CDC Group, Norfund, Finnfund, FinDev Canada and BIO, a group of leading development finance institutions (DFIs) and impact investors, have announced an $82 million joint commitment to Phatisa Food Fund 2 (PFF 2), managed by Phatisa. 

PFF 2 will invest across the African food value chain, considering investments in mechanisation, inputs, poultry and meat production, food processing and manufacturing, logistics, aggregation and distribution across Sub-Saharan Africa.

The investment will strengthen and increase food supply, local production and distribution across the region.

A consortium of investors, consisting of CDC, Norfund, Finnfund, FinDev Canada, and BIO committed to the Fund’s final close, $30m, $20m, $15m, $10m and $7m, respectively. The Fund has reached a final close of $143m, bringing DFIs and commercial investors together to boost the supply of quality food in Sub-Saharan Africa – where an estimated 239 million people are affected by food insecurity.

The Fund, via its investment in companies in the food value chain, targets over 90,000 small-holder farmers and micro-entrepreneurs and aims to create over 2,000 permanent jobs and sustain another 10,000 jobs. The investment follows the success of Phatisa’s African Agriculture Fund (AAF), which has created more than 1,800 jobs and benefitted 86,000 farmers operating in over 20 markets across the continent.

Building on AAF, Phatisa Food Fund 2 will enable small-holder farmers and micro-entrepreneurs to develop their skills, broadening access to markets and economic opportunities. The new fund will also address access to, and affordability of products among farmers and promote smart agricultural methods – enhancing crop resilience, reducing food loss and waste by 50% in the companies it finances, while increasing outputs, yields and incomes.

The investment contributes to UN Sustainable Development Goals 1 (No poverty), 2 (Zero hunger), 8 (Decent work and economic growth), 5 (Gender equality), 12 (Responsible consumption and production) and 13 (Climate action).

Phatisa Food Fund 2 also qualifies for the 2X Challenge, which seeks to support businesses that provide women in emerging economies with access to leadership opportunities, quality employment, and products and services that enhance their economic participation and inclusion.

Clarisa De Franco, Managing Director & Head of Private Equity Funds, CDC said: “It’s great to see DFIs and commercial investors partnering to tackle one of Africa’s most pressing challenges. Small-holder farmers account for 60% of Sub-Saharan Africa’s population and the continent remains a net food importer.

According to the African Development Bank (AfDB), rapidly rising net food imports are expected to grow from $35 billion in 2015 to over $110 billion by 2025. By mobilising capital and investing in the food and agriculture value chain, we can drive tremendous impact, sustain employment and improve food security across the continent, while reducing reliance on imports.”

Stuart Bradley, Managing Partner, Phatisa said: “We are pleased to welcome this multinational group of investors to Phatisa Food Fund 2, a fund focused on increasing investment in the undercapitalised African agribusiness and food value chain. Development impact, without deviating from sound commercial principles, is at the heart of Phatisa’s investment approach. Over the Fund’s investment cycle and through its investments in talented and driven management teams, we aim to create shared value; inclusive and sustainable growth; and address social and environmental challenges impacting some of the most marginalised people in Africa.”

Olav Akrawi, Project Manager in Scalable Enterprises at Norfund said: “Norfund is happy to be part of this opportunity to invest in businesses that are expected to create a large number of jobs and increased business opportunities within the food production space across Sub-Saharan Africa. The Fund’s plans are aligned with Norfund’s strategy, directing its focus towards companies with strong financial prospects that will contribute to economic growth and improve the value chain in the food and agri-sector.”

Riikka Molander, Associate Director & Head of Funds, Finnfund said: “We are glad to participate in this fund with our fellow investors. Strengthening and increasing food supply, local production and distribution – enhancing food security and supporting small-holder farmers – is at the core of Finnfund’s mission. Particularly now, in the midst of the COVID-19 pandemic, it is extremely important to generate financing for agriculture and food production in the African continent.”

“Our support to Phatisa Food Fund 2 will help respond to some of the most important challenges facing Africa today,” said Paulo Martelli, Chief Investment Officer of FinDev Canada.

“Food insecurity is a major issue on the continent, compounded by the COVID-19 pandemic which threatens to push another 23 million African citizens into extreme poverty. Phatisa has shown what it can do to benefit small-holder farmers and the firms working with them while promoting rural livelihoods. We expect our investment in Phatisa Food Fund 2 to create sustainable benefits for many more people in Africa, as well as the companies where they work, shop, and do business with.”

“With our investment in Phatisa Food Fund 2”, says Carole Maman, Chief Investment Officer at BIO, “We want to increase food security in Africa by supporting sustainable food production in Africa for local markets and by helping African food value chains and companies grow. To achieve this, we look to the Phatisa Food Fund 2 to provide patient investment capital as well as technical and commercial assistance.”

The company is a fast-growing provider of telecoms services and infrastructure in Madagascar, Togo, Tanzania, Senegal, Comoros, Mayotte, Reunion and Uganda.

The provision of new financing will allow AXIAN Telecom to expand its footprint through increasing access to affordable mobile and data services by improving digital access and thus pursuing its strategy of inclusion in the telecom value chain for customers, extending access in rural regions and lower-income demographics.

The expansion of AXIAN Telecom into under-serviced markets should disrupt monopolistic pricing policies and dated product offerings and improve vital digital infrastructure such as fibre optic cables, towers and subsea cables.

Richard Palmer, Head of Corporate Debt, at CDC, which will be renamed British International Investment in April, said: “Affordable mobile and data services is a vital component of any economy and investments in under-developed telecom markets is therefore at the core of CDC’s strategy in Africa. Our commitment to this bond financing supports the mobilisation of private capital from institutions that are less familiar with AXIAN Telecom’s markets.”

Hassanein Hiridjee, Chairman and Founder of AXIAN Telecom, said: “This bond financing will greatly support AXIAN Telecom in reaching millions of people whose prospects can be transformed by access to the services that a mobile phone can provide. This will take us through our next growth phase, and we are grateful for the support that CDC and other DFIs have provided in anchoring this transaction.”

You want to know more about CDC?

CDC will formally become British International Investment plc (BII) on 4 April 2022.

British International Investment is the UK Government’s development finance institution and a key part of the government’s wider plans to mobilise up to £8 billion a year of public and private sector investment in international projects by 2025.

BII, under its new five-year strategy will expand its geographical mandate to include South East Asian countries and the Caribbean.

BII will invest between £1.5 and £2 billion per annum between 2022 and 2026 to support the UK government’s Clean Green Initiative and to create productive, sustainable and inclusive economies in Africa, parts of Asia and the Caribbean.

BII is also a founding member of the 2X challenge which has raised $10 billion to empower women’s economic development.   

The company has investments in over 1,000 businesses in emerging economies and total assets of £6.8 billion.

How about AXIAN Telecom?

AXIAN Telecom is a pan-African telecommunications services provider operating in eight markets through its subsidiaries in Tanzania, Madagascar, Togo, Mauritius and Uganda, and joint ventures in Senegal, Réunion-Mayotte, and Comoros.

It operates across three key business segments, providing mobile network services as well as digital infrastructure and mobile financial services.

AXIAN Telecom serves around 33 million mobile customers via its subsidiaries and is a market disruptor, having expanded from being a single market player (Madagascar) until 2015 to eight markets today, through active acquisitions and heavy network investments.

CDC Group, which is soon to be renamed British International Investment (BII), said it had invested close to £2.2 billion in total in African businesses in 2020 and 2021, despite the unprecedented upheaval caused by the Covid pandemic.

Nick O’Donohoe, chief executive of CDC/BII, said: “I am delighted that we exceeded the ambitious target we set at the Africa Investment Summit held in London in 2020. This was during a period when CDC rapidly pivoted to support our portfolio and mitigate the economic fallout of the pandemic in the countries in which we invest. The role of DFIs such as CDC was vital in supporting vulnerable countries that did not have the financial reserves to protect their economies.”

“Moving forward, British International Investment intends to invest between £1.5 and £2 billion per annum between 2022 and 2026 to support the UK government’s Clean Green Initiative and to create productive, sustainable and inclusive economies in Africa, parts of Asia and the Caribbean.”

Last year saw CDC/BII make its largest ever deal in Africa – a partnership with DP World worth up to $1.7 billion – to significantly boost the continent’s ability to trade globally by expanding its port capacity.

Other key investments include Liquid Telecom, that is building a pan-African fibre-optic network, and in the Global Partnership for Ethiopia, a consortium led by Vodafone to build a new, world class mobile network in Ethiopia.

Investing in clean infrastructure will be central to BII’s strategy over the next five year period. At least 30 per cent of total investment by value will go into climate finance.

Among the major clean infrastructure investments made in Africa by the company over the last strategy period was a $100 million (£75.5 million) commitment to the Nachtigal Hydro Power in Cameroon, $50 million (£36.8 million) for the Malindi Solar Project in Kenya [which became operational recently] and $50 million (£36.8 million) for ACWA Power in South Africa.

Speaking today at the 2022 Africa Investment Conference, Chris Chijiutomi, director and head of Infrastructure Equity, Africa and Pakistan, at CDC/BII, said: “Clean infrastructure investment for British International Investment will go beyond renewables. Clean water provision, forestry and agritech, for example, will become increasingly important moving forward.

“We also continue to power Africa’s growth through our investee company Globeleq which last year succeeded in securing 1.4GW of wind and solar projects in South Africa.”

In addition to investing in utility scale projects, BII will prioritise technology-backed Venture Capital opportunities in smaller businesses that have the potential to deliver innovative, local solutions to mitigate the impacts caused by the climate crisis.