The U.S. Agency for International Development and a group of impact investors that includes the Gates, Rockefeller, and Gatsby Charitable foundations have announced a $25 million investment aimed at supporting agricultural businesses in East Africa.
As the region struggles with rising food prices and its worst drought in sixty years, the African Agricultural Capital Fund (AACF), as the fund is called, will deliver much needed growth capital to help boost the productivity and profitability of the region's undercapitalized agricultural sector. To attract investors, USAID's Development Credit Authority is guaranteeing 50 percent of an $8 million commercial loan from J.P. Morgan's Social Finance unit to the fund, which is being supported by $17 million in equity investments from the Gates, Gatsby, and Rockefeller foundations. The fund also will have access to $1.5 million in USAID-funded business development services through the White House's Feed the Future initiative to improve investee companies' operations, competitiveness, and access to markets.
Over the next five years, Pearl Capital Partners, a specialized African agricultural investment fund manager in Uganda focused exclusively on growing small and mid-size enterprises in the agricultural sector, will invest the funds in at least twenty agriculture-related businesses in the region, paving the way for raising the productivity and incomes of some 250,000 households. New investments will need to demonstrate that they benefit large numbers of farmers and have an environmentally benign footprint.
"The African Agricultural Capital Fund is a prime example of how government, civil society, and the private sector can work together to provide innovative solutions to the pressing challenges facing the African continent," said Rockefeller Foundation president Judith Rodin. "The Rockefeller Foundation is proud to support the AACF and the development of agribusinesses that support smallholder farmer, create jobs, and contribute to food security in Africa."