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.
AgDevCo is pleased to confirm that we are entering into
three co-investment partnerships with Tanzanian businesses. The proposed
AgDevCo investments will be funded by the UK Department for International
Development as announced today by Secretary of State, Justine Greening – see DFID
press notice.
-
With Tanzania Tea Packers (Tatepa), to support the
pioneering Suma Hydro Project, which is part of tea industry efforts to ‘green’
tea production in Tanzania. The project has the potential to provide Wakalima
Tea Company with a reliable and renewable power source, whilst also selling
power onto the local grid, boosting employment and incomes in the Rungwe
District. With DFID funding, AgDevCo intends to support the project in its
early stages through the provision of development capital, following which and subject
to further due diligence, AgDevCo is pleased to provide in principle support
for up to £2.5 million equivalent of risk capital to implement the project.
- With Equity for Tanzania (EFTA), to support the expansion of
EFTA’s innovative financial leasing business, which provides equipment finance
to small enterprises and farmer groups who are beyond the scale of
micro-credit. The expansion of this business will allow access to finance for
agribusiness entrepreneurs and farmers who might otherwise be “unbankable”. Subject to further due diligence and the
development of an agreed business plan, AgDevCo is pleased to provide in
principle support for up to £3.3 million equivalent of risk capital to the
business. We see our proposed investment
in EFTA as part of a strategic alliance reflecting AgDevCo and EFTA’s common
objectives.
- With Agrica, an intention to invest £6.3 million ($10m) in
Kilombero Plantations Ltd (KPL), the Tanzanian subsidiary of Agrica, a British
farm development company. AgDevCo’s investment is funded by DFID as part of
their Blended Partnerships initiative. Since 2008, after $40 million of
investment, KPL has become East Africa’s leading rice producer with a
5,000-hectare nucleus commercial farm and a transformative satellite smallholder
programme lifting 5,000 farmer families from subsistence to surplus. The
AgDevCo investment, which assumes improvements in the application of
agricultural tariff policy by the Government of Tanzania, will be divided into
two parts: an initial investment of $850,000 for a pilot rice-husk gasification
plant to provide electricity for KPL’s current operations and prove concept for
larger biomass plants needed to expand irrigation across 3,000 hectares, and
subject to customary due diligence, a follow-on investment in mid-2014 of $9.15
million for the expansion of biomass power, irrigation and the smallholder
programme. This DFID investment in sustainable commercial staple crop
production is a model for future African food security.
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