The last decade has seen increasing recognition by policymakers, capital providers and finance practitioners of the vital role played by agricultural small- and medium-sized enterprises (agri-SMEs) in agriculture and food systems in developing countries, as well as their key challenge of limited access to finance.

In sub-Saharan Africa and Southeast Asia, there is an estimated $160 billion demand for financing by about 220,000 agri-SMEs. However, ISF Advisors and the Commercial Agriculture for Smallholders and Agribusiness (CASA) Programme estimate that only $54 billion (about 34%) is currently being met through formal finance channels — leaving an annual financing gap of $106 billion.

These headline estimates are large, but reflect in numbers what most practitioners have experienced through working with agri-SMEs. Digging beyond numbers, this new State of the Sector report introduces a more specific view of where the market for agri-SME finance is (and isn’t) clearing.

To add new perspective, this report breaks down the market in a more comprehensive and holistic way to show where finance is specifically flowing, via specific types of products from specific types of funders to specific types of agri-SMEs. The report also presents four long-term change priorities that we see as crucial to systematically closing the $106 billion agri-SME financing gap over time.