of the gap remains a severe financing shortfall.
Chart 2 visualises this shortfall. It tracks agricultural lending by region between 2019 and 2023. North Africa stands out, with established banks providing billions in credit, while other regions receive only fragments of the same flow – an imbalance that mirrors Africa’s uneven financial infrastructure.
Chart 2: Credit to agriculture by region, 2019–2023 (US$ millions). (Source: FAOSTAT 2024; author analysis)
Traditional lenders shy away from farming: loans are typically short-term, high-interest, and require hefty collateral – terms most small agribusinesses cannot satisfy. The upshot is a $74.5 billion financing gap each year, stranding most agricultural entrepreneurs without affordable and accessible capital.
Barriers beyond finance
- Weak enterprise capacity: three in four agri-SMEs lack both access to finance and the skills to manage it.
- Informality and poor records: many firms operate off the books, leaving banks without credible data to assess risk.
- High perceived risk: lenders see agri-SME loans as twice as risky as other sectors.
- Infrastructure deficits: inadequate storage, logistics, and cold chains inflate costs and losses.
- Human-capital gap: a shortage of skilled agronomists, technicians, and managers constrain scaling.
Sellers arrange tomatoes while waiting for costumers in a vegetables stall at Kangemi Market in Nairobi on September 27, 2023. (Photograph: Getty Images)
Cultivating an Ecosystem of Growth
African agriculture needs more than rain – it needs an integrated ecosystem of support. Fragmented fixes won’t suffice. Instead, governments, investors and nonprofits are pursuing coordinated models that mix advisory services, acceleration programs, patient capital and talent development.
Start with finance. Innovative financiers are beginning to irrigate the parched middle. Specialized “social lenders” and impact investors now offer products tailored to agri-SMEs. Unlike traditional banks, they provide modestly sized loans (often around $0.5 million) with longer maturities, flexible repayment, and low collateral requirements. Such patient capital gives small agribusinesses breathing room to grow.
The Global Impact Investing Network’s 2025 state of the Market report notes that agriculture and forestry account for over 11% of all impact AUM, with investors increasingly targeting sustainable food systems and climate resilient value chains. Similarly, the Africa AgrifoodTech Investment Report (2023) found that investment in agrifood start-ups reached $636 million in 2022, double level of five years earlier, driven by funds focused on productivity, logistics and traceability technologies. The AVCA 2023 Venture Capital in Africa Report also highlights that agrifood accounted for roughly 10% of all VC deals across the continent, reflecting a growing appetite for scalable, socially oriented ventures.
Blended-finance vehicles sweetened by donor guarantees are also emerging. In East Africa, for example, a new facility is piloting data-driven incentives to mobilize $700 million in lending to agri-SMEs. Chart 3 below shows why such efforts matter: across Kenya, Rwanda, Tanzania, and Uganda, agriculture dominates employment but attracts only a small share of bank credit.
Chart 3: The East African Paradox. Agriculture’s share of employment, GDP, and commercial bank lending in selected East African countries (%, 2019). (Source: ACELI Africa 2019)
Money alone, however, cannot grow a business without knowledge and people. Recognizing this, many initiatives now bundle capital with capacity-building. Agribusiness accelerators and incubators have spread across the continent, scouting promising agri-entrepreneurs and nurturing them with training, mentorship and market linkages. These programs teach basics like accounting, quality control and export standards, turning subsistence growers into businesspeople. Some pair firms with seasoned advisors (for instance, retired food industry executives or agronomists) to provide hands-on guidance and mentorship. Others help small enterprises form cooperatives or aggregation hubs, so they can achieve scale and bargaining power. Alongside advisory support, attention is shifting to talent development. Universities and NGOs are partnering on vocational training in agribusiness management, aiming to equip Africa’s youth with the skills to run modern farms, storage facilities or processing plants. A few pilot projects even act as matchmakers, placing trained graduates into agri-SMEs as interns or managers. By infusing fresh skills and ideas, these efforts address the brain drain that often pushes bright young Africans away from farms and toward city jobs. An integrated ecosystem approach – finance plus mentorship plus skills – begins to turn disjointed individual efforts into a reinforcing cycle of growth.
From Missing Middle to Mainstream
A green revolution in Africa will not come as a single dramatic moment. It will arrive quietly, through thousands of small and mid-sized enterprises finding their footing. The irony is that what is “missing” is not ambition or effort, Africa’s entrepreneurs are plenty resilient but the links to bind them into a thriving chain. Strengthening those links is painstaking work: aligning banks, investors, extension agents and educators toward a common goal. Yet it is in this prosaic, piece-by-piece progress that a profound change can emerge. Africa’s agricultural revolution will not be televised- it will be financed, staffed and scaled.
