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September 30, 2011
New Equity Fund to Invest $25 Million in East African Agribusiness
    by Robert Kropp

Members of the Global Impact Investing Network will invest $25 million to grow small and medium-sized enterprises in the agricultural sector of the region.

Four members of the Global Impact Investing Network (GIIN) Investors' Council—JP Morgan, The Bill & Melinda Gates Foundation, The Gatsby Charitable Foundation, and The Rockefeller Foundation—announced this week the launch of the African Agricultural Capital Fund (AACF), which will invest $25 million of commercial capital in environmentally sustainable agriculture projects that benefit the rural poor in sub-Saharan Africa.

Launched with the support of the US Agency for International Development (USAID), whose Development Credit Authority has guaranteed 50% of an $8 million commercial loan to AACF, the Fund will be managed by Pearl Capital Partners (PCP), an African agricultural investment fund manager based in Kampala, Uganda.

Over the next five years, PCP will invest the $25 million in at least 20 agriculture-related businesses in East Africa, a sector that has suffered from under-investment. The firm will focus on building the skills of local management teams, thereby creating a sustainable approach to investing on the continent. In order to meet the Fund's investment philosophy, PCP will have to demonstrate both strong financial returns and significant social impact.

The continent of Africa has been described as the last frontier of investment, and sustainable investors have taken notice. A recent report on investment in sub-Saharan Africa found that per capita Gross Domestic Product (GDP) of the continent has grown for 15 consecutive years, and combined GDP is expected to reach $2.6 trillion by 2020. The middle class is growing rapidly as well, the report stated.

Regarding the new Fund, Luther Ragin, CEO of GIIN, stated, "This unique collaboration between diverse investors will result in increased capital to the sustainable African agricultural sector and a more rigorous focus on generating social and environmental benefits."

USAID Administrator Rajiv Shah added, "Investors increasingly see the promise of Africa's agriculture sector, but the transaction risks are often perceived to be too high. That's why we're leveraging our development dollars and using innovative tools like the Development Credit Authority to lower the investment hurdles for private partners that want to invest with us."


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