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AGRA invests $2.5m to support smallholders farmers in developing countries

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).

Farming
Smallholder farmers In northern Nigeria

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.

“AGRA’s investment in the first loss tranche of this blended vehicle only covers losses in sub-Sahara Africa. The current 10 approved investments are located in Ivory Coast, Mali, Burkina Faso, Ghana, Kenya and Uganda, and will benefit over 15,000 farmers in these countries,” said Siewertsen.

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The fund is composed of different types of shares with different risk and return profiles. 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’ organisations and SMEs, or indirectly via financial institutions.

It focuses 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 the life of the fund.

In Africa, 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 three years with a turnover exceeding $200,000 with a financial need of more than $250,000 substantiated by a business plan.

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It will also lend to financial intermediaries that have an agricultural portfolio targeting smallholder farmers. Such organisations 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.

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, mechanisation.

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.

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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.

Courtesy: PAMACC News Agency

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