Launched in East Africa in September 2020, Aceli Africa aims to mobilise USD 1.5 billion in finance for high-impact agricultural small and medium-sized enterprises (SMEs) by 2030. Aceli operates as a market catalyst to address financing barriers for agricultural SMEs by deploying a blended finance model.
Aceli Africa: mobilising private capital for agricultural enterprises in East Africa
Abstract
Agricultural SMEs in East Africa face significant barriers to accessing finance due to risk perception, collateral requirements, and high transaction costs. Traditional banks often find lending to these enterprises commercially unattractive, resulting in a financing gap that undermines market development, job creation, and food security. Bridging this gap requires aligning the risk-return expectations of capital providers with the financial needs of SMEs in a sustainable and impactful way.
Launched in East Africa in September 2020, Aceli Africa aims to mobilise USD 1.5 billion in finance for high-impact agricultural SMEs by 2030. Aceli operates as a market catalyst to address financing barriers for agricultural SMEs by deploying a blended finance model. The platform provides portfolio first-loss coverage to de-risk SME loans, making lending to underserved enterprises more viable. Origination incentives compensate lenders for the higher transaction costs associated with smaller loans, while impact bonuses reward financing directed toward smallholder farmers, women and youth employment (aligned with the 2X Challenge criteria), food security, and climate resilience outcomes. Aceli also offers technical assistance to SMEs to strengthen their financial management and business practices.
In addition to financial incentives, Aceli supports the broader ecosystem by providing capacity building for lenders to develop SME-focused products and promote innovation investments, particularly in new business models and digital solutions.
Aceli’s financial incentives align the risk-return expectations of capital supply with the addressable demand among agricultural SMEs. Product offerings include:
Portfolio first-loss coverage. Lenders receive 2%-9% first-loss coverage at a portfolio level for loans ranging from USD 10 000 - 1.75 million. Lenders earn money into a reserve account for every loan that meets impact criteria (e.g., food crop value chains, first-time borrowers). This mechanism absorbs the incremental risk of reaching underserved SMEs.
Origination incentives. Aceli compensates lenders for the lower revenues and higher operating costs of making smaller loans (USD 10 000 to USD 500 000) to early-stage SMEs that would not otherwise be profitable to serve even if the loan repays at a market interest rate.
Impact bonuses. To qualify for the first-loss coverage and origination incentives above, a lender must demonstrate that the borrower benefits smallholder farmers and/or low-wage workers. Aceli also provides “impact bonuses” for loans to businesses that create economic opportunities for women (drawing upon the 2X Challenge criteria) and youth, strengthen food security and nutrition in Africa, and/or meet higher standards for climate and environment.
Technical assistance for SMEs. Aceli partners with local service providers to offer pre- and post-investment technical assistance to strengthen SMEs’ capacity to access and manage financing.
Capacity building for lenders to adapt their product offering, enhance their staff expertise, and improve their systems and processes so they are better suited for the agri-SME market.
Innovation investments to expand distribution channels for reaching underserved SMEs and promote technological and other business model improvements that drive down the costs of agri-SME lending and make the market more competitive and efficient.
Aceli Africa is a trailblazing institution focused on smaller-scale opportunities in the challenging agri-SME financing sector in East Africa. Its innovative, data-driven and system-based approach addresses one of the most persistent gaps in development finance: How to mobilise commercial lending for agricultural SMEs in underserved markets.
By 2025 Aceli Africa has mobilised USD 300 million in private sector lending for 3 500 agricultural SMEs, directly benefiting 1.5 million smallholder farmers and workers through improved market access and employment opportunities. Aceli has received strong international support for its blended finance approach, having secured USD 100 million in donor commitments from partners including the Dutch Ministry of Foreign Affairs, Global Affairs Canada, the IKEA Foundation, the Norwegian Agency for Development Cooperation, the Swiss Agency for Development and Cooperation, the UK Foreign, Commonwealth & Development Office, and USAID (which was Aceli’s first major funder but is no longer funding Aceli due to changes in US foreign assistance).
Based on the significant financing gap for SMEs in Africa and a strong track record, Aceli could be scaled through, for example, geographical expansion, local currency instruments, digital enablement, and expanded partnership with DFIs and other development finance providers.
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