AFRICA – The Agri-Business Capital Fund (ABC Fund) has received US$5 million from Bank of America, its first investment from a corporate global financial institution.
This comes as the ABC Fund is gaining strong momentum with a track record of improving rural livelihoods, creating jobs and strengthening farmers organisations and rural small-to medium sized enterprises.
The ABC Fund is a blended-finance impact fund investing in smallholder farmers and small-to-medium sized rural agribusinesses in developing countries to support sustainable and inclusive agricultural value chains.
Through its activities, it aims to improve the livelihoods of smallholder farmers with a particular focus on women and young people.
This landmark investment makes it a truly blended fund where public sector investments help attract commercial investors.
“By bringing investments to promising and entrepreneurial agribusinesses and farmer’s cooperatives, the ABC Fund is not only building the sustainable value chains of today and tomorrow, but also making a real difference to the lives of thousands of rural families, women and young people,” Thouraya Triki, Chair of the Board of the ABC Fund said.
“Bank of America’s backing shows how public and private sector capital can come together to deliver additional impact. This is a first-of-a-kind investment in the ABC Fund and we hope it to be the first of many.”
So far, ABC Fund has made more than 20 investments in nine countries – Benin, Bolivia Burkina Faso, Côte d’Ivoire, Ecuador, Ghana, Kenya, Mali, and Uganda. With more impact-yielding investments in the pipeline, it is expected that other private sector actors will follow suit.
The capital structure of the fund is made of three tranches of different size, risk-return profile and maturity going from A to C-shares.
The blended finance structure supports an investment from Bank of America at the intermediate tranche (B-shares).
All previous investors invested in the first loss tranche (A-shares) which acts as a buffer to stimulate commercial investments.
“The ABC Fund is unlocking capital to build a more sustainable agricultural sector and meet the needs of rural farmers.
“The Fund will help to address the impacts of climate change on rural farming as well as drive more innovation in the sector to help meet the United Nations Sustainable Development Goals.
“Through this investment, Bank of America is supporting higher rural employment and access to inclusive business opportunities, and a more sustainable agribusiness today and for the future,” Dan Letendre, Managing Director, Environmental, Social and Governance, at Bank of America said.
The Fund was initiated by the International Fund for Agricultural Development (IFAD) 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).