With an aim to boost agri-business and enhance food security in Africa, the African Development Bank (AfDB) has approved a US$15mn equity investment in Africa Food Security Fund (AFSF)
AFSF is a second-generation fund targeting a total capitalisation of US$100mn. The fund will invest in potential high-growth small and medium enterprises operating in the food and agriculture value chains across sub-Saharan Africa, addressing the needs of agricultural SMEs segment that are not targets of the larger private equity funds and commercial banks.
The fund manager, Zebu Investment Partners, is experienced in food production and processing at the SME level. Considering the largely underserved needs of agricultural financing in Africa, the fund’s investment policy entails the deployment of equity or quasi-equity instruments to provide expansion capital in the majority of cases with an average ticket size of US$6mn to allow for follow-on investments without the need to seek additional external funding.
With a sharper focus on Sub-Saharan Africa and relying on its presence in South Africa, Ghana and Mauritius, the fund is expected to invest in underserved countries such as Senegal, Mali and Rwanda. It is envisaged that the fund will create at least 20 direct jobs for each US$1mn invested, benefitting more than 14,000 smallholder farmers with women taking at least 40 per cent of jobs created.
Akinwumi Adesina, president of the AfDB, reiterated the need to link all efforts on this project to the Technologies for Africa Agriculture Transformation (TAAT) programme for productivity enhancement at the upstream level.
The fund’s investment strategy is fully aligned with the Bank’s Ten Year Strategy (2013-2022), as well as the Regional Integration Policy and Strategy (2013 - 2024), especially on its inclusive activities. The current potential pipeline companies are aligned to the objectives of the Bank’s High 5s – Feed Africa, Industrialise Africa, Integrate Africa and Improve the quality of life of Africans.
