The SANAD Fund addresses the rising urgency of food security in the MENA region
Agri-finance and technical assistance projects support the local agricultural sector and drive economic growth
Luxembourg, June 13, 2022 – The SANAD Fund for MSME (SANAD) has, since its inception, provided debt financing and capacity building to support the agriculture sector in Middle East and North Africa (MENA) totaling more than USD 156 million.
Russia’s invasion of Ukraine and the recent COVID-19 pandemic, have laid bare the fragility of global supply chains, including those necessary for sustaining food security. In the Middle East and North Africa (MENA) and sub-Saharan Africa (“SSA”) regions specifically, the spillover effects of the war have reiterated the pressing need to become less dependent on food imports. With less than 50% of its food produced locally, MENA’s high dependency on imports, especially grain imports from Ukraine and Russia, has made it very vulnerable to food supply disruptions.
“To build greater resiliency to the global crises that are negatively impacting on food security, it is necessary to reduce access barriers within the agricultural sector so that more farmers can contribute to the global food supply,” says Dr. Daniela Beckmann, SANAD Board Chairperson. “One way to do this is to improve access to finance within the agricultural sector, as it can position farmers to withstand supply disruptions and contribute to strong local agri-production in MENA and SSA.”
As a debt and equity finance provider to financial institutions in the MENA region, SANAD has long supported the region’s agricultural sector by providing access to finance, enabling MSME loans of USD 96 million within the agricultural sector alone since its inception in 2011. Providing access to uninterrupted financing for local agricultural producers is now more critical than ever, to ensure stable local food production and imports of vital agricultural inputs. SANAD In 2021 alone, through the SANAD Debt Sub-Fund (DSF) enabled agricultural sub-loans representing 17% of all sub-loan disbursements facilitated by the fund for that period. Working with its long-standing partners in MENA and select countries in the SSA, the fund’s financing enabled local agricultural businesses to invest in equipment and machinery but also secure important inputs for local food production. Meanwhile, the SANAD Equity Sub-Funds I and II invested in two partner institutions, with approximately 30% of their gross loan portfolios falling within the agricultural sector, representing a total value of USD 123 million.
“While improving access to finance is critical in building food security, there are other areas that cannot be ignored,” says Dr. Beckmann. “Greater access to training, technology and product diversification is equally important in contributing towards increased productivity and food insecurity reduction,” she said.
To this effect, the SANAD’s Technical Assistance Facility (TAF) successfully implemented over 20 agriculturally focused projects, which have provided partners and sector-level support to enable further agricultural lending. SANAD’s TAF has worked closely with its financial partner institutions to facilitate the provision of financial and non-financial services to their end borrowers. Working with promising startups to find solutions to key agricultural challenges, SANAD TAF has also supported agricultural innovations for increased self-sufficiency.
One such example was developing an acceleration program to scale over 30 promising agri-entrepreneurs in Lebanon and Jordan, by providing training, mentoring, and technical assistance: including legal and design support.
Another initiative to expand inter-regional agricultural lending was SANAD TAF’s hosted knowledge-exchange between 15 partner financial institutions engaged in agri-finance in the fund’s MENA and sub-Saharan Africa core regions.
In another landmark project for SANAD, the TAF has partnered with the Egyptian Credit Bureau, to make available much-needed financing to farmers and other agricultural MSMEs. The development of a web-based credit assessment and scoring tool tailored to the Egyptian agricultural sector will allow various types of financial intermediaries, including banks, leasing companies, and microfinance providers, to expand financing to an important but otherwise underbanked segment of the Egyptian economy.
“In these turbulent times, SANAD remains committed to its mission to serve as a reliable and proactive partner for financial institutions and MSMEs in the MENA region and select countries in SSA through tailored financing and technical assistance support. Given the regions’ strong need to secure agricultural production for both export and domestic food markets, the fund has long prioritized investments within the agriculture sector as part of its strategy. In light of rising global food insecurity, we expect our support for the sector to continue growing as the year continues,” concludes Dr. Beckmann.
The SANAD Fund for MSME finances micro, small, and medium enterprises and low-income households in the Middle East and North Africa and selected countries in sub-Saharan Africa via qualified local lenders. SANAD thereby fosters economic development and job creation – including youth employment – agriculture, affordable housing, and innovations in finance and financial technologies. SANAD strives to meet these goals by providing debt and equity financing to its local partners. The SANAD Technical Assistance Facility multiplies the fund’s development impact and outreach through capacity-building with partner institutions, developing financial infrastructures according to the principles of responsible finance and conducting much required R&D.
An impact investment fund advised by Finance in Motion, SANAD’s investors include the KfW Development Bank, which initiated the fund; the German Federal Ministry for Economic Cooperation and Development (BMZ); the European Union; Switzerland’s State Secretariat for Economic Affairs (SECO); OeEB, the Development Bank of Austria; Germany’s GLS Bank and GLS Treuhand; the Dutch development bank FMO; and Calvert Impact Capital.
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