Nairobi, Kenya
April 27, 2009
by Pius Sawa,
Africa Science
News Service
The Nairobi-based
Alliance for a Green
Revolution in Africa (AGRA), in partnership with the African
Agricultural Capital (AAC) group, recently launched the African
Seed Investment Fund (ASIF) in Kampala.
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 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.
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. |
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