Cracking the Code to Agribusiness Finance: Why African Agribusinesses Keep Getting Rejected, and What to Do About It

You have the idea. You have the land, the produce, or the processing unit. You might even have the buyers, but the moment you walk into a bank or pitch to an investor, something goes wrong. You are told your collateral is insufficient, your records are incomplete, or that the ticket size is too small. You leave with nothing and no clear explanation of why.

You are not alone. In a survey of over 700 African agribusiness owners and entrepreneurs ahead of AFC’s June Agribusiness Clinic, more than half (52%) reported that they had already applied for financing and been declined. Nearly four in ten said the biggest barrier was not knowing where to find investors. One in three blamed lack of collateral, and two-thirds said the only financing instrument they felt comfortable pursuing was a grant, because debt and equity felt too distant, too complicated, or too expensive to even attempt.

These are not the frustrations of unprepared or uncommitted entrepreneurs. They are the frustrations of a sector that is fundamental to Africa’s food security, and yet systematically underserved by the financial architecture meant to support it. According to the IFC - International Finance Corporation (IFC), the financing gap for agri-SMEs and smallholder farmers in Africa is estimated at $117 billion (IFC, 2024).

But here is what no one tells you: the gap is not entirely structural. A significant part of it is informational. The code to agribusiness finance exists, but it is just not written in a language most entrepreneurs have been taught to read. This article is an attempt to translate it.

Why You Are Unable to Access the Money: The Real Barriers

It is tempting to frame Africa’s agribusiness financing problem as simply a supply problem, i.e. not enough capital chasing too many farmers. That is partly true, but the sharper truth, drawn from conversations with banks, private equity investors, and development finance institutions, is that the problem is as much about legibility (i.e. how easy it is for a business to be read and understood by a financier) as it is about availability.

The network gap is wider than most people admit: 38% of respondents in our pre-event survey identified limited investor networks as their single biggest financing barrier. This is a different problem from not having collateral or not meeting credit criteria. It is a problem of invisibility, of not being in the room where funding decisions are made, and not knowing which rooms exist. Most financing relationships in Africa are still built on trust and proximity. A farmer in rural Malawi and a fund manager in Lagos are operating in entirely different information ecosystems, and the farmer usually bears the full cost of that distance.

Collateral requirements feel like a closed door: 33% of respondents cited lack of collateral as their primary barrier. For most African agribusiness owners, collateral means land or property, assets many do not hold formal title to or cannot risk pledging. What very few entrepreneurs know is that the definition of collateral, in practice, is far more flexible than it appears on a bank’s requirements list. The gap here is not just financial; it is a knowledge gap about what is actually negotiable.

High interest rates price out the smaller players: 19% of respondents flagged high interest rates as a key barrier. In markets like Nigeria, where the central bank’s monetary policy rate has pushed commercial lending rates above 26%, the cost of formal debt financing effectively excludes most small and growing agribusinesses from the commercial banking system. Many entrepreneurs do not know that below-market rates exist through blended finance facilities, or how to access them.

The financial literacy gap runs deeper than it looks: Across the surveyed population, 10% identified unclear application requirements as their biggest barrier. However, at the Agribusiness Clinic, it became clear that this figure undercounts a much broader problem: most first-time financing applicants do not understand how lenders actually evaluate a business. They prepare business plans and project revenue figures, but they do not know that an investor or lender is simultaneously running a parallel assessment, one that has nothing to do with projected revenue and everything to do with behaviour.

This behavioural assessment is perhaps the most important thing agribusiness owners do not know about, and it is worth spending time on.

What Investors Are Actually Looking For (That Nobody Tells You)

At June’s Agribusiness Clinic, Deji Adebusoye of Sahel Capital, one of Africa’s leading agribusiness-focused investment firms, introduced a distinction that reframed the entire conversation: the difference between ability to pay and willingness to pay.

“Many times, a lot of people just think that we focus on the ability to pay - my business is doing well, I’m growing revenues, I’m profitable. The reality is those are important factors, but the ability to pay is really at the second level. The problem is usually with willingness to pay. If you as a borrower have the money, do you want to pay?” - Deji Adebusoye , Sahel Capital

This is the question that most entrepreneurs do not even know they are being asked. Because when you have no credit history (which describes the majority of first-time financing applicants across Africa), investors cannot assess your willingness to pay directly. So, they look for proxies. And those proxies are hiding in plain sight on your financial statements and bank records.

Walk through your financial statement line by line. Below your revenue is your cost of goods sold, e.g. what you pay your suppliers. Do you pay them what you owe, when you owe it? Below that are your operating expenses, including salaries. Are you paying your staff a fair wage and remitting their pensions consistently? Below that is interest expense. If you have borrowed before, did you repay on schedule? And at the bottom, your taxes: are you remitting what you owe to the government and on time?

These four obligations (to your suppliers, your employees, your past lenders, and the state) are what an experienced investor reads as your character before they ever read your projections. As Adebusoye put it bluntly: “If you are not fulfilling your obligations to any of those four people, I do not see any reason why you would do it to me as well.”

This is a wake-up call, but it is also an empowering one. Because it means that your financing readiness is being built or eroded every single day, through the discipline you show in running your business, long before you walk into a bank or write a pitch deck.

The Practical Playbook: Six Things You Can Do Right Now

The good news is that every barrier described above has a known workaround. Here is what the financing experts who attended the clinic said, stripped of jargon and translated into action.

1. Rebuild your understanding of collateral: Land is not the only acceptable collateral, and most entrepreneurs do not know this. According to Wole OSHIN of Stanbic IBTC , banks can accept a ‘collateral mix’ that includes the commodities being financed (for aggregators or grain traders, part of the stock itself can serve as security), the strength of your off-take arrangements (a signed agreement with a processor or buyer is itself a financial asset in the eyes of a lender), and credit risk guarantee instruments offered through institutions such as NIRSAL in Nigeria and equivalent bodies in other African countries. These guarantee schemes are not accessed directly: you approach a partner bank, which then makes an application on your behalf. The key is to ask your bank explicitly: “What guarantee schemes do you have partnerships with, and what collateral substitutes will you accept?” Most applicants never ask.

2. Start building your credit history today, even if you are not ready to borrow: The catch-22 of first-time financing is real: you need a credit history to access credit, but you cannot build a credit history without accessing credit. The way out is to start small and intentionally. Borrow from a microfinance institution, a fintech lender, or even a cooperative, and repay on time and in full. Each repayment is a data point. Sahel Capital’s Deji Adebusoye noted that his firm is now prepared to back businesses with proven credit behaviour across smaller lenders, even if those businesses have not previously accessed institutional finance. The first loan is not about the money; it is about the record.

3. Understand which financing instrument suits your business stage: Equity and debt are not interchangeable, and they do not suit every business at every stage. As Adebusoye explained, “equity is like a long-term marriage; you need to be 100% certain this is someone you want to be in a long-term relationship with.” Equity investors are looking for governance, scalability, and a clear exit pathway. Debt investors are looking for cash flow, repayment discipline, and collateral. Grants (which 66% of our surveyed members prefer) are real but finite and highly competitive. A smarter strategy is to sequence your financing: start with grants or microfinance to establish track record, layer in debt as cash flow stabilises, and consider equity only when you have the governance structures and growth trajectory that justify diluting your ownership. Knowing where you are in this sequence helps you approach the right investor with the right ask.

4. Navigate interest rates through blended finance: High commercial interest rates are not fixed. Sterling Bank ’s Dr. Joshua Zira, MBA, M.Sc, ACIB shared that his institution actively works with development finance organisations, including a multi-year partnership with Mastercard Foundation (e.g. SWAY), to offer below-market rates to qualifying agribusinesses. At the time of the clinic, Sterling was offering facilities as low as 9% per annum for certain agribusiness segments, and rates of 16-17.5% through blended windows, compared to the standard commercial rate above 26%. These facilities exist across multiple African countries through DFI-backed programmes that most entrepreneurs have never heard of. The strategy: when approaching a bank, ask specifically what development-finance or blended-rate windows are currently open to agribusinesses. These windows are often time-limited and undersubscribed simply because applicants do not know to ask for them.

5. Use aggregation as your bridge to institutional finance: Individual smallholder farmers face a near-structural exclusion from formal banking. No bank will lend to a single farmer on a single hectare - the transaction cost is too high relative to the ticket size. But when farmers aggregate through cooperatives, associations, or out-grower schemes anchored by a processor, the equation changes entirely. Dr Joshua Zira of Sterling Bank was direct: “If you aggregate yourselves, it is much better for us to fund you than if you approach as a single person.” Aggregated groups present a lower cost-to-serve, a diversified risk pool, and in many cases a ready-made off-take structure. If you are a smallholder or a small farmer, the most powerful financing decision you can make this year is to join or form a cooperative.

6. Know which door to knock on: One of the most common and costly mistakes agribusinesses make is approaching the wrong institution. The African Development Bank Group , for instance, approved a record $11.5 billion in new operations in 2024, and $10.9 billion in 2025, yet none of this reaches agribusiness MSMEs directly. It flows through national development banks, regional development banks, and commercial bank intermediaries who then lend to businesses like yours. Your entry point into the formal financing ecosystem is almost always a microfinance institution or a community bank, not a multilateral development bank. Start where the ticket sizes match your need, build a record there, and scale up from there.

A Final Word

The agribusiness financing gap in Africa is real, persistent, and damaging to millions of entrepreneurs who are doing important work. But it is not impenetrable. The code exists, and it is learnable. The businesses that crack it are not necessarily the biggest or the best-connected; they are the ones who understand what financiers are actually reading, and who build their businesses accordingly, day by day, line item by line item.

AFC’s Agribusiness Clinic exists precisely for this translation work, to put our members in the same room as the institutions making financing decisions, and to turn what is abstract and intimidating into something practical and actionable. Every month, a new theme. Every month, a new set of tools for the entrepreneurs building Africa’s food future.