AgDevCo, an investment firm specializing in the African agricultural sector, has recently secured $32 million in funding from the UK’s Foreign, Commonwealth, and Development Office (FCDO). This funding will spearhead the launch of AgDevCo Ventures, a novel investment initiative dedicated to nurturing early-stage agribusinesses across Africa. The initiative is strategically positioned to bolster the growth of small and medium enterprises (SMEs) by providing them with essential financial backing.
With an investment focus on the “missing middle”—a segment of SMEs often bypassed by private investors due to perceived risks and elevated transaction costs—AgDevCo Ventures will offer investments ranging from $1 million to $3 million. The venture’s mission is to foster job creation, enhance the earnings of smallholder farmers, and strengthen climate resilience on the continent by channeling capital into these nascent agribusinesses.
AgDevCo Ventures will initially target East African nations such as Kenya, Uganda, Tanzania, and Rwanda, leveraging AgDevCo’s existing regional footprint. The long-term vision includes broadening its impact to additional African territories.
The venture’s investment portfolio is anticipated to have a significant representation of African and female-owned businesses, reflecting a strong commitment to promoting inclusivity and gender equality within the sector.
Operating autonomously as a distinct investment arm of AgDevCo, AgDevCo Ventures will feature a specialized team headquartered in Nairobi, supplemented by the expertise available throughout the wider organization. In addition to the FCDO funding, the firm is actively seeking to raise an extra $25 million from development finance institutions and family offices, with the objective of commencing operations by the onset of 2025.
This initiative marks a strategic return for AgDevCo to the early-stage SME investment arena, a domain in which it was active from 2009 to 2017. The group’s recent transition back to smaller-scale investments has been facilitated by its profitability, which has enabled a portfolio shift towards larger stakes in more mature businesses.
The UK government, through the FCDO, has been a longstanding supporter of AgDevCo’s efforts to promote sustainable agribusiness development across Africa. Lord Collins of Highbury, the UK Minister for Africa, underscored the significance of stable food markets, highlighting the goals of providing farmers with reliable incomes, generating employment opportunities for young people, and combating malnutrition. He pointed out that the UK government is set to contribute over half of the $50 million total fund for AgDevCo Ventures, with the balance expected to be raised from other investors.
As of June 2024, AgDevCo reports having allocated $210 million across 38 investments in 11 sub-Saharan African countries. Among its notable investments are $7.7 million in the Kenyan agribusiness Agris, $7.2 million in the Pan-African enterprise Hatch Africa, and $10 million in Cashew Coast, based in Côte d’Ivoire.
