Dutch development bank FMO and Rabobank have partnered in the EUR100 million IDH Farmfit Fund.

The IDH Farmfit Fund, made up of public and private funds, will provide financing for small-scale farmers, cover any initial losses on loans and allow banks to provide financing for the sector in developing countries. FMO and Rabobank will both invest EUR10 million. The fund is the world’s biggest public-private impact fund for smallholder farmers with Unilever, JDE Peet, Mondelēz also being investors.

‘Many countries in Africa increasingly import food, while the continent has enormous agricultural potential. Local farmers do not have the means to develop this sustainably,’ says Roel Messie, CEO of the IDH Farmfit Fund. ‘This fund builds a bridge between small-scale farms in Africa and our financial services,’ adds Marianne Schoemaker, CEO of Rabo Partnerships at Rabobank. ‘For many banks, direct funding of small-scale farming in developing countries is a bridge too far. The chance of loans not being repaid is just too big.’ As the IDH Farmfit Fund covers initial losses, the risk aspect of financing is much smaller. ‘In this way, the fund encourages banks to invest after all,’ says Pieternel Boogaard, director of Agri, Food & Water at FMO.