In an effort to boost agri-business and enhance food security in Africa, the African Development Bank Board has approved a US$15mn equity investment in Africa Food Security Fund (AFSF or "The Fund"), to support enterprises in agri-business SMEs and enhance food security in Africa.
AFSF is a second-generation fund targeting a total capitalization of US$100mn. The Fund will invest in potential high-growth Small and Medium Enterprises (SMEs) operating in the food and agriculture value chains across sub-Saharan Africa. It aims to address the needs of least served operators in 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 under-served needs of agricultural financing in Africa, the Fund’s investment policy entails deployment of equity or quasi equity instruments to provide expansion capital in the majority of cases with 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 will invest in under-served 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, benefit over 14,000 smallholder farmers with women taking at least 40% of jobs created.
In addition to its investments, the Fund will provide post-investment support through a technical assistance facility to investee companies. In his closing remarks at the Board session, the Bank’s President, Akinwumi Adesina, reiterated the need to link all efforts on this Project to the Technologies for Africa Agriculture Transformation (TAAT) program 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: Light up and Power Africa (though investments in energy and climate financing); Feed Africa (through investments in food, beverage and agro-processing companies); Industrialize Africa (through investments in processing companies); Integrate Africa (through investments in businesses that cater to regional economies); and Improve the quality of life of Africans (through provision of a technical assistance facility).
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