Sunday, February 17, 2019

EU provides €45 million in support for smallholder agri-businesses in rural Africa

IFAD and AGRA, both with operations on the ground
in rural communities, will work closely with the fund manager
to identify investment opportunities with promising SMEs.
Image Credit: Twitter(@IFAD)
15 February 2019. European development commissioner Neven Mimica launched the new Agri-Business Capital Fund, or ABC Fund, a partnership between the EU and others who have so far committed around €55 million to support direct investments via small-scale loans for small- and medium-sized businesses and farmers' organizations, plus indirect investment in local financial institutions for on-lending.

The EU has made €45 million available to the fund. On top of this, the Luxembourg Government and the Africa Green Revolution Alliance, an international NGO, are contributing €5 million and $5 million respectively.

Launch of the Agri-Business Capital Fund (ABC Fund)
  • Welcome remarks: Mr Gilbert F. Houngbo, President of IFAD 
  • Introductory statement: Mr Neven Mimica, European Commissioner for International Cooperation and Development Speakers: 
  • H.E. Paulette Lenert, Minister for Development Cooperation and Humanitarian Affairs, Grand Duchy of Luxembourg 
  • Dr Patrick I. Gomes, Secretary-General, African Caribbean and Pacific Group of States (ACP) 
  • Ms Hedwig Siewertsen, Head of Inclusive Finance, Alliance for a Green Revolution in Africa (AGRA) 
  • Mr Florian Kemmerich, Managing Partner, Bamboo Capital Partner
Bamboo is the fund manager of the ABC Fund, in partnership with Injaro Investments (‘Injaro’).
“The launch of the ABC Fund is a momentous milestone for the impact investing industry. The support of organisations such as IFAD, the EU and the Luxembourg Government, coupled with a launch event at IFAD’s annual Governing Council is testament to the maturity of the industry. We believe that the ABC Fund has the potential to transform small scale farming in developing countries and we look forward to working with IFAD and Injaro as we strive to realise this vision.” Jean-Philippe de Schrevel, Founder and Managing Partner of Bamboo
“Injaro is excited to participate in this innovative initiative that actively addresses a long-standing and glaring gap by connecting smallholder farmers in Africa with access to a range of financing instruments. The lack of accessible and affordable working capital, trade finance and term loans consistently prevents farmers from scaling and addressing their local food security needs. The ABC Fund will support farmers through technical assistance to improve yields and reduce post-harvest losses with the ultimate goal of progressively eliminating hunger on the continent.” Jerry Parkes, Managing Principal of Injaro Investments





Background
The ABC Fund is a major blending operation for agricultural investments in developing countries.
  • Visit the Agri-Business Capital (ABC) Fund page 
  • Visit the Governing Council page here
  • The new ABC Fund, established by IFAD, is primarily geared towards individual smallholders and farmers' organisations, with loan sizes from $25 000 - $1 million (approximately €22 000 – €885 000), thus improving their access to finance. 
  • This "missing middle" has the potential to be profitable and to impact development, but has lacked sufficient funding until now.
  • It covers direct investments such as small-scale loans for small and medium-sized enterprises, farmers' organisations and 'agripreneurs', along with indirect investment in local financial institutions for subsequent on-lending. 
  • It builds on existing IFAD development activities to screen opportunities and reduce the risk attached to subsequent investments. 
  • It is expected to attract significant additional funding from other sources – private and impact investors alike. 
  • Based in Luxembourg, it draws on the expertise of a professional fund manager and uses technical assistance adapted to investees' needs.
  • Building on past experience, the ACP Farmers' Organisations Programme will strengthen farmers' organisations and cooperatives so that they can increasingly access capital directly, for the benefit of their members. In this way they will become a key element in the supply of bankable deals for the ABC Fund and form another angle of the sustainable investment the EU is seeking to promote.
  • The ABC Fund aims to raise EUR 200 million over the next 10 years. It will provide loans adapted to the needs of SMEs. Loan size will range from EUR 20,000 to EUR 800,000. The ABC Fund will work through financial institutions for loans in the range of EUR 20,000 to EUR 200,000, while providing loans between EUR 200,000 and 800,000 directly to investees.
See also: Africa-Europe Alliance for Sustainable Investments and Jobs


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