Closing the Working Capital Gap in Agribusiness

Introduction

Agribusiness is the backbone of many African economies, employing over 60% of the continent’s workforce and contributing about 23% to GDP. Yet, despite its significance, one major bottleneck continues to hinder growth—access to working capital. Without sufficient liquidity, businesses struggle to purchase raw materials, pay workers, and scale operations, limiting their ability to maximize value within local economies.

The Working Capital Challenge in Agribusiness

Agribusinesses, particularly in Africa, face unique financial constraints. Unlike traditional industries, agriculture operates on seasonal cash flow cycles. Farmers and processors need capital upfront to buy seeds, fertilizers, and raw materials, but revenue often comes months later after harvest and processing. This misalignment creates a persistent working capital gap that slows down growth and innovation.

A study by the African Development Bank (AfDB) estimates that Africa’s annual agribusiness financing gap exceeds $100 billion. Local banks, wary of the risks associated with unpredictable weather patterns, volatile commodity prices, and limited collateral, often hesitate to provide financing. As a result, many promising businesses remain small, and Africa continues to export raw materials instead of adding value locally.

Case Study: How Swedfund is Closing the Gap

A recent financing initiative highlights how development finance institutions (DFIs) are stepping in where local banks cannot. Swedfund has announced a working capital loan of up to $15 million to agribusiness company Robust International. This loan is part of a joint initiative with the Dutch, British, and French development finance institutions and the Dutch fund manager ILX.

The loan will enable Robust to source local commodities for its new processing facilities. The company will buy sesame seeds and cashew nuts directly from cooperatives, aggregators, and farmers to support operations at its new plants in Côte d’Ivoire, Mozambique, and Burkina Faso.

“Africa exports many agricultural products for processing and refining. Robust now takes the step to do this locally instead, leading to job creation, development of local supply chains, increased capacity, and lower emissions. Robust has a strong focus on human rights and decent conditions for workers and farmers in their supply chain. Through the working capital facility, we offer funding where local banks are not able to,” says Sofia Gedeon, head of sustainable enterprises and food systems at Swedfund.

This example demonstrates how targeted financing solutions can help African agribusinesses move up the value chain, creating jobs and reducing reliance on raw commodity exports.

Who Can Close the Gap?

Addressing the working capital gap requires a collaborative effort from multiple stakeholders:

1. Development Finance Institutions (DFIs): Organizations like Swedfund, IFC, and the African Development Bank play a crucial role in providing long-term financing. The Swedfund- Robust International loan is a prime example of how DFIs step in where local banks fail.
2. Impact Investors & Private Equity: More investors are recognizing the potential of Africa’s agribusiness sector. Funds like AgDevCo and TLcom Capital focus on supporting high-growth agricultural ventures with flexible financing options.
3. Government & Policy Makers: African governments can bridge the financing gap by offering incentives such as loan guarantees, subsidized interest rates, and tax reliefs for agribusiness investors.
4. Fintech & Alternative Lenders: Digital platforms such as FarmDrive and Twiga Foods are revolutionizing agribusiness finance by leveraging mobile money and data analytics to provide smallholder farmers and agribusinesses with working capital loans.

The High Cost of Doing Nothing

The consequences of not addressing the working capital gap are severe:

• Underutilized Potential: Africa has 60% of the world’s uncultivated arable land but remains a net food importer, spending over $50 billion annually on food imports.
• Job Losses: The agribusiness sector has the potential to create 17 million jobs by 2030, but without financing, many businesses struggle to expand and hire more workers.
• Food Insecurity: Limited access to finance means lower productivity, higher food prices, and increased reliance on imports, making food security a perpetual challenge.

Conclusion

Closing the working capital gap in agribusiness is not just about boosting individual companies—it’s about transforming Africa’s entire food economy. By leveraging DFIs, impact investors, fintech solutions, and smart policies, Africa can unlock billions in value, create jobs, and reduce dependence on food imports. If we get this right, the continent’s vast agricultural potential could finally be realized, feeding not just Africa but the world.

So, next time you enjoy a cashew nut or sesame snack, think about the journey it took—and how much more impactful that journey could be if Africa processed more of its own raw materials. The solution is within reach; it’s time to bridge the gap and grow Africa’s agribusiness sector to its full potential.

Edith Njage

Edith is the Founder and CEO of Arielle for Africa Ltd. and Arielle Advisory. A serial entrepreneur, she is on a mission to empower African youth through job creation, promoting entrepreneurship, scaling African businesses, advancing STEM education, and championing sustainability in business. Outside of her profession she is an avid reader, podcast show host, writer and public speaker.