January 6, 2020

By Lynda Kiernan

The Agri-Business Capital Fund (ABC Fund) announced it has made its maiden investment in Socak Katana, a Cocoa cooperative based in Côte d’Ivoire. 

This investment will be the first in a series of investments in cocoa cooperatives that will eventually support and help 10,000 farmers achieve greater revenue and market access.

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.

“The launch of the ABC Fund is a momentous milestone for the impact investing industry,” said Jean-Philippe de Schrevel, founder and managing partner of Bamboo in February 2019. 

“The support of organizations such as IFAD, the EU and the Luxembourg Government, coupled with a launch event at IFAD’s annual Governing Council is testament to the maturity of the industry. We believe that the ABC Fund has the potential to transform small scale farming in developing countries and we look forward to working with IFAD and Injaro as we strive to realise this vision.”

Under its mandate to provide “catalytic financing to underserved yet profitable segments of agribusiness value chains in developing countries”, the ABC Fund has made its first investment in Socak Katana, a cocoa cooperative in the North Western region of Côte d’Ivoire.

With more than 2,700 members, Socak Katana procures, processes, stores, transports and sells cocoa beans to both domestic and international buyers. It also provides technical assistance and training to its member-farmers.

Currently, the cooperative is Fairtrade certified, with 54 percent of its farmers UTZ certified. It sources from approximately 8,400 hectares (20,757 acres) under cultivation, and has a total production capacity of 6,000 metric tons.

“We are excited about this first investment of the ABC Fund that will increase farmers’ earnings and support rural communities,” said Jerry Parkes, CEO, Injaro Investments.

”Improving earnings for rural farmers has an important multiplier effect as each farmer typically supports several household members. We look forward to making more investments that demonstrate the power of impact capital to improve lives in rural agricultural communities.”

Côte d’Ivoire is the world’s top producer of cocoa beans, which account for 30 percent of the country’s total export income, according to data from the UN Department of Economic and Social Affairs. And despite being highly dependent on a single crop, the country’s economy is fairly strong, outpacing Rwanda and Senegal with a growth rate of 7.4 percent in 2018, an expected growth rate of 7.2 percent for 2019, and an inflation rate controlled at roughly 0.3 percent, according to the World Bank. 

This lack of diversity, however, has led to agriculture contributing only 1.2 percentage points to the country’s GDP growth since 2012 – a sector that half the country’s population depends on for their livelihood.

“My education was funded by cocoa! Our houses are built with cocoa! The foundations of our roads, our schools, our hospitals is cocoa! Our government runs on cocoa! All our policy focuses on sustaining cocoa!,” N’Zi Kanga Rémi, the governor of the rural department of Adzopé, told The Guardian in February 2019. 

However, smallholders in the country earn barely the price of a candy bar per day, and together with other challenges such as climate change, deforestation, and child labor issues, Côte d’Ivoire has made the modernization of its agriculture sector a priority. 

This investment in Socak Katana will help secure revenue for these smallholders by providing the cooperative the necessary capital to buy beans at a better price aligned with premiums established under Fairtrade and UTZ certifications. It will also enable the company to increase its number of both seasonal and permanent employees to process and handle higher volumes of cocoa.

“This first investment is a symbolic moment for the ABC Fund,” said de Schrevel. “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.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.