In this guest post from Farming First, Alex Simuyandi of AgDevCo discusses approaches for financing the “missing middle” of African agribusinesses and tells us more about the new Lending for African Farming Company.
There are many challenges that agribusiness in Africa face. Skilled and experienced management is a resource in short supply, as is access to affordable finance. With the latest UN numbers suggesting that more than 200 million individuals in Africa are chronically undernourished, and the FAO estimating that investment in sub-Saharan Africa is 11 times more effective in reducing poverty than investment in any other sector, there is a great demand for financers to take a frontline position to combat poverty and increase food security.
As one of the most active investors in small and medium agribusinesses in Africa today, we provide innovative financing to help these businesses grow and mature. At AgDevCo, we also work with each of its investees to develop their management capacity and provide its portfolio companies with hands-on commercial agricultural and financial management support.
Due to the type of funding we receive from our partners, most notably the generous support of UKAid, we are able to take a long-term perspective on our investments and provide ‘patient capital’ that can wait for businesses to grow and become profitable before seeking a return. This long term financing is ideal for the types of enterprises that need early-stage financing for capital expenditure and to be able to reach operational maturity, but can’t yet attract traditional funding from banks or other commercial investors…