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African agribusiness partnerships driving growth on the continent



Africa’s dynamic agribusinesses are rapidly developing new markets for African food products across the continent through organic growth and global partnerships. Despite coming relatively late to large-scale food production and export, the continent has a number of advantages driving its ability to boost food production and access new global markets.

The world’s population is growing even as incomes are increasing. This is changing diets, driving the demand for food globally. Africa’s population and income are also growing, with increases in the volume and variety of foods consumed tracking middle-class formation in key regions across the continent. All this is happening at a time of investment in transport and logistics infrastructure supported by legislation alive to the benefits of developing competitive trade within Africa.

This is also all happening on a continent with 60% of the world’s unused arable land.

“Africa’s agriculture sector is undergoing rapid change. Advances in the scale of aggregation and investment in processing and associated industries is promoting the large-scale accumulation and movement of African commodities like grains, cocoa, pulses, sugar and edible oils amongst others, within African countries, between African regions and even globally,” says Junaid Jadwat, executive, agribusiness sector, consumer client coverage at Standard Bank.

Family-owned agribusinesses expanding

These changes are being driven by local family-owned agribusinesses expanding their processing, warehousing and distribution capabilities into neighbouring territories, or across regions. “Local companies like Bakhresa Group, Bidco Group, Export Trading Group, Mohammed Enterprises Tanzania Limited and Willowton, with local expertise and strong distribution capabilities, are expanding across borders in their home regions and diversifying across the consumer value chain into higher value FMCG processing,” adds Jadwat.

“The resilience and growing strength of Africa’s family-owned agribusinesses point to their strategic advantage in local knowledge and established relationships,” explains Jadwat.

Standard Bank, present in 20 African markets has worked with many of these family-owned businesses, often for generations, and shares many similarities with them. Standard Bank is focused on driving growth on the African continent, which they call home. The bank has people on the ground who understand their markets, the detail of their client’s businesses as well as the conditions under which they operate. Standard Bank also understands local legislation, along with the challenges of moving goods, managing money and providing liquidity across the continent.

Most importantly, however, Standard Bank along with many of its African agribusiness clients, “can see the opportunity that the continent presents for agribusiness and agri-trade – while providing the global infrastructure to leverage this opportunity,” says Jadwat.

Global agribusinesses partnering with local players

One of these opportunities is the growth potential increasingly realised through partnerships between global agribusiness companies and local or regional players. Established global agribusiness players like Louis Dreyfus Company, Olam, and Wilmar have partnered and are continually looking to partner with locals to pursue opportunities for expansion across the continent, bringing skills, global standards/benchmarks, as well as a strong supply network and scale. “It would be exceedingly difficult for a newly arrived global agribusiness to access these networks without working with a local partner”, explains Jadwat.

“At the same time, many African commodities businesses are at that stage in their development where they are increasingly seeking access to the international trading and distribution networks that the global FMCG multinationals have – if they are to expand volumes and access a wider footprint of global consumers and a larger basket of consumer goods,” he adds.

For more than 20 years, Land O’Lakes has been supporting dairy farmers in Africa by administering funds for US Aid in addition to providing access to markets and technical assistance to improve farmers’ yields and competitiveness. In 2015 Standard Bank was lead debt arranger for Land O’Lakes acquisition of a 52.5 percent stake in Villa Crop Protection, a leading crop protection company based in South Africa. Land O’Lakes is the second largest cooperative in the United States with 2016 net sales of $13.2b and a clear vision for accessing the African agricultural market.

The synergy provides Land O’Lakes access to a continental agricultural network while providing vital chemical and fertiliser inputs. It also provides Villa Crop Protection’s clients with an alternative and expanded global market for their produce. More recently, Land O’Lakes completed a joint venture in Kenya with the Bidco Group, called Bidco Land O’Lakes Ltd, on their animal feeds business, further expanding their African footprint.

Having worked with many of these businesses for decades, Standard Bank is increasingly providing advisory, debt, trade finance, and global markets solutions that not only underpin the expansion of daily trading operations but also support the evolution and drive the earnings of Africa’s entire agricultural sector. Since the sector employs 70% of sub-Sharan Africa’s labour force and contributes 30% towards its GDP, “investing in and supporting the growth, health and dynamism of African agribusiness is central to the future growth and prosperity of the continent that we call home,” says Jadwat.


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World Poultry Foundation (WPF) launches video series to help Africa’s farmers improve poultry production



With poultry increasingly a focus for emerging farmers across Africa, the US-based World Poultry Foundation (WPF) has released a series of training videos to help farmers reduce waste and optimise profits.

Feed accounts for up to 70% of the costs of raising poultry, so proper feeding techniques enable farmers to reduce waste, cut production costs and raise healthier birds, says WPF. Water is equally important in poultry farming, with proper water management crucial for healthy birds.

WPF’s training series, with four videos dedicated to production, explains how farmers should store feed, proper feeding of poultry and how to prepare and manage zones of comfort to encourage proper brooding for chicks. The videos also explain the importance of litter in helping to prevent common diseases to improve production and returns.

World Poultry Foundation CEO Randall Ennis says the video series has been developed to address the most common challenges faced by emerging poultry farmers across Africa. “By applying best practice poultry farming methods, farmers can significantly increase their production, their incomes, and the nutrition available to their families and communities,” he says.

The training videos, as well as free checklists and worksheets, are available here



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AFEX Raises $50Million for Agri-SMEs, Africa’s First Warehouse Receipt Backed Commercial Paper



AFEX CEO, Ayodeji Balogun (Source: AFEX)

AFEX Commodities Exchange Limited (AFEX), Nigeria’s leading private commodities exchange company, has announced the first Warehouse Receipt Backed Commercial Paper in Africa, with tech-enabled operations and a 24-hour fast cash turnaround for borrowers. With over $50 million raised for Agri-SMEs, this bridges the funding gap between lenders and borrowers in the Nigerian agricultural sector with a commodity-backed instrument – for the first time.

The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the Food and Beverage, Trading Poultry and Animal Feed segments in Nigeria. The receiving companies are top 10 players in their respective segments. They have now been enabled access to a tool for managing price volatility, enabling up to 30% direct savings on prices.

“With our vision to reach a cumulative total of over $5 Billion in investment to the agriculture sector over the next five years, this financing deal is right on track to achieve this goal’’ – said Ayodeji Balogun, CEO, AFEX Commodities Exchange. “As we move towards building a derivatives market in Africa, we want to be able to reduce exposure to price risk for stakeholders, by enabling them to hedge their positions and trade in commodity derivatives.”

The warehouse receipts, which can then be transferred from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a sustainable funding structure and address underfunding in the Nigerian agricultural sector. With the warehouse receipt system linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.

“Our mission is to provide low-risk working capital facility for stakeholders in the Agro sector, in a way that is transparent and has a very high viable investment return’’ – said Akinyinka Akintunde, VP Financial Markets at AFEX. “As a licensed commodities exchange and warehouse receipt system operator, we deploy a warehouse receipt system and collateral management infrastructure to increase market confidence for both lenders and borrower.”With AFEX’s goal to support Africa’s food security while promoting a fair exchange of value among players in commodity value chains, this deal’s social impact is delivered through market access for farmers and reduced post-harvest losses. AFEX continues to contribute to the United Nations Sustainable Development Goals 1, 2, 5 and 8; no
poverty, zero hunger, gender equality, decent work, and economic growth.

Also Read Cocoa Pricing: Why Public-Private Sector Partnerships are Key to Sustaining the Livelihood of Smallholders Farmers in Africa


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SunCulture secures $11m debt facility from SunFunder syndicate to expand solar irrigation in Africa



SunCulture CEO and co-Founder, Samir Ibrahim (Source: YouTube)

SunCulture, a solar irrigation company headquartered in Nairobi, Kenya, today received the first disbursement from a new $11m syndicated debt facility to expand its operations in sub-Saharan Africa.

The new loan is groundbreaking for the “productive use” solar sector due to its size and its innovative combination of working capital and end-user financing.

Arranged by SunFunder, the co-investors in the facility are Nordic Development Fund; Triodos Investment Management, through its Hivos-Triodos Fund; SunFunder through its Solar Energy Transformation Fund; AlphaMundi through both its SocialAlpha and AlphaJiri Investment Funds; and the AfDB’s FEI OGEF managed by Lion’s Head.

This will enable SunCulture to scale up renewable energy installations at smallholder farms and households that will mitigate over 20,000 tons of CO2 annually – as farmers replace diesel pumps with solar ones – whilst facilitating income growth and job opportunities in rural communities.

SunCulture has pioneered a “Pay-As-You-Grow” business model to make solar-powered irrigation affordable for smallholder farmers in sub-Saharan Africa, combining end-user finance, value-added services, modern climate technology, and access to improve productivity. A recent report developed by Dalberg Research shows that irrigation systems and solar-powered water pumps can increase farmers’ production between 2 and 4 times, and their income between 2 and 6 times.

Samir Ibrahim, Chief Executive Officer at SunCulture, said, “The past year was devastating for the millions of smallholder farmers in Kenya; 87% are in a worse financial position due to the pandemic. 81% of SunCulture farmers, however, were able to increase their revenue from farming in 2020. Solar irrigation helps create food security and sovereignty, and it also helps lift people out of poverty. This facility further enables our efforts to support farmers by
providing them with more of our solar solutions, and faster.”

Jemimah Kwakye-Fosu, Investment Officer, who led the transaction for SunFunder, said: “We are delighted to have led this syndicate of proactive lenders who worked well together for a common goal: to help SunCulture reach many more farmers. It shows how working capital can be combined with end user financing, which is essential for making productive use technologies affordable.”

Surabhi Mathur Visser, Head of Investments at SunFunder, said: “This is a pioneering transaction that demonstrates how productive use technologies like solar irrigation can be scaled up. SunFunder arranged this facility with a similar-minded group of lenders to support an innovative product and business model. We look forward to seeing SunCulture grow in Kenya and new markets.”

Karin Isaksson, Managing Director at NDF, said: “This loan to SunCulture is the second e[tended to a company graduating from the EEP Trust Fund managed by NDF. It is a clear demonstration that we can deliver on the new NDF Strategy and its commitment to provide flexible and scalable financing as well as catalytic impact. It has all the ingredients that define NDF’s added value in the climate financing landscape. It demonstrates our capability to convene and mobilise additional financing, as well as our unique mix of financing instruments to match the needs of our partners, public or private. We are proud to be standing with our partners and supporting the emergence of a greener economy, precisely at this time of COVID-19.”

“Since our first investment in 2019, SunCulture has made huge strides to unlock the potential of smallholder agriculture through innovative products and consumer credit. FEI-OGEF is happy to be able to refinance our inventory loan into this new working capital facility and continue that growth alongside a committed and constructive group of lenders,´ noted Harry Guinness from Lion’s Head.

Judith Santbergen, Senior Investment Manager at AlphaMundi, said: “Since 2018, AlphaMundi has successively provided support to SunCulture through a combination of technical assistance and debt investment. We are e[cited to continue and increase our investment in the company via this new, innovative working capital facility.”

Sjoerd Melsert, Senior Investment Manager at Triodos Investment Management, said: “SunCulture is a great e[ample of an innovative company that is active on the nexus of renewable energy and agriculture, using solar energy to increase farmers’ incomes. Our facility supports the further growth of SunCulture’s pay-as-you-go solar portfolio, leading to a more sustainable and higher production for smallholder farmers, which is fully aligned with the
mission, ambition and activities of Hivos-Triodos Fund.”




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