Kampala, Uganda
April 2, 2009
The Alliance for a Green
Revolution in Africa (AGRA), in partnership with the
African Agricultural Capital
(AAC) group, today launched the African Seed Investment Fund
(ASIF). Over the next five years, it will invest in at least 20
small- and medium-size seed companies in Southern and Eastern
Africa, infusing equity and expertise into an industry that has
languished for decades, and paving the way for raising the
productivity and incomes of at least one million farm
households.
 “The
sole purpose of ASIF is to provide high quality seeds to
smallholder African farmers, thereby improving income and
quality of life,” said Dr. Namanga Ngongi, President of AGRA.
“Direct investment in local seed companies will allow African
enterprises, working with local public crop breeders and local
farmers, to seed prosperity.”
ASIF is the first fund of its kind: African-owned and targeted
specifically at promoting the growth of small- and medium-sized
African seed companies through long-term loans provided at
below-market rates. ASIF will thus fill a critical funding gap
in African agricultural development—financing for its seriously
underdeveloped and undercapitalized seed sector.
Across Southern and Eastern Africa there are over 50 small- and
medium-sized African seed companies, compared to hundreds that
operate in Europe or in the United States. To help fill this
gap, ASIF will operate in eight countries--Kenya, Tanzania,
Uganda, Rwanda, Ethiopia, Mozambique, Malawi and Zambia.
Having more than doubled in four years, sales revenues of
African seed companies stood at about US$2.5 million in 2006.
Yet, in Eastern and Southern Africa alone, only about one-third
of maize – the region’s largest staple food crop – is produced
from improved varieties. And African seed comprises only a
fraction of the global seed market, estimated at US$30 billion.
“While recent growth of the African seed sector demonstrates the
high demand for good quality seed, it falls far short of meeting
that demand,” said Josephine Okot, Managing Director of Victoria
Seeds Ltd in Uganda. “Our women’s collectives are working hard
to grow good seed for distribution.”
Okot’s company contracts with some 200 growers, most of whom are
women’s groups, to produce high quality seed of a range of crops
that includes such staples as maize, rice, sorghum and
groundnut. Companies like Ms. Okot’s stand poised to benefit
from the new fund.
The lack of a robust African seed industry has left these
farmers with few choices. Smallholder farmers—who grow most of
the food consumed in Africa—can neither afford nor access
high-yielding quality seed varieties of their staple food crops.
Whereas improved seed has been responsible for more than half of
global yield increases, African smallholder farmers must rely on
saved seed whose quality has deteriorated over time, producing
the world’s lowest cereal yields and ensuring chronic hunger and
malnutrition.
“Yet, Africa’s plant breeders have begun developing high
yielding, locally-adapted seed that would enable farmers to
double or triple their yields,” said Joseph DeVries, director of
AGRA’s Seeds Programme. “We now need a vibrant seed sector that
gets these varieties to farmers. ASIF will enable this--it is
venture capital for Africa’s seed entrepreneurs.”
The AGRA-AAC partnership aims to jumpstart a well-capitalised,
competitive and efficient regional seed industry; with
commercial incentive to produce, distribute and market improved
seed varieties that meet farmers’ demands.
“Until recently, only well-off, large-scale farmers bought
improved seed,” DeVries said. “The seed market is evolving to
recognize that the real markets is at the pyramid’s base, among
millions of smallholder farmers. The prices, crops and varieties
marketed need to reflect that.
” AGRA is an African organization that finds practical solutions
across the agricultural value chain to sustainably boost
smallholder farm productivity. Its investment in ASIF is part of
a comprehensive approach to helping millions of small-scale
farmers and their families end poverty and hunger. AAC is a
diversified agri-business fund, incorporated in Uganda in 2004,
with a track record of spurring the growth of pro-poor African
agri-businesses.
Venture Capital for Seed Entrepreneurs
Alongside capital investment, the fund will provide business
development services, including continual advice on issues like
seed production, storage, and distribution and seed company
management. Distributors will also be trained on the appropriate
use of seeds and other inputs such as fertilizer, to ensure the
most efficient, safe and environmentally sound use of all.
ASIF will implement a gender policy that works to involve women
actively as entrepreneurs, workers, and smallholder farmers.
Women make up the majority of Africa’s smallholder farmers and
have the greatest impact on the livelihood of their families,
yet face many impediments to education, training and access to
finance.
In addition to its larger loans to at least 20 African seed
companies, ASIF will invest in about 10 early-stage businesses
with big potential, said Tom Adlam, Managing Director of AAC.
These loans will range from approximately about $50,000 to
$1,500,000 each. The fund overall will seek a net return of 3%
on its investment.
“AAC’s management of the fund will build on our successes in
reaching smallholder farmers,” Adlam said. “These include
working with more than one thousand farmers of
organically-certified vanilla in Uganda, and an investment in
Kenya’s Western Seed company which distributes hybrid maize seed
that is drought-resistant and stress-tolerant.”
The drought-resistant maize varieties now reach about 200,000
farmers in Kenya, and has enabled them to significantly increase
maize yields.
“African farmers need improved varieties of maize more than any
other farmer in the world. Their livelihoods—their very
survival—depends on it,” DeVries said.
And while maize will be an important crop for the program, it
will not be the only one. Companies producing seed for such
staple crops as beans, cowpea, pigeonpea, rice, sorghum, millet
and others will be encouraged to apply.
To qualify, companies will need to meet investment criteria in
three main areas: enterprise, performance, and development
criteria. The latter includes measures such as overall job
creation, skills development in rural communities, and an
environmentally benign footprint.
“Rather than having to chose between poor quality low-yielding
seed or high-cost hybrid seed marketed by multinationals,
African farmers will have another choice,” Ngongi said. “We can
foresee the day when dozens, if not hundreds, of small- and
medium-sized African seed companies are working across the
region with local, public sector breeders to get low-cost,
high-quality seed to farmers from Ethiopia to Mozambique.
About the Alliance for a Green Revolution in Africa (AGRA)
AGRA is a dynamic partnership working across the African
continent to help millions of small-scale farmers and their
families lift themselves out of poverty and hunger. AGRA
programmes develop practical solutions to significantly boost
farm productivity and incomes for the poor while safeguarding
the environment. AGRA advocates for policies that support its
work across all key aspects of the African agricultural value
chain from seeds, soil health and water to markets and
agricultural education.
AGRA's Board of Directors is chaired by Kofi A Annan, former
Secretary-General of the United Nations. Dr Namanga Ngongi,
former Deputy Executive Director of the World Food Programme, is
AGRA's president. With support from The Rockefeller Foundation,
the Bill & Melinda Gates Foundation, the UK's Department for
International Development and other donors, AGRA works across
sub-Saharan Africa and maintains offices in Nairobi, Kenya, and
Accra, Ghana. |
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