Catalyzing finance for young food entrepreneurs: A UN Food Systems Independent Dialogue
When and where
Transforming food systems requires empowering millions of young entrepreneurs to use their creativity, energy and dedication to develop new business models that deliver better access to food, nutrition, equitable livelihoods, environmental sustainability and resilience. Improving young agri and food entrepreneurs’ access to finance, complemented by knowhow and technology, is critical for that. The Food System Summit offers a strategic opportunity to advance concrete, game-changing actions that empower young entrepreneurs to transform the sector.
In many parts of the world, small and medium enterprises – or SMEs – represent the backbone of food systems, operating all along food value chains or providing services, information, and technology solutions to value chain actors. Their role in the food economy is often huge. For instance, almost two thirds of food consumed on the African continent come from SMEs, according to a 2019 report by the Alliance for a Green Revolution in Africa. The direction in which food value chains are evolving and how they will be in the future depends to a large degree on the capacity of agri-SMEs to develop business models that help transform food systems.
Access to finance is a top challenge for agri-SMEs, and particularly so for those with innovative business models and for young and women entrepreneurs. The reasons for that include, on the entrepreneurs’ side, lack of physical collateral, limited business management capabilities, lack of credit history, and limited projected returns for their business models, especially when set within poorly functioning markets. On the finance supply side, the reasons for the challenge include lack of adequate financial products, standard procedures with high transaction costs, and limited capacity to properly assess and manage the risks involved with serving this market segment.
Young agripreneurs often struggle particularly to access patient capital to start their journey or to transition from grants to semi-commercial and then to commercial capital. Many operate in markets that lack a diverse pool of capital to meet the different needs they face while their enterprises grow. Fragmentation and lack of coordination among different types of financiers and investors often make it difficult for them to navigate successfully the financial ecosystem.
How can the Food Systems Summit catalyse new, coordinated solutions to these challenges, building on existing initiatives and on emerging game-changer proposals for youth, agri-SMEs, and finance? This event aims to leverage ongoing initiatives and conversations and to accelerate progress to deliver a tangible contribution to the agenda of young food entrepreneurs at the Summit and beyond.
Objectives of the dialogue
- Foster shared understanding about the importance of “enabling financial ecosystems” for young entrepreneurs, with effective financial offerings on a continuum from grant to commercial capital, business development services, and enabling policies and partnerships.
- Empower young food and agripreneurs to tell their stories and to present their proposals for solutions to the finance challenge, inspiring ideas for action that participants and the public can take back to their respective networks and constituencies.
- Unpack success stories and illuminate their success factors to facilitate the identification of action possibilities that participants can then pursue, individually or with each other.
- Consider and refine new or existing game-changer proposals relevant to the theme at hand, particularly by mobilizing the perspectives of young entrepreneurs.
- Raise awareness about existing initiatives that participants can connect to and support and tools that they can use to build new alliances or strengthen their work in this domain.
After brief introductions and fire-starter panels, each session of the event will move to discussion tables around the following topics:
- Building young people’s entrepreneurial capabilities as innovators in food and agriculture
- Information systems empowering agripreneurs to navigate the financial sector
- Financial de-risking of investment capital for young agripreneurs
- Aligning metrics and standards to assess the “bankability” of agri-SMEs
- Enhancing coordination among different types of capital and financial service providers
- Financial services and products for ag-tech innovators