Privately-owned micro, small and medium agrifood enterprises (MSMEs) in sub-Saharan Africa, North Africa and Türkiye seeking loans from local financial institutions stand to benefit from TERRA, a new innovative programme from Italy's Cassa Depositi e Prestiti (CDP), the Food and Agriculture Organization of the United Nations (FAO) and the European Union.
TERRA is short for "Transforming and Empowering Resilient and Responsible Agribusiness".
In low- and middle-income countries, MSMEs face barriers in accessing financial resources. One reason is that agrifood is perceived as riskier than other sectors because of its exposure to factors such as climate shocks and commodity price volatility. Yet, with agriculture, forestry and fishing contributing 17 percent of sub-Saharan Africa's gross domestic product, the sector represents a sizable financing opportunity.
Thanks to the European Union guarantee of up to 109.5 million euros, CDP will provide dedicated credit lines and guarantees under TERRA to selected financial institutions and corporations operating in Africa and Türkiye.
The FAO Investment Centre will provide technical assistance tailored to the needs of local financial institutions. This support may include advisory services; the strengthening of financial institutions' agrifood investment strategies, lending practices and risk policies; value chain assessments; capacity development; and data analysis.
"FAO has co-designed this innovative programme with both the European Union, a long-term strategic partner of the FAO Investment Centre, and with Cassa Depositi e Prestiti, a like-minded development institution from one of our member countries," said FAO Director-General QU Dongyu. "Our role will be to leverage FAO's technical expertise in food and agriculture, and finance to support local financial institutions through tailored technical assistance. Knowledge is the best de-risking instrument."
The CEO of Cassa Depositi e Prestiti, Dario Scannapieco declared: "The partnership agreement signed today between CDP and FAO marks a key step in deploying the TERRA flagship programme. Supported by the EU guarantee under EFSD+ and part of the Global Gateway strategy, TERRA will enable CDP to mobilise new financial resources to expand access to finance across the agrifood value chain. By combining FAO's technical expertise with CDP's catalytic role, the programme will foster inclusive and resilient development, contributing to food security, climate adaptation, and economic empowerment."
Financing from either CDP's new credit lines or the own funds of financial institutions backed by a portfolio guarantee will be on-lent to MSMEs and cooperatives active in the agrifood sector. These loans will finance both the borrowers' short-term working capital needs as well as long-term investments.
By combining credit lines, de-risking instruments and technical assistance, TERRA aims to enhance the financial institutions' ability to successfully allocate more capital to the agrifood sector.
TERRA is funded by the European Union through the European Fund for Sustainable Development Plus (ESFD+), one of the financing tools of its Global Gateway, which promotes sustainable investments in European Union partner countries.
About CDP
Cassa Depositi e Prestiti is the National Promotional Institute which has been supporting the Italian economy since 1850. The main goal of CDP is to accelerate the industrial and infrastructural development of Italy to boost its economic and social growth. CDP focuses its activities on sustainable development at local level, supporting the innovation and growth of Italian enterprises, also in the international arena. It partners local authorities, in a financing and advisory capacity, to create infrastructures and improve services of public value. CDP also participates actively in international cooperation initiatives to realize projects in developing countries and emerging markets. Cassa Depositi e Prestiti is entirely financed by private capital, through the issuing of Postal Savings Bonds and Postal Savings Passbooks, and through issues on national and international financial markets.
About EFSD+
The European Fund for Sustainable Development Plus (EFSD+) is one of the financing tools of Global Gateway, promoting sustainable investments in the European Union's (EU) partner countries. Offering a variety of risk-sharing instruments of up to €40 billion, the EFSD+ aims to mobilise up to €135 billion of public and private financing to help partner countries achieve the Sustainable Development Goals (SDGs). The EFSD+ Guarantee is deployed via a range of eligible development finance institutions, which act as the EU's implementation partners on the ground.
About the FAO Investment Centre
The FAO Investment Centre partners with countries and financing institutions to advise on and design the investment strategies, policies and projects that will shape tomorrow's agrifood systems. It explores innovations to increase food security, climate resilience and financial inclusion. And it fills critical knowledge gaps and develops capacities for better investment decision-making. The Centre works in over 120 countries, tailoring its investment and finance solutions to help countries tackle today's challenges for a healthier, more sustainable future.
