NAIROBI, Kenya (PAMACC News) - The Alliance for a Green Revolution in Africa (AGRA) has invested its second tranche of $2.5 Million to boost the share capital of the Agri-Business Capital Fund (ABC Fund).
The ABC Fund is an innovative initiative by AGRA, the European Commission through its EU-ACP agreement, the Luxemburg Government and the International Fund for Agricultural Development (IFAD)to support sustainable and inclusive agricultural value chains for smallholder farmers and small-to-medium sized rural agribusinesses (SMEs) in developing countries.
“ABC Fund is a global facility but 80% of the investments will be made in Sub Sahara Africa,” said Hedwig Siewertsen, the Head Inclusive Finance at AGRA.
The fund is composed of different types of shares with different risk and return profiles.
According to Siewertsen, the funds come in form of loans and equity, specifically tailored to the needs of smallholder farmers and agri-SMEs.
“To reach them most effectively, these products are made available either directly to farmers’ organizations and SMEs, or indirectly via financial institutions,” she said.
The main focus of the money is on investments that can drive economic and social development and generate economic opportunities for smallholder farmers, in particular women and young people, with an aim of improving livelihoods of more than 4 million individuals over a predetermined period of 10 years.
According to plan, the tranche from AGRA will be used to provide loans to agricultural SMEs that service smallholder farmers and have a business track record of minimum 3 years with a turnover exceeding USD200,000 with a financial need of more than USD 250,000substantiated by a business plan.
It will also lend to financial intermediaries that have an agricultural portfolio targeting smallholder farmers. Such organizations can apply for the funds through the fund managers who are Bamboo Capital Partners based in Nairobi, and Injaro Investment Limited which is based in Accra and Abidjan.
So far, the current 10 approved investments are located in Ivory Coast, Mali, Burkina Faso, Ghana, Kenya and Uganda, and will benefit over 15,000 smallholder farmers in these countries.
Targeted entities for the funds include producers of primary agricultural products, input suppliers such as manufacturers or distributors of seeds, companies that produce, maintain or operate storage facilities, and service companies, traders, veterinarians, mechanization.
Other beneficiaries include aggregators and/or processors of primary agricultural products, logistics companies that transport and handle primarily agricultural goods, and finally, processors of secondary agricultural goods/ food products.
“Investing in smallholder farmers and agri-SMEs enables them to increase their productivity, improve their livelihoods, strengthen their resilience to climate change, and better benefit from participation in value chains,” said Siewertsen noting that targeted investment will help generate employment and economic opportunities for millions of rural women and the youth.
This comes at a time national, regional and global food markets are growing to feed a swelling world population and meet increasing demand for more diverse and sophisticated food products, thereby presenting huge opportunities for smallholder farmers and agri-SMEs.
This is the second tranche AGRA has invested in the ABC fund. The first tranche of investment of a similar amount was done last year.