By Lynda Kiernan, Global AgInvesting Media

The Agri-Business Capital Fund (ABC Fund) has provided financing to the tune of approximately US$900,000 to Dragon Farming Ltd, a soy milling and aggregation company in Ghana.

The ABC Fund was launched at the International Fund for Agricultural Development (IFAD) annual Governing Council in Rome in February 2019 as a blended-finance impact fund with an initial funding target of €200 million (US$224 million), and a mission to deploy capital in support of rural SMEs in developing countries. Bamboo Capital Partners, which committed €50 million (US$56 million) in seed capital, is managing the fund in partnership with Injaro Investments.

Additional significant commitments have been received from the European Union, African, Caribbean and Pacific Group of States (‘ACP’), the Luxembourg Government, the Alliance for a Green Revolution in Africa (‘AGRA’), and IFAD contributes to the Technical Assistance Facility that will support the fund.

Amid the turmoil that is 2020, the ABC Fund has had a busy and active year so far. Under its mandate to provide “catalytic financing to underserved yet profitable segments of agribusiness value chains in developing countries”, the ABC Fund made its first investment in Socak Katana, a cocoa cooperative in the North Western region of Côte d’Ivoire, in January. 

“This first investment is a symbolic moment for the ABC Fund,” said Jean-Philippe de Schrevel, founder and managing partner of Bamboo at the time. “A few months after its incorporation, the fund is already contributing towards supporting livelihood and creating jobs for cocoa farmers’ communities in Côte d’Ivoire. This is the first step on our journey to transform small-scale farming in developing countries and we look forward to announcing further investments in due course.”

A few months later, in May of this year, the ABC Fund gained distinction by being the recipient of the first direct investment in the private sector from the International Fund for Agricultural Development (IFAD).

The US$9 million commitment was made under IFAD’s private sector engagement strategy adopted in September 2019 allowing the financial institution to make investments directly in private sector entities and funds targeting rural SMEs and small-scale producer cooperatives. 

“The private sector’s involvement in the eradication of hunger and poverty was crucial before the COVID-19 crisis,” said Gilbert F. Houngbo, president of IFAD. “Now it has become even more important as we work to reduce some of the immediate impacts of the crisis and plan for a longer-term recovery when it is over.”

“More than ever, we need to join forces with the private sector to help small-scale producers and rural SMEs preserve and create jobs for those who are more likely to be left behind.”

This financing agreement with Dragon Farming comes at a time when Ghana and other countries across Africa are also having to adapt and respond to the global pandemic.

With a mission to be a source of innovative and environmentally sustainable products to meet the nutritional needs of animals in Ghana and beyond, Dragon Farming processes raw soybean into meal, full fat soya, and soy oil.

Feed production in the country increased by 5 percent in 2019 to 40.6 million tons, and Dragon Farming’s vision is to become an industry leader in this growing space and a force behind the expansion of the poultry and aquaculture industries in Africa. 

“We are pleased to be partnering with a company which has already made great progress in becoming a first-rate soya milling and aggregation player, and we are proud to lend them our support during this challenging time for the country,” said Jean-Philippe de Schrevel, founder and managing partner, Bamboo Capital Partners. “The ABC Fund loan will enable Dragon Farming to increase market access for smallholder farmers and create more rural jobs. We look forward to working with the team at Dragon Farming to help them execute their vision in the next few months and years.”

With a current crushing capacity of 48 tons per day, the capital provided by ABC Fund will enable Dragon Farming to scale its operations to increase the volume of soya beans purchased from farmer-based organizations by 40 percent this year compared to last year.

This level of production will enable 14,000 smallholder farmers to sell their raw soybeans to the company, while reducing Dragon Farming’s cost of production and increasing its profitability. It will also enable the company to increase its number of workers, including female workers, and will support its sourcing of soybeans from aggregators supported by AGRA, one of the investors in ABC Fund.

“The COVID 19 pandemic and its related restrictions are disrupting the supply chains of agribusinesses across the world, including Africa. Such difficulties if layered with lack of access to funding will make it hard, if not impossible, for these agribusinesses and cooperatives to thrive,” said Jerry Parkes, CEO, Injaro Investments.

“At the ABC Fund, we believe agribusiness is the backbone of economies and supports many livelihoods across Africa. In times like these, it is imperative that we provide the needed funding to support these livelihoods through sustaining the operations of agribusinesses across the continent,” continued Parkes. “In light of this philosophy, we continue to support businesses and disburse loans during this period whilst carefully mitigating the risks posed by this pandemic.”

 

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.