Impact investment: Supporting agricultural SMEs in Africa

8 August 2016. Bamboo Finance and Louis Dreyfus Commodities are launching a €46 million investment fund, NISABA, to support agriculture in sub-Saharan Africa. The fund will support small and medium enterprises along the value chain by improving access to data and training, and by linking producers to end consumers.

The initiative came from Louis Dreyfus Commodities, one of the leading global merchandisers of agricultural goods, and Bamboo Finance, a Swiss private equity firm specialising in investments benefitting low-income communities in developing countries. In October 2015, the two companies announced their partnership to build and run an impact investment fund. Impact-investing strategies aim to develop positive social, societal and ecological effects with financial returns. The partnership expects to hold the final close for the fund, which is hard-capped at $50 million, in mid-late 2017. The fund is attracting interest from investors in both the developed world—specifically impact investors and DFIs—as well as African pension funds.

“In Africa, many small and medium enterprises (SMEs) have real potential for creating jobs and increasing a country’s GDP, but they lack financing to expand. The 10-year fund is based on Louis Dreyfus’ knowledge of African agriculture and Bamboo Finance’s expertise in investing in SMEs, and intends to help SMEs along sub-Saharan Africa’s agricultural value chain to expand and attract funding.” Pierrick Paindavoine, NISABA’s director

NISABA will have a balanced portfolio in terms of geographical coverage, activities and products, and will invest in emerging markets where there’s a financing gap in the agricultural value chain. Focus will be on small businesses that combine social, ecological and financial goals, by improving access to data, training, innovative technologies, and finance and risk management. Market access will also be enhanced by linking producers to end consumers. Finally, the fund will strengthen local technical capacities in postharvest management, value-added processing and packaging.

The fund, which has a pipeline of opportunities across several segments of the dairy value chain in East Africa and in highly fragmented markets such as rice in Senegal, will target opportunities that both maximize impact and generate returns. Capital will be deployed where the agribusiness sector as a whole has a relevant place in the local economy and society, offers room for development and has a high potential for impact.