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Young Africans fired up by African Development Bank agribusiness mentoring partnership with Purdue University

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President Akinwumi Adesina with some young farmers sponsored to an agribusiness mentoring programme at Purdue University, U.S.

 

For Miriam Ahuna Ofoeze, nothing now stands between her and her cherished goal of becoming a successful agribusiness entrepreneur. Thanks to an innovative training programme sponsored by the African Development Bank at Purdue University, Indianapolis, the young Nigerian is even convinced she now has what it takes to become a future World Food Prize winner.

“I have a dream that one day I will make some impact in Africa and win the World Food Prize,” says the young post-harvest processor at the National Root Crops Research Institute in Umudike, southeastern Nigeria.

The Prize is the foremost international award recognizing individuals for their contribution to the quality, quantity or availability of food in the world.

Ofoeze says she has been inspired and fired-up by the week-long hands-on training delivered by Purdue University’s agribusiness experts and is grateful to the Bank for the opportunity.

“Attending the programme was a great lift and insight into how to move my career forward,” said, Ofoeze, one of seven beneficiaries of the Bank-funded training. “I learnt how to consider every part of agriculture as a business and to be able to scale it up. Interacting with conference attendees also increased my network, and I hope to collaborate with some of them soon.”

As part of its Empowering Novel Agri-Business-Led Employment Youth Program (ENABLE Youth), the  Bank partnered Purdue University to expose seven young African agribusiness entrepreneurs to innovative opportunities to expand their technologies and agribusiness enterprises.

The Scale Up Conference, as the Indianapolis workshop was called, was a partnership between the Bank and Purdue University and focused on how sustainable agriculture technologies could be extended to millions of farmers to help feed the world’s growing population.

The mentorship programme involved a special ‘Firestarter’ at the Purdue Foundry, a business incubation hub, where Purdue professors provided useful insights on commercializing ideas and products.  The group of seven selected from Cameroon, Cote d’Ivoire, Nigeria, Rwanda, Sudan and Zimbabwe, had interests spanning precision agriculture using drones, innovative nutrition solutions, seed production for indigenous crops, and mechanization in harvesting gum Arabica.

Aboubacar Karim, one of the participants, said the training helped him on several levels, and like Ofoeze, said he hoped to collaborate with some of the people he met on the course.

“I have made contacts with experts in the field of precision agriculture, who work on interesting projects and with whom I can have concrete collaboration. The ‘Firestarter’ entrepreneurship training made me re-evaluate and improve my business approach. It is always a pleasure to meet people who are enthusiastic and passionate about what they do,” added Karim, founder and CEO of INVESTIV, a start-up company in Cote d’Ivoire specializing in precision agriculture using drones.

Director of Agriculture and Agro-Industry at the Bank, Martin Fregene, said the selected youth all run innovative agribusiness enterprises which demonstrate the modernization of agriculture. He  expressed optimism that the Bank’s support would transform agriculture for future generations and encourage young people to see the potential in farming and agribusiness.

“The Bank is committed to support youth agripreneurship on the continent and has invested over US$320 million in Enable Youth projects in nine countries (Cameroon, DRC, Ghana, Kenya, Madagascar, Malawi, Mozambique, Sudan and Zambia) which will create over 50,000 jobs,” Fregene said.

Participants also attended the Scale Up Conference on innovation in agriculture at Purdue, where they gained better understanding of successful, sustainable large-scale implementation and best practices for expanding agricultural technologies.

The Bank’s Enable Youth Program is designed to empower youth at each stage of the agribusiness value chain by harnessing new skills, technologies and financing approaches to help them establish viable and profitable agribusinesses.

Edson Mpyisi, Coordinator of the Enable Youth Program said the Bank is working with Africa’s youth and women to catalyze entrepreneurship, facilitating access to technologies and networks.

“This will in turn create a thriving agribusiness sector in Africa, thereby increasing rural jobs and improving livelihoods while making agriculture attractive and profitable to youth,” he said.

“Being a part of the Scale Up Conference helped me to expand my network of partners who will help me attain the mission of my agribusiness to eradicate the malnutrition problem,” said Elyse Habumukiza, one of the young entrepreneurs.

Carolyn Woo, Distinguished President’s Fellow for Global Development at Purdue University, lauded the “drive, passion and natural inclinations” of the young entrepreneurs, and said the Foundry provided a systematic approach and discipline that will enable them anticipate challenges and make critical decisions.

 

-African Development Bank

Agriculture

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

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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

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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.”

SunCulture

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

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AFEX Commodities Exchange Limited (AFEX) CEO, Ayodeji Balogun (Source: AFEX)

Pricing is a debating point in the cocoa sector, dominating contemporary stakeholder conversations; especially African cocoa producers. This is a result of the historically low cocoa prices that do not provide a fair income to farmers involved in cocoa production. Despite the announcement of the Living Income Differential (LID) by both Cote d’Ivoire and the Ghana Cocoa Boards, there still exist questions on the sustainability of this intervention – to take farmers out of poverty. Stakeholders in the African Cocoa industry need to rethink its strategy to improving farmers’ livelihood, by increasing their earning potential through value chain efficiency, facilitated by public-private sector partnership.

Interventions aimed at income enhancement and lifting farmers out of poverty are often based on the assumption that the said interventions, alone, are enough for the solution being pursued. On the surface, the decision to increase the farmgate price of cocoa and LID by an additional $400 a tonne on all cocoa contracts, appear to be a solution to lifting farmers out of poverty. However, even if farmers’ incomes were to increase – through increased farm gate prices – other structural issues like small farm sizes and low productivity levels will still keep these farmers below the poverty line.

For Cocoa farmers to earn a fair wage from their input, issues like ageing plantations, lack of adequate training and financing as well as direct access to the market, need to be addressed. These structural issues pose a more significant threat on the livelihood of cocoa producers in Africa.  Price increases on their own are not enough to lift the poorest farmers out of poverty. Price interventions like the LID must go hand in hand with other policies and programme, implemented to increase the volume and quality of beans produced. Achieving this will require a multi-stakeholder collaboration involving both the private and public sector aimed at not only improving the quality of lives of farmers but ensuring that the cocoa value chain is optimized.

To enable smallholder farmers benefit in an egalitarian way from the cocoa industry, the focus should be towards improving value chain efficiency while addressing structural challenges in the sector. This is achievable through a public-private collaboration that will drive private sector operations to deepen financial markets, scale-up infrastructure investments and enhance productivity and quality through training and input supply.

Through collaborating with Cocoa Cooperative Societies –providing training, input financing and market access, AFEX has enabled smallholder farmers to increase their productivity, while producing to international standards. With technology like AFEX Workbench – a value chain management platform which facilitates input sourcing, loan administration, sales, a transparent and efficiently executed cocoa process is achieved.

A public-private sector-driven model will create a sustainable approach which will revitalize and boost cocoa production in Africa – creating jobs and improving the living standard of the farmers. While the government takes the driver seat to develop policies and the infrastructure to catalyze this growth across the cocoa ecosystem, private sector organizations will ensure value chain efficiency – increasing the benefits stakeholders gain from the industry.

AFEX is committed to providing the support and technology to improve the quality of life for African cocoa farmers and their communities.

Author: Ayodeji Balogun is the CEO of AFEX Commodities Exchange Limited (AFEX)

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