AGRA Celebrates Launch of African Agricultural Capital Fund (AACF)
27 June 2012 - AGRA President Jane Karuku joined partners in celebrating the launch of the Kenyan African Agricultural Capital Fund (AACF). You can read her full remarks below.
Remarks – AACF launch, Serena Hotel, Nairobi– 27 June 2012 – 8:00-10:30
Ladies and gentleman, I am very pleased to be able to join you today for the Kenyan launch of the African Agricultural Capital Fund (AACF) and I would like to thank Pearl Capital for the invitation to speak to you this morning.
We are here today to mark not only the launch of this very important fund but also the fact that we are making progress towards reaching one of our ultimate goals, to give farmers access to improved seed and to improve their productivity and prosperity across the continent. This is a giant step in that direction.
But in order to fully appreciate what we are celebrating today, I think it is important to reflect on the situation at hand and some background on our work in the area.
Agriculture continues to be given low priority for investment. As many of you know, in Sub – Saharan Africa, agriculture accounts for approximately 70% of the labor force and about 30-50% of GDP BUT agriculture receives only about 2-3% of total lending.
Growth in this sector has the best chance for reducing poverty.
Banks have a high-risk perception of the agricultural sector and agriculture is currently not viewed as a strategic sector to engage in. And together we are changing that thinking.
AGRA has been working to bridge the financial gap in agriculture through its work in Innovative Financing. We build financial partnerships with development organizations, governments, banks and other stakeholders. We work to assist in leveraging financing of agriculture and in facilitating the strengthening of both agricultural and financial value chains.
AGRA’s Innovative Financing efforts are leveraging about $ 3.79 billion to the agricultural sector, mainly to the smallholder farmers. This is done through various networks, initiatives and lending.
Through this work, AGRA has benefited more than 1.67 mil smallholder farmers. HOLD FOR APPLAUSE. More farmers and agribusinesses now have access to credit. Initiatives are having an impact.
As part of our efforts to promote investment in the agriculture sector, AGRA has had a long relationship with Pearl Capital Partners, primarily through the African Seed Investment Fund, which is also managed by Pearl.
Pearl Capital is a pioneer in impact investing and has taken action while many others have only talked about making change. They have taken on real risk for the sake of changing the situation for smallholder farmers, and they have proven that it is possible to be very successful in doing so.
ASIF was launched in 2009 with $12 million in committed capital, with a view to investing in at least 20 small- and medium-size seed companies in Southern and Eastern Africa, infusing equity and expertise into an industry that has languished for decades, and paving the way for raising the productivity and incomes of at least one million farm households.
ASIF was the first fund of its kind: African-owned and financed and targeted specifically at promoting the growth of small- and medium-sized African seed companies through long-term capital provided at below-commercial rates. ASIF has been filling a critical funding gap in African agricultural development—financing for its seriously underdeveloped and undercapitalized seed sector.
The lack of a robust African seed industry has left farmers with few choices.
Smallholder farmers—who grow most of the food consumed in Africa—can neither afford nor access high-yielding quality seed varieties of their staple food crops.
Whereas improved seed has been responsible for more than half of global yield increases, African smallholder farmers must rely on saved seed whose quality has deteriorated over time, producing the world’s lowest cereal yields and ensuring chronic hunger and malnutrition.
Until recently, only well-off, large-scale African farmers bought improved seed. The seed market is evolving to recognize that the real market is at the pyramid’s base, among millions of smallholder farmers. The prices, crops and varieties marketed need to reflect that.
Over the past three years, Pearl has, through the African Seed Investment Fund, committed capital of more than $8 million to 11 seed businesses in East and Southern Africa and, based on its current pipeline, the remaining $3 million will be invested by the end of next year. The Fund is performing well in line with our expectations and is jumpstarting a well-capitalised, competitive and efficient regional seed industry; with commercial incentive to produce, distribute and market improved seed varieties that meet farmers’ demands. We have already seen significant increases in the volumes of seeds produced and marketed by the Fund’s investee businesses, which include both Western Seed and Dryland Seed in Kenya, along with other commitments in Uganda, Malawi, Mozambique, Tanzania and Ethiopia.
We are therefore very glad to see that Pearl has successfully raised this new Fund, especially as it will be specifically targeting promising businesses operating in the agriculture sector and aiming to deliver healthy financial and social returns.
(It is also a mark of the commitment made by the Rockefeller and the Bill and Melinda Gates Foundation (the joint founders of AGRA in 2006) to the improvement in performance of African Agriculture that they have invested directly in this new fund, and we at AGRA wish the Fund every success in developing a successful investment portfolio over the next four years. )
We are proud to be a strong partner and supporter of the African Agricultural Capital Fund. We believe through this, we can change the picture for farmers and struggling seed companies. We will help take them to the next level and give them the stability needed to be successful and promote a thriving agricultural sector across the country and the continent.
To read Pearl Capital's press release, click here.