Connecting Capital within African Agrifood Systems

The report analyzes the gap between the supply and demand of climate finance in African agrifood systems, drawing on CPI's experience with 23 agribusinesses and 17 finance vehicles. It identifies a systemic misalignment where investors prioritize risk-adjusted returns and export-oriented cash crops, while enterprises often operate across the entire value chain and focus on staple crops essential for food security. The document argues that while enterprise-level technical assistance is helpful, closing the investment gap requires vehicle-level interventions that better price risk and align mandates with market realities. Key findings highlight a geographic concentration of capital in Kenya, Nigeria, and Uganda, and a disconnect between the upstream focus of finance vehicles and the end-to-end operations of agribusinesses.

• There is a systemic misalignment between investor mandates and the realities of agribusinesses, rooted in return expectations, underdeveloped local financial markets, and unsupportive policy environments. While technical assistance (TA) for enterprises improves investor-readiness, it rarely shifts the risk-return profile on its own; complementary TA at the vehicle level is required to make projects bankable.
• Capital mobilization is geographically concentrated in a few developed markets, specifically Kenya, Nigeria, and Uganda, which represent nearly half of all engagements. This creates a gap where the most climate-vulnerable countries receive the least support; for instance, the ten most vulnerable African countries received only 11% of climate finance flows in 2024.
• A mismatch exists between the value chain focus of finance vehicles and enterprises. Finance vehicles concentrate on upstream production (e.g., on-farm adaptation and smallholder lending) because these offer measurable outcomes for concessional capital. Conversely, enterprises often operate end-to-end across the value chain to secure market routes and reduce disruption, meaning a vehicle mandated only for upstream activity may not accommodate them.
• Investor preference for export-oriented, hard-currency value chains leads to a dominance of cash crops, such as coffee and cacao, in finance vehicle mandates. In contrast, staple crops like maize, rice, sorghum, and millet—which are critical for food security—face thinner, more concessional financing and smaller ticket sizes because they operate on thinner margins and have higher climate exposure.
• Mobilizing commercial capital and supporting food security are distinct goals requiring different vehicles. Commercial vehicles favor the liquidity and scalability of cash crops, whereas advancing food security requires concessional, grant-based, or public funding. Blended finance is identified as a key mechanism to align multiple mandates and channel investment into underserved markets.

APA

Climate Policy Initiative (2026). Connecting Capital within African Agrifood Systems. https://www.climatepolicyinitiative.org/publication/connecting-capital-within-african-agrifood-systems/

Chicago

Climate Policy Initiative. Connecting Capital within African Agrifood Systems. 2026. https://www.climatepolicyinitiative.org/publication/connecting-capital-within-african-agrifood-systems/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Connecting Capital within African Agrifood Systems |date=23 June 2026 |url=https://www.climatepolicyinitiative.org/publication/connecting-capital-within-african-agrifood-systems/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2026connecting, author = {{Climate Policy Initiative}}, title = {{Connecting Capital within African Agrifood Systems}}, institution = {Climate Policy Initiative}, year = {2026}, month = jun, url = {https://www.climatepolicyinitiative.org/publication/connecting-capital-within-african-agrifood-systems/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }