Hunger has worsened in several regions of Africa, driven by armed conflict and extreme weather that scientists have linked to fossil fuel-driven climate change.
The announcement, by USAID administrator, Samantha Power and Norwegian minister of international development, Beathe Tvinnereim on the sidelines of the UN General Assembly, comes as Russia and China vie with the United States and Europe to win over developing countries.
The fund aims to reach a total of $200 through additional contributions from donors and has the potential to benefit nearly 7.5 million people, the spokesperson said.
USAID and Norway will each commit an initial $35m. The fund has the potential to support 500 small- and medium-sized agricultural businesses, 1.5 million smallholder farmers and nearly 60,000 private sector jobs.
The fund aims to spur hundreds of millions more dollars in commercial financing by reducing the risk of investing.
Famine in parts of the Horn of Africa was averted this year as the rainy season, projected to fail for a fifth consecutive year, beat expectations. But aid officials say some 60 million people are still food insecure in seven east African countries.
Millions in West Africa have faced food insecurity spurred by climate shocks, Covid-19 and high prices.
"Without these smaller agribusinesses, Africa's smallholder farmers are growing just enough to feed themselves and their families," Power said.
"But connect them to a nursery that can supply them with quality seeds and fertilizer, a market where they can sell excess harvest, or a processor that can turn their crops into higher-value products, and suddenly they have a chance to take off, delivering the kind of agricultural growth we know is necessary to fight hunger and poverty."
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