Advise to the African Agricultural Capital Fund on social and development impact

Capital Fund
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Situation

The African Agricultural Capital Fund LLC (AACF) was an agribusiness SME fund capitalized by the Rockefeller Foundation, USAID, Gatsby Charitable Trust, Bill & Melinda Gates Foundation, and JP Morgan Chase. The Fund’s investment focus was Kenya, Uganda, Malawi, Rwanda and Tanzania. Qualifying investee companies comprised agribusiness SMEs that sourced produce from and supplied farm inputs to smallholder farmers. 

The Fund investors were pioneers in intentionally establishing an independent Impact Committee to evaluate deals for their social and development impact, beginning at the point of entry and throughout the investment lifecycle. The Fund required development impact experts on its Impact Committee.

Industries
Smallholder Agriculture Development
Agribusiness & Food Systems
Climate Action
Gender Equity & Inclusion
Finance & Investment
Youth Economic Opportunity
Capital Raising & Impact Investing
Engagement

ORI's economic growth and impact investing expert was selected to AACF’s Impact Committee over a five-year period. The expertise supplied ensured that potential deals met rigorous social and development impact requirements from deal origination through investment cycle and portfolio management.

ORI helped improve the Fund’s social and development impact by:

  • Providing expertise via its managing partner, who chaired the Impact Committee with membership comprising two other internationally recruited experts over a five-year period.
  • Reviewing and enhancing social and development impact metrics and performance management related to ESG and impact investing.
  • Screening and, where appropriate, approving qualifying deals from an impact lens – or advising on how to close gaps for potential deals that did not qualify in the first instance but presented a strong potential for long-term impact.
  • Advising the Investment Committee on deals that passed social and development impact requirements for further vetting on their investment attractiveness.
  • Evaluating periodically the portfolio performance on progress on social and development indicators.
Outcomes
  • Investments in agri-SMEs were both financially attractive and environmentally sustainable, socially inclusive, and climate compatible.
  • The Fund helped advance social impact, based on a fund target impact of c. 250,000 smallholders.
  • The Fund created thousands of jobs (including for youth and women) in the agribusiness value chains in which investments were made.
  • Initial investments have helped realize >US$100 million in total financing to portfolio companies.
  • The strong performance of many agri-SMEs demonstrated that achieving attractive financial returns and delivering a strong impact is possible if deal screening is rigorous at entry and throughout the fund’s life.