FMO, the Dutch entrepreneurial development bank, has committed $12.5 million to the Acumen Resilient Agriculture Fund II, or ARAF II. The private equity fund will finance early-stage and growing agribusinesses that help African smallholder farmers access markets, funding, agricultural inputs, technology and advisory services.
The commitment supports ARAF II’s $64.5 million first close and forms part of a broader capital mobilisation effort led by Acumen Capital Partners. The fund will build on the first ARAF vehicle, which reached more than three million farmers through investments in climate-focused agriculture businesses across East and West Africa.
Key Overview
- FMO has invested $12.5 million in ARAF II through Building Prospects, a Dutch government fund managed by FMO.
- ARAF II reached a first close of $64.5 million.
- Returning investors include FMO, the Green Climate Fund and Proparco.
- New backers include Swedfund, BIO and the Fund for Agricultural Finance in Africa.
- The fund plans to invest in approximately 18 to 20 agribusinesses across East, West and North Africa.
- ARAF II aims to help at least four million additional smallholder farmers adapt to climate change.
FMO Anchors ARAF II’s First Close
FMO confirmed its $12.5 million commitment on July 16, 2026. The financing was made through Building Prospects, a Dutch government facility managed by FMO to support private-sector development and essential infrastructure in emerging markets.
The development bank previously invested $7.5 million in ARAF I in 2020. Its follow-on commitment is intended to anchor ARAF II and encourage additional development finance institutions and impact investors to participate in a sector where conventional commercial capital remains limited.
ARAF II achieved a first close of $64.5 million. Separately, Acumen announced that its wider agriculture investment platform had secured $90 million in newly committed capital from returning and new partners. The announcements describe related fundraising milestones but should not be treated as the same figure.
Capital Targets Climate-Resilient Agribusinesses
ARAF II will provide equity financing to companies whose products and services strengthen smallholder farming businesses. These may include providers of improved seeds and inputs, affordable finance, digital platforms, weather information, farmer training, aggregation, processing and access to reliable buyers.
FMO says the fund will back businesses that combine several services rather than offering isolated products. This approach is designed to help farmers increase productivity and income while becoming better equipped to manage droughts, floods and changing rainfall patterns.
The fund is expected to invest in roughly 18 to 20 seed, early-stage and early-growth companies. BIO’s approved $5 million investment identifies ten target markets: Kenya, Uganda, Tanzania, Ethiopia, Ghana, Nigeria, Côte d’Ivoire, Senegal, Egypt and Morocco.
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Development Institutions Build a Blended Capital Base
FMO joins the Green Climate Fund and Proparco as returning investors. New participants include Swedfund, the Belgian Investment Company for Developing Countries and the Fund for Agricultural Finance in Africa, alongside a family-office investor.
The Green Climate Fund approved a $30 million equity contribution toward ARAF II, supported by expected co-financing and a technical-assistance facility. Proparco has separately committed $12 million to the fund, highlighting its focus on companies that improve farmer access to markets, finance and climate-smart agricultural services.
This mix of concessional, development and private capital is intended to absorb some of the risks associated with investing in young agribusinesses while still targeting commercial returns.
Expansion Builds on ARAF I’s Results
ARAF I launched in 2020 as an equity fund focused specifically on strengthening smallholder farmers’ climate resilience. Acumen says the first fund’s 12 portfolio companies have directly reached more than three million farmers, with over 80% reporting improved yields and incomes.
ARAF II will extend the strategy beyond East and West Africa into North Africa. Its stated ambition is to reach at least four million additional farmers while improving food security, supporting rural employment and expanding the availability of climate-adaptation services.
The fund’s performance will ultimately depend on whether portfolio companies can scale commercially while delivering measurable benefits to farmers. The FMO commitment provides ARAF II with additional long-term capital to test that model across a broader African market.
Sources
FMO / Acumen / Green Climate Fund / Proparco / BIO
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