May 13, 2021

By Lynda Kiernan, Global AgInvesting Media

The British impact investor and development finance company CDC Group has made one of its largest corporate debt investments in its history – committing $100 million to ETG Group in support of farmers across Africa and Asia. 

This investment is not only one of the largest in CDC history, but it represents a long-term partnership that is a testament to the catalytic role that agriculture and rural development will play as Africa embarks on its next phase of growth in the coming decade. It also contributes to supporting UN Sustainable Development Goals (SDG) 2 (zero hunger) and 8 (decent work and economic growth).

As an agricultural conglomerate with operations in 48 countries, ETG connects smallholder farmers to global markets – a key ability for the creation of positive impact, enabling the financial independence of local farmers, and increasing the availability of food staples.

This debt commitment will act to support the growth of ETG’s food and agriculture business, strengthen its food value chains by expanding its logistics networks, boosting agricultural yields, and the production of staples crops including grains, rice, and cocoa. 

Working within a two-way logistics model, ETG drops fertilizers at the farmgate, which are used to improve the quality of crops, then picks up produce from farmers to sell on the global market. ETG also provides warehousing and establishes distribution centers, giving farmers the flexibility to store their produce until an optimum time to sell – raising their income potential.

ETG has long-standing relationships with more than 550,000 smallholders, who also benefit from training, expert farming support, and mechanization, which all result in higher yields and improved livelihoods, while ETG’s agronomists mentor farmers on production of high-margin cash crops and the implementation of crop rotation for year-round stability.

“Agriculture and rural development are vital engines that are accelerating Africa’s economic transformation and meeting global food and health needs,” said Tony Morgan, managing director and head of private equity and corporate debt, CDC Group. “As these sectors continue to evolve and grow exponentially, this shift will be bolstered by a diversified, technologically-enabled, and commercially-oriented agro-industry – one that connects Africa’s markets regionally and internationally.”

“The food and agriculture sector is a fundamental part of the development agenda, increasing the availability and accessibility of agricultural goods brings more nutritious food to the market, with the longer-term goal of improved food security and nutritional outcomes in countries where we invest.”

Emma Wade Smith OBE, Her Majesty’s Trade Commissioner for African at the UK Department for International Trade, commented, “Improving access to markets for Africa’s farmers is critical to food security, across the continent and the world. It is also essential to sustain and improve the livelihoods of Africa’s farmers and their families.” She added that the positive impact of this investment will reach far beyond the hundreds of thousands of smallholders – many of whom are women – and that it also reflects the ambition of the UK government to be an investment partner of choice for Africa.

ETG has strong ESG credentials, recently launching a data-driven agricultural intensification pilot project in Kenya targeting the improvement of farmer productivity, while strengthening the environmental risk management and climate resilience of ETG Kenya’s food staples.

As part of this facility, CDC will support ETG’s ongoing efforts in implementing and aligning with international Environmental & Social standards, focusing on supply chain risk management, and safeguarding work and procedures. 

“We are extremely grateful for the support of CDC Group,” said Anish Jain, chief treasury officer, ETG. “Given CDC’s focus on ESG frameworks, this facility marks a solid achievement for ETG to further strengthen its world class supply chain and mitigate risks in its operations. Including this CDC capital commitment, ETG has one-third of the loan book linked with ESG and Sustainability standards.”

“We are delighted to deepen our partnership with ETG,” said CDC Group’s Tony Morgan, “and look forward to the tremendous impact and economic development that CDC’s patient capital will support.”

– 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, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan@globalaginvesting.com.