Africa’s food future rests on the shoulders of smallholder farmers. But expecting them to transform the continent’s food system alone is neither fair nor realistic. With the right mix of investment, infrastructure and policy support, inclusive models like nucleus farms and data-driven risk tools are already proving what is possible. Ben Poole reports.
At the GTR East Africa 2025 event in Nairobi, a keynote address and dedicated agrifinance panel brought the region’s agricultural challenge into sharp focus. Together, they highlighted a practical path forward that places smallholder farmers at the heart of Africa’s food system, supported by technology, blended finance and long-term thinking.
A broken system under pressure
African nations import as much as US$50bn in food annually – a figure that, according to the World Bank, could rise to between US$90bn and US$110bn this year without significant structural reforms. This marks a sevenfold increase from around US$15bn in 2018, and includes everyday staples such as wheat, rice, maize and edible oils – much of which could, in theory, be produced locally. Still, the continent remains heavily reliant on global supply chains.
In his keynote address at the conference, Ramesh Moochikal, chief executive officer of Africa Improved Foods, a Rwanda-based social enterprise aiming to end malnutrition on the continent, outlined the structural reasons for this mismatch. Productivity is chronically low: African agriculture delivers just 21% of its potential yield. Irrigation reaches only 10% of farmland. Fertiliser use is well below global norms. Most alarmingly, seed systems remain outdated, inefficient or simply inaccessible.
This underperformance perpetuates a vicious cycle. Food insecurity affects 58% of Africa’s population – double the global average, according to the UN. Meanwhile, 1.1 billion Africans live on less than US$10 per day, meaning that even modest food price inflation rapidly erodes affordability.
“We have the land, the water, the sun and the people, but we import more wheat every year,” said Moochikal. “We’re feeding our children bread we can’t afford, while local produce rots in the field.”
Deepening the investment case
The problem Africa faces isn’t just agronomic, it’s financial. Too few institutions are willing to commit the kind of patient capital agriculture requires.
“No commercial bank wants to finance agriculture unless it’s dressed up as something else,” Moochikal said. “When we built a commercial coffee farm in Zambia, it took US$65mn and six years to produce a single dollar of return.”
Infrastructure investment in farming is badly lacking. According to Moochikal, a specialist in Africa’s agri and food sectors for over 30 years, the industry needs over US$65bn for irrigation, another US$8bn for produce storage, and significantly greater investments in seed systems, fertiliser access and post-harvest handling.
Development finance institutions (DFIs) are helping to bridge the gap. During a panel discussion, the audience at GTR East Africa heard how FMO, the Dutch development bank, is actively engaged across the region, providing loans, guarantees and technical assistance to agri-SMEs and local banks.
Njeri Mwangi, investment officer and local representative, East Africa at FMO, explained: “We work with African banks to unlock appetite for agri lending by improving ESG frameworks and underwriting capacity. We also deploy concessional funds to enable higher-risk investments that support productivity and access.”
“Fragmentation is a challenge, but local lenders are often closer to the client and more willing to serve the sector,” Mwangi added.
Yet DFIs cannot carry the burden alone. Moochikal argued that the long-term impact depends on deeper coordination between public and private players. His own company, a public-private partnership in Rwanda involving the International Finance Corporation, FMO and others, has supported 90,000 farmers, improved nutritional outcomes and generated over US$1bn in economic value.
Technology and trust
While financing remains critical, lenders also face steep risk hurdles. Poor infrastructure, volatile weather and weak data make traditional underwriting methods unreliable. This is where technology and insurance are shifting the conversation. Index insurance products are emerging as a powerful tool to protect both lenders and borrowers from climate risk.
Also known as parametric insurance, index insurance is a model that provides payouts based on a pre-agreed trigger, such as rainfall levels or crop yields, rather than relying on a traditional claims process. Once the set threshold is met, the payout is automatically activated, removing the need for lengthy damage assessments or on-site inspections.
“When you’re insuring a million farmers across 18 countries, traditional insurance doesn’t scale,” said panellist Amitoj Singh, product development team lead at Pula Advisors, a Kenya-based insurance agency.
“Index insurance uses rainfall, soil moisture or yield samples to trigger automatic payouts. There’s no need to lodge a claim.”
In Zambia last year, for example, index insurance payouts reached over ZK800mn (about US$40mn), supporting more than 500,000 smallholder farmers affected by climate-related losses, according to Pula Advisors. The payouts were made under the Farmer Input Support Programme, which provides weather-based crop insurance to protect farmers against drought and other adverse events. The agency says it marked the largest crop insurance payout in the country’s history, helping to preserve borrower-lender relationships and enabling farmers to replant the following season.
Critically, insurance alone isn’t enough. Trust is key. Pula uses remote sensing of weather, vegetation indices and crop health indicators, but always combines it with on-the-ground yield sampling. Community engagement is also central, with field staff and village champions helping farmers understand how the system works.
“You have to meet farmers where they are,” Singh advised. “Once they’ve seen the benefit, such as a neighbour receiving a payout, for example, the next season they actively seek it out.”
This organic demand is real and growing. In some cases, Pula has had to cap voluntary uptake after a successful season to manage capacity.
From a lender’s perspective, this shift is significant. Index insurance is no longer just a buffer against bad seasons; it’s becoming a gateway to primary production finance. Rabobank, for example, is utilising data from these platforms to modify how credit risk is assessed.
Jan Scheurleer, senior relationship manager, trade commodity finance Africa at Rabobank, told the audience: “We’ve been working on virtual farming, using pure and historic data through the insurance platform. That was key to getting the financing through. We want to finance primary production in Africa, but you must consider the costs and risks. Platforms do this for us.”
One of the virtual farming projects that Rabobank is involved with is called Acorn, a platform that supports smallholder farmers to adopt agroforestry practices while generating certified carbon removal units for sale on the voluntary carbon market. It’s a clear example of how digital platforms can unlock new forms of value for farmers while supporting wider climate goals.
Reframing the value chain
Financing smallholders directly remains a costly and complex endeavour. As such, many lenders focus instead on value chain actors with deeper reach, particularly aggregators who source, support and sell on behalf of farmer groups.
These aggregators play a critical role in derisking and digitising the chain. With the right agritech tools, they can map plots, forecast yields, track input usage and maintain full traceability from farm to buyer.
Speaking on the panel, Herbert Hatanga, partner, East and Southern Africa at investment advisory firm Clarmondial, said: “We look for aggregators that deploy technology to build inclusive and transparent supply chains. That visibility supports better financing outcomes and helps ensure impact flows to women, youth and marginalised groups.”
Clarmondial’s Food Securities Fund invests in these types of businesses. It also works with suppliers that offer inputs on credit, enabled by bio-registers that capture farmers’ credit and production histories. These records are increasingly used to unlock pay-later arrangements for seeds and fertilisers, providing farmers with tools they would otherwise struggle to access.
This data-rich model helps build loyalty, reduce side-selling and support more sustainable on-farm practices. It also enables seamless integration with third-party services, such as insurance and advisory tools.
Remote sensing further strengthens these models. Digital tools are now being used to monitor fertiliser use, assess input effectiveness and spot anomalies.
Zhann Meyer, head of agricultural commodities at Nedbank, told the audience: “With multispectral cameras, we can see the difference between one farm using a certain fertiliser and another that isn’t. That helps with agronomic decisions but also with financing validation.”
Tools like this play a crucial role in identifying and flagging risks. “If a crop doesn’t show up in the warehouse a few days after harvest, we know something’s wrong,” Meyer added. “We can track side-selling through movement patterns and respond quickly.”
Rabobank’s Scheurleer agreed that the ability to bundle insurance and technology has been a game-changer.
“We can’t finance individual farmers, it’s too costly and our systems aren’t designed for that. But with platforms and digital tools, we can now manage that risk at scale.”
Scaling without displacement
If smallholders are to remain central to Africa’s food future, they need models that offer scale and support without replacing them. One promising approach is the nucleus farm model, where a large commercial farm sits at the centre of a network of smallholder outgrowers, offering shared infrastructure, training and guaranteed offtake.
Moochikal shared the example of a 3,000-hectare coffee farm in Zambia, surrounded by 6,000 hectares of small plots. The nucleus farm provided irrigation, inputs and a stable buyer for local growers.
“The corporate [large commercial farm] doubles capacity, the community gets support, and the government is happy because the community is happy,” he said.
The concept is not new, but it is gaining traction. During the panel, Hatanga at Clarmondial noted that many aggregators already operate so-called demonstration farms that serve a similar purpose. These showcase new practices and encourage uptake among surrounding farmers.
However, scaling such models requires capital. Most aggregators focus on trading, not farm development. Blended finance solutions could help fill this gap by supporting the development of demo farms and shared facilities that benefit wider producer networks.
The long-term opportunity also includes a gradual move toward emerging farmer finance – typically small-scale or previously underserved farmers who are in the early stages of developing their operations.
“Our experience with commercial farmers on these platforms will help us take the next step, financing emerging farmers,” said Scheurleer.
With the right risk controls and data support, lenders are expanding their reach.
Rethinking inputs and productivity
Inputs are another major hurdle. Fertiliser use in Africa is a fraction of the global average, and farmers often receive products too late, in the wrong form, or not at all. Often, this breakdown stems from government procurement processes, highlighting the need for financing models to consider not only cost but also timing and suitability.
Remote sensing tools can now track fertiliser use and measure the impact of different products on crop performance. Multispectral imaging even allows agronomists to detect nutrient deficiencies by monitoring leaf colour and density.
These capabilities help verify supplier performance. They also improve input targeting and help identify poor application practices, reduce waste and drive better outcomes per hectare.
At the same time, seed systems require urgent attention. Moochikal at Africa Improved Foods described spending eight years trying to introduce better cotton seed into Mozambique, not imported from the other side of the world but just from neighbouring Zimbabwe.
The challenge was one of mindset rather than cost.
“Seed is the single biggest lever we have,” he argued. “But it takes political will and persistence to get change.”
Towards a shared strategy
Technology, finance and infrastructure can only go so far without an enabling policy environment. A key message from the stage at GTR East Africa 2025 was that governments must recognise that agriculture is not a short-term political win. It demands patience, consistency and coordination.
As Moochikal pointed out in his keynote, one-third of African children are stunted, a crisis with long-term economic consequences as well as health implications. Yet progress is possible. In Rwanda, a targeted model combining local sourcing, farmer training and fortified food production helped cut stunting from 47% to 31%, he said.
“The food system cannot be fixed in three years. If you want results, start now and stay the course.”
If governments can commit for the long term, the payoff could reshape entire economies. Agriculture addresses all four of the African Union’s stated development priorities: food security, employment, import substitution and export growth.
Africa’s demographic future depends on getting this right. By 2050, the continent is expected to account for 40% of the global workforce. But if one-third of that population is cognitively impaired due to childhood stunting, the advantage will be lost.
The speakers outlined a clear and actionable pathway forward. Now it falls to policymakers, capital providers, and private sector leaders to make it a reality by working with smallholders to create a more resilient, inclusive and productive agricultural system.
