The Nature of the Harvest

Part Four: Who pays for the harvest {#part4 .part} # Chapter 13. The institutions that fund Mozambican agriculture

Mozambique's agricultural transformation is financed by a mix of the state, multilateral banks, bilateral donors, foundations, private companies and, increasingly, individuals. Knowing who they are, and what each one funds, matters for farmers' organisations, agribusinesses, researchers and anyone who wants to build a project that fits.

Multilateral development banks and international funds

The World Bank Group (IDA). The World Bank, through its concessional arm IDA, is one of the largest financiers of Mozambican agriculture, supporting irrigation, land administration, market access and rural infrastructure. In October 2026 the World Bank and IFAD signed a new co-financing framework agreement to scale up joint investment in rural economies and food systems, building on co-financing that grew from about 646 million dollars in 2021 to 1.56 billion dollars in 2025. A central part of their joint work is AgriConnect, a flagship initiative that aims to support agricultural transformation for 300 million smallholder farmers by 2030, implemented through national compacts with governments.

The International Fund for Agricultural Development (IFAD). IFAD is the United Nations agency devoted entirely to rural development and smallholders. In Mozambique it has invested over many years in smallholder value chains, rural finance, artisanal fisheries and reducing post-harvest losses.

The African Development Bank (AfDB). The AfDB funds crop value chains, irrigation and fertilizer finance. Its Rice Value Chain and Climate Resilience Project, approved in 2025 with a 22.8 million dollar grant from the African Development Fund, targets 30,000 rice farmers, about 70 percent of them women. Through its Africa Fertilizer Financing Mechanism it has also supported credit guarantees that help agro-dealers stock fertilizer before planting. The AfDB is also expected to be a partner in capitalising the new Development Bank of Mozambique.

The Food and Agriculture Organization (FAO). FAO works with the Ministry of Agriculture on technical programmes, data, seed systems, emergency response after cyclones and droughts, and regional market connections.

Bilateral partners

Germany. German development cooperation has committed more than 50 million dollars to an innovative fund for agribusiness, supporting mechanisation, productivity, subsidised credit and agro-industrial growth, managed with the Bank of Mozambique and the Zambezi Valley Development Agency.

Italy. The Italian Agency for Development Cooperation (AICS) funds an FAO project to boost agricultural value chains and trade between Zimbabwe and Mozambique, and has long supported rural development in the country.

The Netherlands. The Dutch government has pledged support for seed development, complementing the government's push for certified seed.

The United States. For two decades the United States, through USAID and its Feed the Future initiative, was one of the largest agricultural donors in Mozambique, supporting market systems, cash crops such as sesame and soya, and agro-dealer networks along the Nacala corridor. In 2025 that changed. The US administration cancelled most foreign aid contracts; a memo to Congress in April 2025 listed more than 172 million dollars of cuts in Mozambique alone, nearly half of USAID's spending there, including food security projects. USAID formally closed on 1 July 2025, with its remaining functions moved to the State Department. Much of what American aid used to fund in Mozambican agriculture now has no funder.

Foundations and alliances

The Gates Foundation funds agricultural research across sub-Saharan Africa, including crop breeding, seed systems, livestock health and digital advisory services, much of it through research centres and partners.

AGRA, founded with support from the Gates and Rockefeller foundations, has a Mozambique strategic plan for 2023 to 2027 focused on functional input and output markets, trade and farmer resilience, and convenes public and private actors around seed, fertilizer and market systems.

The gap: small, fast, direct finance

Large institutions fund large programmes. They are good at irrigation schemes, national seed systems, roads and policy reform. They are not designed to deliver 50 dollars of seed to one farmer in a village in Zambézia next week, with a receipt.

That gap, small, fast, direct finance for individual farmers before each planting season, has grown wider with the end of most American aid. It is a gap that individuals can fill.

Part Two: Agriculture as the engine of growth {#part2 .part} # Chapter 5. How farming powers a whole economy

The old mistake

In the 1950s and 1960s, many development economists believed that the way to grow rich was to move people out of agriculture as fast as possible. The Caribbean economist W. Arthur Lewis described poor economies as having a large traditional sector with surplus labour and a small modern sector. Development, in his model, meant the modern sector absorbing workers from the traditional one. Many governments read this as permission to tax farmers heavily and spend the proceeds on industry.

It did not work in most places. Taxing farmers, through low controlled prices and overvalued currencies, drove them back into subsistence. Food became scarce and expensive in the cities, which pushed up wages and made the new factories uncompetitive. Many African countries that tried to industrialise on the backs of their farmers ended the century poorer than they began it.

The better idea

In 1961, the economists Bruce Johnston and John Mellor published a short article, "The Role of Agriculture in Economic Development," that set out a different view. Agriculture, they argued, contributes to development in five ways:

1. Food: it feeds the growing cities at stable prices, keeping wages competitive.
2. Exports: it earns foreign exchange to import machines and technology.
3. Labour: as farms become more productive, some workers can move to industry without food production falling.
4. Capital: farm savings and taxes can finance investment elsewhere.
5. Markets: prosperous farmers buy clothes, bicycles, phones, tools and building materials, creating demand for domestic industry.

The fifth point is the one most often forgotten. A country where most people farm cannot build a large domestic market for anything until farmers have money to spend.

The East Asian economies followed this logic. Taiwan's land reform in the early 1950s turned tenants into owners, its farmers' associations spread new varieties and fertilizer, and rising rural incomes created the first market for Taiwanese factories. South Korea and Japan did something similar. China's growth after 1978 began with the household responsibility system that gave families control of their plots.

The agrifood system

Today economists talk less about "agriculture" and more about the agrifood system: the whole chain that turns inputs into food on a plate.

The chain has four links:

1. Input supply: seed companies, fertilizer importers and blenders, agro-dealers, tools and equipment, veterinary services, credit.
2. Primary agriculture: the farms themselves, from family plots to commercial estates.
3. Agroprocessing and value addition: milling, oil pressing, drying, roasting, packing, juicing, cold storage.
4. Trade and logistics: aggregation, transport, warehousing, wholesale markets, export through ports and corridors.

In rich countries, the farm itself captures only a small share of what consumers spend on food. Most of the value, and most of the jobs, are in the links before and after the farm gate. A country that only farms and exports raw produce leaves most of the money on the table. A country that builds the whole chain keeps it.

Why this matters for poverty

Growth in farming reaches the poor directly, because so many of the poor are farmers. When a family's maize yield doubles, it eats better, sells a surplus, pays school fees and buys from the village shop. When an agroprocessor opens in a district town, it buys from hundreds of farmers and employs dozens of workers. That is why the World Bank concluded that growth from agriculture reduces poverty at least twice as effectively as growth from other sectors.