August 27, 2019

By Lynda Kiernan

Australia-based Palladium has announced the launch of the Palladium Impact Fund I, a fund established to invest in SMEs along the agribusiness value chain and off-grid clean energy in sub-Saharan Africa. The fund will also prioritize its capital to women, fostering economic empowerment and generating opportunities for the underserved. 

“For this first fund, we’ve chosen to invest in empowering African women,” explained Andrew Tillery, head of Palladium Impact Investments. “Women perform the majority of agricultural activities, own a third of all firms, and are key to the welfare of their families.”

Palladium will manage the fund and will anchor it with $5 million. The fund then anticipates raising capital from family offices, pension funds, and institutional investors prior to a first close expected later this year. 

“The Palladium Impact Fund I welcomes investors who truly want to move the needle on the world’s greatest challenges,” said Tlllery. 

Each debt and mezzanine investment made through the Impact Fund I will range between $250,000 and $2 million in SMEs across Ghana, Nigeria, and Kenya, with the goal of alleviating poverty, economically empowering more than 500,000 households, and creating 3,500 jobs – of which 60 percent will be for women. 

Mind the Gap

Impact and socially responsible investing has gained serious traction in recent years, however, it is estimated that there remains a $2.5 trillion (with a “t”) gap between current impact investing levels and what is needed to achieve the UN’s Sustainable Development Goals (SDGs).

“Environmental, Social and Governance” issues are coming to the fore for many fund managers, with vast amounts of ESG and Ethical Investing research being conducted,” said Chipo Muwowo, head of content at Savvy Investor, in his article, Rapid Urbanization and Growing PE Investing: African Agriculture Set to Rise, which will be featured in the GAI Gazette, Volume 6, Issue 3, which will be distributed in conjunction with the annual Global AgInvesting Asia event, to be held in Tokyo on 12-13 September.

But, for real positive impact to be achieved, the investments that form the foundation upon which the necessary developments are based need to be financially positive as well. 

“Fifty-four years of experience has taught Palladium that for an investment to have an impact, it has to be sustainable, which means it needs to generate a financial return,” said Tillery.

This experience, along with the deep relationships that Palladium has built, has positioned its team to achieve these dual goals. Having worked with many of the top aid agencies in the world, including USAID, DFID, and DFAT, which collectively have staff in 90 countries, these relationships have helped generate a significant pipeline of investment opportunities; enabled access to local networks, and have taught Palladium what it takes to achieve real impact.

“We’re ideally placed to use our extensive international development work and global reach to source ideas for potential, credible investment opportunities,” said Christopher Hirst, CEO, Palladium. “Our relationships with USAID, DFID, DFAT, governments and private sector clients are directly relevant as we seek to ultimately bridge the gap between aid and impact investing, with Palladium as the intermediary.”

Toward this end, Palladium has already made two investments. The first in Naasakle, a shea nut harvesting and processing business founded by a mother-daughter team in Ghana, and the second in PEG Africa, an off-the-grid solar energy endeavor. An additional 10 investment opportunities are currently being considered.

“Solar and clean energy technology is hugely important, particularly in rural Africa as it provides vital electricity to households,” said Tillery. “The social benefits are significant: for instance, 24-hour lighting enables more effective infant care and in turn can lower the infant mortality rate. It’s also the catalyst for the development of small, growing businesses as the working day is longer and more productive. Clean energy can power enabling technology, such as irrigation for farmers, to mitigate many of the risks associated with primary production like adverse weather conditions.”