Innovative impact fund to create jobs for rural youth in developing countries
An impact fund with an innovative approach for attracting much needed capital to the rural areas of developing countries will be launched at the annual meeting of Member States of the International Fund for Agricultural Development (IFAD).
IFAD, along with the European Union, the African, Caribbean and Pacific Group of States (ACP), the government of Luxembourg and the Alliance for a Green Revolution in Africa (AGRA), will launch the Agri-Business Capital (ABC) Fund to help rural entrepreneurs in the agricultural sector access the finance they need to grow their businesses and create jobs for poor rural people, in particular young people.
The aim of the ABC Fund is to generate private sector investment in rural small and medium-sized enterprises (SMEs), farmers' organizations and smallholder farmers' groups which often find it hard to access finance from traditional institutions who view them as too risky.
"Small and medium-sized enterprises can be an engine for development and offer rural communities a pathway out of poverty and hunger, but only if they can access the resources they need,” said IFAD President Gilbert F. Houngbo. “The launch of the ABC Fund is an important step to realize the huge potential of small farmers, their organizations, and most importantly young people."
It is estimated that more than half of the 1.2 billion young people in the world live in rural areas. Young people are two to three times more likely than adults to be unemployed. In Africa alone, 10 to 12 million young people enter the job market every year.
Neven Mimica, European Commissioner for International Cooperation and Development, emphasized the potential impact of the ABC Fund investments on smallholder households.
"Smallholders and rural businesses are not getting the investment they need from the private sector! ABC Fund will help us address this gap, improve their access to capital and consequently the lives of 700.000 rural households," he said.
In line with its focus on promoting private-sector development, Patrick I. Gomes, ACP Secretary General, highlighted the transformative effect the ABC fund could have in poor rural communities.
“Our African, Caribbean and Pacific members have great expectations of the ABC Fund,” he said. “We look forward to having the Fund respond to specific needs in the three regions and supporting the implementation of our new approach to structurally transform the ACP agricultural sector. This fund, which aims to contribute to wealth and job creation, particularly for our youth, should significantly enable ACP countries to add value, extract higher rents from commodities, diversify and further integrate into global value chains.”
Paulette Lenert, Luxembourg’s Minister for Development Cooperation and Humanitarian Affairs, said her government has been a critical partner in the fund's development.