Luxembourg, Switzerland Launch €18m Programme to Support Farmers through Innovative Finance

Luxembourg and Switzerland have launched a programme to strengthen the resilience of smallholder farmers in the Global South through innovative finance

On Friday 2 October 2020, the Luxembourg Directorate for Development Cooperation and Humanitarian Affairs, represented by Minister Franz Fayot, and the Swiss Agency for Development and Cooperation met at the Maison de la Microfinance in Luxembourg to celebrate the signing of an agreement to launch the "Smallholder Safety Net Upscaling Programme" (SSNUP). The objective of this programme is to improve the resilience of smallholder farmers in developing countries, in close collaboration with impact investment funds geared towards social and ecological sustainability. ADA, the Luxembourg NGO specialising in inclusive finance, will coordinate this innovative programme.

A large majority of the poor population live in rural areas and are mainly made up of vulnerable smallholder farmers practising subsistence agriculture. In order to support this population whose work is essential for food security at the global level, the Luxembourg Cooperation and the Swiss Cooperation, in collaboration with ADA and Lux-Development, have launched the SSNUP programme. The first phase, planned from 2020 to 2023, will be put in place with an estimated budget of €18 million, of which €12 million will be co-financed by Switzerland and Luxembourg, €3 million co-financed by the private sector and €3 million to be mobilised by other donors.

Through this partnership, the public and private sectors will co-finance technical assistance for actors in agricultural value chains: small and medium-sized enterprises (SMEs), cooperatives and other agricultural financial intermediaries. This co-financing with the private sector thus aims to promote growth in productivity, income and the resilience of smallholder farmers. The technical assistance departments of impact investing funds will also collaborate to share their knowledge of agricultural markets.

Among SSNUP's partner impact investors are the Grameen Crédit Agricole Foundation, Incofin, Oikocredit, responsAbility and Symbiotics. All of these partner funds, with total assets under management (AUM) ranging from €92 million to €3.5 billion, already have 10% to 100% active investments in rural areas within their portfolio. Through SSNUP, the sum of these investments in favour of small farms is expected to increase further.

The programme also targets several Sustainable Development Goals (SDGs), including the creation of sustainable sources of income for the families of small farmers, the creation of jobs for young people, the emancipation of women in rural areas and the adoption of ecological and sustainable agricultural practices, in order to limit the negative consequences on the climate. The projects co-financed by SSNUP will be implemented in the countries of the Global South, with particular attention to the most vulnerable zone, sub-Saharan Africa.

Finally, the SSNUP programme focusses on knowledge sharing with the entire sector. ADA will be responsible for collecting the lessons learned, measuring the impact and disseminating the results in collaboration with several actors such as the International Institute for Sustainable Developmen (IISD ), the Council on Smallholder Agricultural Finance (CSAF) and the Luxembourg-based Microinsurance Network (MIN).