Whether for profit or social motives - and often both - an increasing number of investors are targeting opportunities in African agriculture. At the same time innovative approaches for deploying aid to support farming businesses linked to smallholders are emerging. This blog provides a snapshot of who is doing what, where and how.

15 February 2013

UK Deputy PM praises AgDevCo's work in Mozambique

UK Deputy Prime Minister Nick Clegg and DFID Minister Lynne Featherstone visited Maputo on Wednesday 13th February, where they spent an afternoon with SME agriculture businesses supported by AgDevCo, as part of the Beira Agricultural Growth Corridor (BAGC) initative.

Nick Clegg  praised the work undertaken by the BAGC in supporting small scale agricultural producers in the central Mozambican provinces of Manica, Sofala and Tete.

Launched in 2010, BAGC is a partnership between the Mozambican government, private companies and donor agencies, including the British Department for international Development (DFID). Clegg, who is on a two day working visit to Mozambique, declared that the initiative will bring substantial and positive changes in the lives of farmers in the areas covered.

DFID Minister Lynne Featherstone welcomed the work AgDevCo was doing saying that small and medium-sized businesses were critical for inclusive growth and job creation in Mozambique. In an article in the Huffington Post she wrote about the potential for mobile money solutions to provide new opportunities for farmers, such as those linked to AgDevCo's ECA smallholder farmer business.


Opening remarks by Chris Isaac, Director Business Development AgDevCo:

"Small and medium sized enterprises (SMEs) are the engine of economic growth in all countries. Agriculture is the backbone of Mozambique’s economy engaging over 80% of the workforce. More investment in Mozambican agricultural SMEs is essential to:

• Create jobs
• Ensure economic growth is broad based
• Provide opportunities for small entrepreneurs and farmers, many of whom are women

The problem is that it is very difficult for SMEs to access financial capital. Most banks will not provide loans to SMEs due to the high-risks of starting a business – or they will only do so at very high interest rates. And private equity funds typically look for deals of 5 million dollars or more, far too big for most SMEs.

Catalytic Finance is the solution. A Catalytic Fund provides a combination of low-cost capital and “hands on” technical support to help SMEs grow, to the point where they can graduate to access commercial debt and equity. Backed by development agencies like the UK’s Department for International Development (DFID), a catalytic fund can do smaller deals, take a little more risk and accept a slightly lower rate of financial return than a private investor, while insisting on the highest social and environmental standards.

Today you will meet a number of Mozambican SMEs funded by the BAGC Catalytic Fund, which is managed by AgDevCo.

Businesses like So Soja, run by a brilliant entrepreneur Lucas Mujuju, who is bringing nutritious and delicious soy-based products to Mozambique’s schools and hospitals.

Or the Mozambique Honey Company which is creating a market for high quality honey buying from rural beekeepers, run by Anifa Osman, to be distributed throughout the country by Tropigalia.

Or Frutis Lda, owned by the charismatic Sr Issufo Valy who was born on his farm and is now singlehandedly setting about the revival of the fresh fruit industry in the Beira corridor.

You will also meet some of our corporate partners who work with us to link smallholder farmers and SMEs to reliable markets, allowing us to scale up our impact. Like Rio Tinto who are working with us to ensure that every vegetable eaten in the mining canteens of Tete has been grown in Mozambican soil; or Cervejas de Moçambique who are buying fair-trade maize from our small farmer marketing business ECA.

Lastly you will meet some financial services companies like Hollard who is working with us to introduce innovative drought insurance products for the first time in Mozambique, protecting farmers like Mussa Macaliha from the changing climate.

None of this would be possible without funding support from UK Aid. None of this would happen without the dedication and commitment day in and day out of people like Lucas, Anifa, Issufo and Mussa. At a time when all eyes are on the big discoveries of coal and gas in Mozambique, we believe it is small entrepreneurs and farmers like those here today who are the real future of the Mozambican economy."