Why Investors Are Rethinking African Agrifood: Commercial Viability, Climate & Supply Chain

The 2025 landscape for agrifood VC in Africa, as described by Sherief Kesseba of CRAF, reflects an ecosystem in transition. Traditional dependence on grants and concessional funding is ending, with the emphasis shifting towards commercially viable models that can deliver returns while generating positive social and environmental impact. The global VC allocation to Africa is still under 5%, while the continent faces an annual agricultural financing gap estimated between US$75 billion and over US$100 billion. These numbers highlight both the under-capitalization of the space and its immense latent opportunity.

CRAF’s investment strategy demonstrates these shifts in practice. Key portfolio programs include Winich Farms in Nigeria, which secured US$3 million (US$2.5 million equity + US$590,000 debt) in pre-Series A financing from a syndicate including CRAF, Acumen Resilient Agriculture Fund (ARAF), Sahel Capital, and others, to scale its collection points network (30 of 36 Nigerian states) and build financial products for smallholder farmers. Similarly, Sea Gardener in Egypt is using RAS technology to upgrade Egypt’s shellfish sector toward export markets, leveraging infrastructure innovations to meet global standards and produce efficiently. These are evidence of sector-specific capital concretely backing ventures with viable unit economics and climate resilience, rather than growth at any cost.

Despite progress, systemic risks persist. Startup mortality remains high due to weak unit economics, particularly where logistics, perishability, and supply distances are large. First-mile/last-mile costs continue to erode margins when growth is too fast or aggressive. Policy fragmentation, limited digital infrastructure, and regulatory uncertainty around standards (traceability, sustainability, deforestation) make scaling across geographies difficult.

Strategic implications are significant for investors, fund managers, and policymakers: Funds that can combine impact metrics with commercial rigor are likely to succeed. There is a strong case for blended finance models where DFIs provide patient capital or first-loss layers, enabling commercial investors to step in. Operational leverage points include cluster or cooperative models that aggregate smallholders to achieve scale; traceability and supply chain technologies that meet export/regulatory demands; and local entrepreneurs who understand rural realities and execute efficient growth. Policymakers must harmonize regulatory environments, improve infrastructure, and encourage standards that allow African producers to access high-value markets globally.

Key open questions include: What are the exit pathways that actualize returns for investors in this space? How will inflation, currency risk, and climate extremes alter unit economics? Can pan-African regulatory frameworks around traceability, deforestation, and sustainability be established to reduce compliance fragmentation? And how will commercial capital flows into agrifood scale in the face of persistent risk-perceptions?