Grace Ashiru
AgDevCo, a specialized investor in African agriculture, has announced that it has secured $32 million in funding from the UK’s Foreign, Commonwealth, and Development Office (FCDO) to launch AgDevCo Ventures, a new investment initiative aimed at supporting early-stage agribusinesses in Africa.
This strategic initiative is designed to foster the next generation of agribusinesses by offering essential financial assistance to small and medium enterprises (SMEs) in Africa.AgDevCo Ventures will target smaller investments, ranging from $1 million to $3 million, specifically focusing on the “missing middle” — a segment that is frequently overlooked by private investors due to perceived risks and high transaction expenses.
The venture aims to generate more jobs, enhance smallholder farmer incomes, and strengthen climate resilience across the continent by providing capital to these early-stage agribusinesses.
Initially, AgDevCo Ventures will direct its support towards East African countries where AgDevCo already has established operations, including Kenya, Uganda, Tanzania, and Rwanda. The firm plans to broaden its reach to additional African regions in the future.
The portfolio is anticipated to include a significant proportion of African and female-owned businesses, highlighting its commitment to inclusivity and gender equality.
AgDevCo Ventures will function as a distinct investment branch within the group, supported by a dedicated team based in Nairobi and expert assistance from across the organization.
The firm is in the process of raising an additional $25 million in impact investment capital from development finance institutions and family offices, with plans to commence operations by early 2025.
This new initiative signifies AgDevCo’s re-entry into the early-stage SME sector, where it was active from 2009 to 2017.
According to the group, the return to smaller investments has been made feasible by its recent profitability, which has enabled it to adjust its portfolio towards larger investments in more established businesses.
Through the FCDO, the UK government has consistently supported AgDevCo’s mission to promote sustainable agribusinesses across Africa.
Lord Collins of Highbury, the UK Minister for Africa, underscored the significance of stable food markets, stating, “Providing hardworking farmers with stable incomes, creating jobs for the youth, and helping to eradicate malnutrition are essential objectives.”
He mentioned that the UK government is set to contribute over half of the total $50 million fund for AgDevCo Ventures, while the remaining funds will be sought from additional investors.
As of June 2024, the group reports having committed $210 million to 38 investments across 11 sub-Saharan African countries. Among these notable investments are $7.7 million in the Kenyan agribusiness Agris, $7.2 million in the Pan-African Hatch Africa, and $10 million in Côte d’Ivoire’s Cashew Coast.
