A cashew nut farmer in Burkina Faso. Source: Anatrans
Bamboo Capital Partners, the Asset Management arm of Palladium’s Impact Investment business, has announced two new investments to support smallholder farmers in West Africa through the Agri-Business Capital Fund (ABC Fund). The loans, worth a combined EUR 1.2 million, were awarded to Anatrans, a cashew nut processor based in Burkina Faso, and Maphlix Trust Ghana Limited (“Maphlix”), a producer and processor of tubers and vegetables.
Creating Local Opportunities and Jobs
At a time when the COVID-19 pandemic is putting unprecedented pressure on small- and medium-sized enterprises (SMEs) around the globe, these investments will enable smallholder farmers to maintain their businesses, and contribute to job creation and growth in their communities.
The loan to Anatrans will help the cashew business facilitate market access for six farmer groups with over 1,200 members. It will secure revenue for these farmers at the time the raw cashew nuts are purchased, while also providing additional revenue at the end of the harvesting period. The loan will also enable the farmers to receive premiums under the Organic and Fairtrade certifications.
With this loan, Anatrans plans to generate employment opportunities for up to 1,500 people during the 2020/21 season, as well as selectively funding community projects to benefit the lives of over 7,000 residents in the region. Previously, these community projects have included the construction of local schools and a borehole.
Maphlix will use its loan to expand sweet potato production, resulting in a significant increase in farmer revenues. ABC Fund’s financing will act as a catalyst for Maphlix to secure more supplier contracts in order to further increase its network of smallholder farmers.
The company will be able to increase the size of its out-grower scheme by tripling the number of smallholder farmers, which will create nearly 600 jobs and ensure that nearly 1,100 laborers receive an improved daily income.
The ABC Fund
The ABC Fund is a blended-finance impact fund which provides catalytic financing to underserved, yet profitable segments of agribusiness value chains in developing countries. The Fund deploys loans and equity investments in farmer organisations, rural SMEs, and financial institutions.
These organisations often have potential for high growth and job creation, and can also drive social development for their own communities and countries, but they often lack the capital they need to grow their businesses.
For Bamboo Managing Partner Florian Kemmerich, Anatrans and Maphlix ticked all the boxes.
“The demand is so huge, and there are so many angles to take, but we’re laser-focused on the issues and needs of underserved, rural populations,” he says. According to Kemmerich, these needs transcend geographies and politics to include livelihoods, poverty uplift, economic inclusion, and gender equality, to name a few.
“Eighty percent of the GDP in these countries comes from agriculture,” he explains. “If we want to create wealth and infrastructure, support the growth and scaling of SMEs, this is the way to do it.”
What cemented the decision for the team looking at Anatrans and Maphlix was the fact that their business models were intrinsically linked to the people and communities the ABC Fund seeks to impact. These businesses continue to support the livelihoods of smallholder farmers, which in turn, goes on to impact the local communities in which they operate.
In addition, they have a comprehensive understanding of the risk they face as a business and have put in place the right mechanisms to track and mitigate these risks to improve their chances of business success.
“Strategically this is a very important endeavour and something that’s close to our hearts,” Kemmerich continues. “We’re extremely excited about the ABC Fund because it’s open-ended and we can raise more capital over time.
Because it’s blended finance, we can go where local banks won’t lend because the risk is too high, and adjust the risk reward return for our financial investors.”
Palladium recently invested a minority equity stake in Bamboo, forming a long-term strategic partnership and establishing Bamboo as the Asset Management arm of Palladium’s Impact Investment business. This capital injection is allowing Bamboo to accelerate the development of funds like the ABC Fund and others within its groundbreaking SDG500 platform, deploying capital at a faster rate into a wider range of businesses.
The Agri-Business Capital (ABC) Fund is managed by Bamboo Capital Partners in partnership with Injaro Investments. The ABC Fund was initiated by the International Fund for Agricultural Development (IFAD) in partnership with, and is currently funded by investments from, the European Union, the Organization of African, Caribbean and Pacific States (OACPS), the Luxembourg Government and the Alliance for a Green Revolution in Africa (AGRA).