September 7, 2016
UK-based social impact investor, AgDevCo has agreed to invest $1.5 million under a debt and equity deal in Malawian peanut processor Agri-Oils Limited.
The funding will help support the construction of a state-of-the-art peanut processing facility being built by Afri-Oils that will process locally sourced peanuts from 18,000 regional smallholder farmers to be shipped to both domestic and export markets.
At one point Malawi exported more than 50,000 tons of peanuts per year, but at the end of the 1980s the country’s exports plunged due to a combination of factors according to the report, Monitoring African food and Agricultural Policies – Analysis of Incentives and Disincentives for Groundnuts in Malawi, published by the UN’s Food and Agriculture Organization (FAO). Smallholders began switching to tobacco as their main cash crop; in addition, the state-owned Agricultural Development and Marketing Corporation (ADMARC), which was the only trader of groundnuts in the country, became ineffectual after its disorganized takeover by the private sector and the dissolution of its monopoly. And thirdly, higher levels of aflatoxin in Malawian peanuts clashed with tighter global quality requirements.
However, through the implementation of improved processing protocols including more advanced handling and sorting methods, along with farmer training programs, Afri-Oils aims to control aflatoxin levels and lift Malawi back onto the global market for groundnuts.
“We are backing Afri-Oils to tackle the aflatoxin challenge and put Malawi back on the map as a major international peanut producer,” said Jim Henderson, AgDevCo’s Malawi’s associate director in a recent statement.
This is not the first investment in a Malawian nut company by AgDevCo, which has invested $76 million across the five sub-Saharan countries of Mozambique, Ghana, Zambia, Malawi, and Tanzania. In November 2014 the firm invested $2 million of a $6 million investment in Malawian nut producer, Trohpa Estates Limited.
Other more recent investments by AgDevCo include a $1.1 million investment made in May of this year in the Zambian feedlot business, Ilobezi Limited, and a $4.5 million investment in partnership with Saise Farming Enterprises in a seed potato production project in the Northern Province of Zam.
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Lynda Kiernan
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