Sustainable Impact Investment In Africa
Farmer's Weekly|November 6, 2020
Sustainable Impact Investment In Africa
‘Impact investment’ aims to generate social and environmental benefits as well as solid financial returns. AgDevCo, a UK-based project developer, has 50 agribusiness investments of this type in sub-Saharan Africa, linking more than 375 000 smallholder farmers to markets. CEO Daniel Hulls spoke to Glenneis Kriel about his company’s investment approach.
Daniel Hulls

How did AgDevCo start?

AgDevCo was launched in 2009, around the time of the spike in global commodity prices. The idea was to create an impact investment business capable of providing patient [long-term] debt and equity capital to early-stage agribusinesses in sub-Saharan Africa.

The UK government has been our primary funder to date. It recognizes the effectiveness of a business-led approach to development assistance and shares our view about the importance of the agribusiness sector to growth, jobs and food security.

How have AgDevCo and your investment portfolio grown since then?

We started with just US$1 million [about R16,5 million] of funds to invest in Mozambique. Our investment mandate was to make the smallest ‘seed capital’ investments (averaging US$250 000 [R4,1 million]), typically in ownermanaged businesses. By showing what we could achieve with so little, we managed to obtain substantial additional funding. Initially, this was in Mozambique and then also in Ghana and Tanzania. Investing in the early years in those small businesses definitely supported local economic growth and achieved impact, but it was not a good investment in terms of AgDevCo’s own sustainability. The entrepreneurs we were working with required plenty of hands-on support and the size of the investments meant that our costs were always going to outstrip potential returns, even when we were successful.

Given this, we increased the average size of our investments as our funds grew, looking for a mix of early-stage agribusinesses with more formal corporate/ management capability, as well as profitable agribusinesses seeking growth capital.

Today, we have US$200 million [R3,31 billion], of which US$130 million [R2,16 billion] has been invested in 50 businesses across 10 countries. Our portfolio has linked more than 375 000 smallholders to the market and created or sustained 15 000 jobs.

We’re currently fund-raising, aiming to add development finance institutions or impact investment capital alongside our endowment funds from the UK government.

Which countries do you target?

We focus only on lower- or lower-middle-income countries in sub-Saharan Africa, so upper-middle-income countries such as South Africa, Equatorial Guinea, Gabon, Mauritius, Namibia and Botswana don’t qualify. That said, we’ve invested growth capital in some South African companies for business expansion into Africa. We value their business and farming capabilities and look to support their expansion through our knowledge and presence in African countries as well as our risk capital.

For example, in 2014, we co-invested with Westfalia Fruit to establish a 200ha avocado farm near Zembe in Mozambique, and more recently a follow-on investment in a farm near Catandica. Westfalia also provides packing and marketing services through its Chimoio packhouse facility, providing access to export markets to other commercial avocado and litchi producers in the region, as well as emerging commercial litchi farmers.

Our investment with Westfalia has seen the creation of about 160 full-time jobs.

Is the business environment improving in the countries you ’ ve invested in?

Sadly, I’m not sure I can point to any country in our portfolio that has improved dramatically over the past decade. I’d say Uganda, Rwanda, Côte d’Ivoire, and Kenya are amongst the easiest to do business in. Others, like Malawi, are also reasonably predictable and have the attraction of having lots of opportunities, given the importance of commercial agriculture to the economy.


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November 6, 2020