GENET archive


7-Business: African Agricultural Capital invests USD 7 million in "genetically improved" seeds

                                 PART I
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TITLE:  Investor in $7m plan to fund seed production
SOURCE: The EastAfrican, Kenya, by Julius Barigaba
DATE:   27 Feb 2006

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Investor in $7m plan to fund seed production

African Agricultural Capital will invest $7 million in small and medium-
sized enterprises in the agricultural sector in East Africa to boost
production and marketing of "genetically improved" seeds.

The organisation, which is based in Kampala, will give loans ranging
from $100,000 to $1 million to companies with the potential to expand
and deliver products and services in the rural areas.

According to AAC officials, the investments will fund farm inputs,
technical service and improved access to market opportunities. The funds
will also help entrepreneurs get storage and agro-processing facilities.
However, it is specifically interested in the production of staple crops
and seed.

"There is a vibrant seed sector in East Africa producing better
genetically improved seeds than the traditional ones," said ACC managing
director Tom Adlam. "We hope the farmers can benefit from this; our
interest is to specifically fund businesses in the agriculture value
chain because agriculture still comprises more than 50 per cent of the
gross domestic product of the entire East African region."

He told The EastAfrican last week that his organisation was talking with
eight companies that are to participate in the initiative. Kenyan
entrepreneurs are lining up for most of the first issue of loans slated
for May.

ACC is being funded by the Rockefeller Foundation, the Gatsby Charitable
Foundation and Volksvermogen, a Belgian organisation. The three are
focusing on private sector-led development of agricultural output and

Rockefeller and Gatsby have previously funded agriculture-based projects
and research in the region, but were not satisfied with the level of
transfer of technology and agricultural activities.

Officials in Uganda's Ministry of Agriculture, Animal Industry and
Fisheries welcomed the AAC venture, saying it will benefit Ugandan farmers.

According to Komayombi Bulegeya, Commissioner of Agriculture in charge
of crop production, the bulk of Uganda's small and medium-sized farmers
are let down by crop failure and tough lending conditions imposed by
banks and microfinance companies.

However, Mr Bulegeya said AAC would target farmers in the commercial
category, because "These are the ones who borrow within the range of
Ush50 million to Ush100 million ($27,000 to $54,000) and they comprise
only 5 per cent of the farming community. 

AAC's manner of operation will be to identify, at an early stage,
businesses that are unable to secure investment from commercial banks.
However, they will also work with other financial institutions for co-
financing. AAC's loan capital stretches over three to six years.

An official of the Uganda National Farmers Federation said the seed
production sector has experienced a funding vacuum. Owing to various
risk factors, most banks are not keen to lend to the sector.

But Mr Adlam said that his organisation would move into improved staple
crop varieties to get around the risk factors arising out of climate change. 

"We focus on varieties that resist drought and that will afford the
farmers a competitive marketing edge in the region," said Mr Adlam.

                                 PART II
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TITLE:  Farming in EA 'needs major boost'
SOURCE: The Guardian, Tanzania, by Pastory Nguvu
DATE:   08 Feb 2006

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Farming in EA 'needs major boost'

The agricultural sector across East Africa requires major investment in
order to be more efficient and competitive, according to African
Agricultural Capital (AAC) Chairman Hatim Karimjee. 

Karimjee said this in Dar es Salaam on Monday during the official launch
of the AAC in Tanzania. 

''There is no doubt that agriculture sector across East Africa needs
significant investment, if we are to become more efficient and
competitive, and increase rural income, but until now there has been a
major gap in sources of investment financed aimed at the agriculture
sector,'' he said. 

He said AAC has been established in order to fill that gap, adding that
he was confident that the AAC management team would be able to identify
a good number of high quality businesses in need of expansion. 

On his part, the AAC Managing Director, Tom Adlam, said that the company
was determined to ensure that it becomes the leading investor in East
African Small and Medium Entrepreneurs (SMEs) operating in the
agriculture value chain in a way that benefits smallholder farmers. 

''We are particularly interested in identifying businesses at an early
stage in their development which are unable to secure investment from
the commercial banking sector,'' he said. 

A statement issued earlier by the AAC Chairman said that in recent years
investment in private sector agriculture in East Africa has been very
limited despite the fact that the region's agricultural sector has many
entrepreneurs who have good ideas for building successful businesses. 

However, the AAC boss noted that lack of access to finance and technical
assistance has resulted in failure of businesses expansion.

''This has resulted in the failure by private sector to adapt improved
technologies, products and services to the agricultural sector, which
acts as a key constraint on rural job creation, economic development and
food security,'' said the statement. 

It added that in response to the absence of an investment facility,
which focuses on the development of private initiative in the
agriculture sector in East Africa, the Rockeffelar Foundation, the
Gatsby Charitable Foundation and Volksvermogan NV have decided
established African Agricultural Capital. 

The AAC will specifically be responsible for investing in small and
medium-sized agriculture-related businesses in East Africa.

                                 PART III
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TITLE:  Foundations and the African farmer: strengthening the links
SOURCE: Alliance Extra, by F L Cockcroft
DATE:   Nov 2005

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Foundations and the African farmer: strengthening the links

EVENT Conference on Supporting Positive Change in Rural Africa through
Agricultural Research and Agri-business Development 
DATE 21-23 September 
VENUE London, UK 
ORGANIZERS The Gatsby Charitable Foundation and the Rockefeller Foundation

Agriculture is one of the most important keys to unlocking Africa's
future but this has not been adequately recognized in the African focus
of the G8 and the EU this year. It remains, however, a critical theme
for a few foundations and trusts that fund projects in Africa and was
the subject of a recent conference held in the UK to discuss their
experiences. Convened by the Gatsby Charitable Foundation, working
closely with the Rockefeller Foundation, it brought together for the
first time 20 foundations and trusts from the US, the EU and Africa.

The overall objective of the UK conference was to enable foundations and
their grantees to describe both individual projects and their overall
strategy. The three principal issues aired were:

- increasing the productivity of small farmers;
- creating a responsive market for their products;
- examining the mechanisms by which foundations can provide funding most

More than half of the more than 30 speakers were African scientists and
commercial and social entrepreneurs actively involved in project
implementation. They included research scientists working on the
development of higher-yielding crop varieties with improved disease
resistance, innovators in agricultural enterprises of direct relevance
to small farmers, and foundation staff with significant funding experience.

Dr Ousmane Badiane clarified the link between agricultural development
and poverty reduction but stressed that farming techniques have to
change, that skills training is critical and that farmers have to adopt
a business strategy if they are to survive in the modern marketplace. He
stressed that African governments are increasingly recognizing this and
that NEPAD (New Partnership for Africa's Development) has come to an
agreement that governments will allocate 10 per cent of their budget to
the agricultural sector.

Some speakers also stressed the ability of agricultural researchers to
use additional funds effectively, while others argued that if new
varieties are to be valuable they need effective dissemination and
opportunities for outreach and training. However, transferring new
technologies as a package can be complex. Dr Lydia Kimenyi, Manager of
the Maendeleo Agriculture Technology Fund in Kenya, and Dr Oumar
Niangado from the Syngenta Foundation in Mali both stressed the need to
integrate research and development at an early stage in creating new

Marketing: another part of the equation

If improved varieties and technologies are to generate real benefits,
they need to be matched by effective market mechanisms. The question of
the growing strength of local entrepreneurs, and their need for changing
types of financial support, was discussed by Kurt Hoffman, Director of
the Shell Foundation, and illustrated with reference to the Foundation's
new lending institution (GroFin Capital). Experience in developing
export channels for small-scale, mainly women farmers producing solar
dried fruits, and the broader lessons for enterprise development, were
described by Adam Brett, whose company Fruits of the Nile has a
formidable track record in Uganda and a growing one in Tanzania. The
production of quality seed is at the heart of any significant
agricultural programme and the pressing investment in seed businesses
was highlighted by Mrs Josephine Okot, the MD of Victoria Seeds in Uganda.

Human resource needs

As African agriculture develops, the need for high-level human capacity
will also intensify. A consortium of US foundations (including
Rockefeller, Carnegie and Ford) has been providing support to
universities in Africa for some years, and the need for improved
teaching modules for a range of universities is now being addressed by a
pan-African initiative ('BASIC') led by the Forum for Agricultural
Research in Africa, which was described by Dr Ralph von Kaufman. The
link between appropriate training and research, and the need for
research across the wide range of ecological niches in Africa, was
stressed by Professor Mark Laing of the University of Kwazulu-Natal, at
whose African Centre for Crop Improvement the Rockefeller Foundation
sponsors a number of postgraduate students every year.

Which institutions?

In spite of the value of these initiatives, and the opportunities they
generate for foundation support, there remains the question of which
institutions make the most effective partners and grantees. For the most
part, foundation support is made to public entities (such as
agricultural research institutes, universities and NGOs). In a
deliberate attempt to identify alternatives, the Gatsby Foundation has
established the Kilimo Trust in Uganda, a local grantmaking trust which
is designed to serve the East African Region. As a means of enabling
funds to be channelled to the medium-scale agribusiness sector
Rockefeller and Gatsby, and Volkesvermogen of Belgium, have established
an investment company, African Agricultural Capital, which is designed
to take a financial stake in such enterprises, through both equity and
loan capital. From a related perspective, Ms Anje Wind of the Rabobank
Foundation described the different ways foundations can provide funds to
grantees and match these with other kinds of financial instruments.

The need for public policy in the agricultural sector that is supportive
of such initiatives was stressed by Dr Marco Quinones of the Sasakawa
Africa Association - though others questioned whether foundations were
in a position to effectively influence policy at this level and
preferred to focus on learning and research, or simple project implementation.

In the final sessions of the conference, a consensus emerged in favour
of a forum for foundations with an interest in African agriculture that
would focus on the sharing of experiences on particular themes and
perhaps extend to the co-funding of feasibility studies in areas in
which a group of foundations are interested.

Finally, August Schumacher Jnr, former US Under Secretary for Farm and
Foreign Agricultural Services, asked those present to think more widely
about future change in global agriculture and where the real drivers for
technology dissemination in the developing world would come from. Given
the great success of the Green Revolution in Asia in the 1950s and
1960s, and the key role played by foundations such as Rockefeller, where
would the next generation of innovators come from, he asked, and should
foundations be thinking of ways to identify and support a new generation
of players, perhaps in very difference institutional frameworks?

Overall those attending agreed that it had been a unique opportunity to
explore current and new ways of meeting Africa's greatest challenge:
that of feeding its people and fighting poverty.

Laurence Cockcroft is Senior Adviser to the Gatsby Charitable
Foundation's Developing Countries Programmes, he can be contacted
through Yvonne Pinto at

European NGO Network on Genetic Engineering

Hartmut MEYER (Mr)
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