Location
Ethiopia
Stakeholders involved
Agro-processing firms, local small and medium-sized enterprises (SMEs), development banks, public sector entities, farmer cooperatives, Integrated Agro-Food Parks (IAFPs)*
Lead organization
Co-investment model
The co-investment model combines public infrastructure investment with private capital. The government of Ethiopia has already invested heavily in core infrastructure – roads, power, water systems and park facilities – lowering upfront costs and reducing risk for private investors. In the country, IAFPs are a platform for sustainable, market-driven agribusiness and rural transformation. They have leveraged approximately USD $1.1 billion in public and private investment.
Impact
smallholder farmers
combined direct and indirect employment
million (USD) in public infrastructure
This inclusive and sustainable model enhances farmer incomes, reduces post-harvest losses and strengthens rural economies – over 300,000 smallholder farmers are linked to the IAFPs. The parks support sectors such as dairy, coffee, oilseeds, honey, avocado oil and fruit, with recent local surveys indicating that combined direct and indirect employment across the three parks is approaching 100,000 as they continue to scale up.
IAFPs directly contribute to Sustainable Development Goals (SDGs) 1 (by increasing incomes for thousands of farmers), 2 through ensuring sustainable food production systems and increased investment […] in rural infrastructure, 8 (by boosting per capita economic growth and productivity through diversification, technological upgrading and innovation – 122 SMEs already have bankable business proposals and have signed lease agreements for plots in IAFPs), 9 (by investing upward of USD $700 million in public infrastructure) and 12 (in food waste reduction through RTC storage). They align with Agenda 2030 for modern agriculture, manufacturing, industrialization and value addition, as well as Comprehensive African Agricultural Development Program (CAADP) Pillar II by accelerating growth in the agricultural sector by helping to meet the increasingly complex cost, quality and logistical requirements of domestic, regional and international markets. The initiative is also part of Ethiopia’s Homegrown Economic Reform Agenda and National Strategy aimed at transforming the economy through market-driven initiatives that leverage the country’s strengths.
Levers and enablers
IAFPs integrate production, processing and logistics with a central hub, while Rural Transformation Centers serve as aggregation points for smallholder produce, facilitate structured off-take agreements, often via cooperatives, and help the flow of raw materials to the processing hubs.
Technology and innovation are central. Parks offer quality control labs, renewable energy and effluent treatment to enhance business operations. IAFPs implement social and environmental safeguards through impact assessments and mitigation plans.
Barriers
Barriers include limited access for SME and smallholder farmers to credit, which is addressable through warehouse receipt systems and contact farming linked to food processing SMEs in the IAFPs. Another is the effective dissemination of food safety systems, post-harvest loss reduction knowledge, skills and infrastructure, which can be more easily disseminated within the catchment area of the park. Coordination challenges among diverse stakeholders also exist but there are opportunities to mitigate them through the centralizing role of the IAFPs.
Lessons for scaling
- Ensure that agribusiness development initiatives are firmly rooted in national, regional and continental development objectives;
- Provide targeted technical assistance related to project preparation, food safety systems, SME development, institutional capacity,and policy guidance, along with de-risking instruments and blended finance solutions – such as loan guarantees or warehouse finance systems – to further spur private capital and strengthen links between farmers and processors.
* Integrated Agro-Food Parks (IAFPs) are agribusiness development corridors integrating value chain actors with high-quality infrastructure, utilities, logistics and specialized facilities and services to create economies of scale for sustainable market-driven agribusiness development and rural transformation.
