AgDevCo invests $5M in Zambia’s Katito farming enterprises
AgDevCo expects that its investments in two large-scale commercial farming enterprises in Zambia will provide the “critical mass” needed to attract ancillary businesses along the supply chain
Global AgInvesting | 30 August 2017
AgDevCo invests $5M in Zambia’s Katito farming enterprises
UK-based, sub-Saharan-focused social impact investor AgDevCo announced it has invested $5.05 million in Katito Farming Enterprises Ltd. – a key part of the firm’s Northern Zambia Agricultural Hub (NZAH). Through its NZAH project, AgDevCo aims to establish an irrigated farm, bulk storage, and agricultural processing operations that will catalyze commercial agriculture in the remote northern regions of Zambia.
This investment by AgDevCo represents the second investment by the fund in Northern Zambia following its $4.5 million investment made in June of last year in partnership with Saise Farming Enterprises – a seed potato project that is working toward modernizing the supply chain through the inclusion of irrigation systems and climate controlled warehouses for crop storage until distribution to farmers the following season.
This deal also marks the firm’s third investment in the country after the it announced a $1.1 million investment in Zambian feedlot business, Ilobezi Limited – a growing business that is expected to purchase 8,200 head of cattle from the region’s smallholders each year.
Between Katito Farming and Saise Farming, AgDevCo expects that these large-scale commercial farming enterprises will provide the “critical mass” needed to attract ancillary businesses along the supply chain including input suppliers, aggregators, value addition processors, off-takers, and logistics providers.
“I am delighted with this additional investment in Northern Zambia and am optimistic of the impact it will have on the Province, both directly and indirectly by attracting other investors,” said Nigel Seabrook, AgDevCo Zambia Country Director. “Other players in the agricultural value chain should look at the regional food demand as a huge opportunity for Northern Province.”
Through the farming project, AgDevCo plans to produce seed maize, soybeans, wheat, groundnuts, commercial maize, and seed potatoes – all of which will contribute to strengthening food security for the region as well as Burundi, Rwanda, and Eastern DRC through greater exportation via barges on Lake Tanganyika and by rail via Tanzania.
Future plans at the site include an in-grower scheme, demonstration farming, and the provision of extension services.
“We as the community are looking forward to the establishment of Katito Farming Enterprises Limited so that they can employ members of the community,” said Edward Simfukwe, the Katito community representative.
AgDevCo has been highly active in working toward a reduction in poverty and increasing food security through its investments across Africa. Currently managing investments in six countries, and with plans to extend its investment reach to another four, AgDevCo sees the surest way out of poverty as the development of profitable agriculture with strong links to markets, according to the firm’s website.
Toward this end, in March of this year, AgDevCo announced it had partnered with UK development financial institution CDC on an investment of $11.5 million in Jacoma Estates – a Malawian farming company specializing in the production of macadamia nuts, chillies, and paprika.
Under the terms of the investment, which will be structured as debt and preference shares, CDC will provide $8 million, while AgDevCo contributed the remaining $3.5 million in funds. Jacoma plans to use the capital to help expand its farming operations at its Tropha Estates located in Northern Malawi, and also to strengthen Jacoma’s existing outgrower schemes that will enable more than 1,000 farmers to participate in a project that will support greater ability to reach export markets, gain access to higher-yielding seeds and valuable agricultural inputs, and will provide up to 100 hectares of year-round irrigation to local smallholders.
AgDevCo also has targeted the Malawian nut sector as having potential for growth. In September 2016, the firm made an investment in Malawi when it committed $1.5 million through a debt and equity deal to peanut processor Agri-Oils Limited.
At one point Malawi exported more than 50,000 tons of peanuts per year, but at the end of the 1980s the country’s exports plunged due to a combination of factors according to the report Monitoring African Food and Agricultural Policies – Analysis of Incentives and Disincentives for Groundnuts in Malawi, published by the UN’s Food and Agriculture Organization (FAO).
However, smallholders began switching to tobacco as their main cash crop; furthermore, the state-owned Agricultural Development and Marketing Corporation (ADMARC), which was the only trader of groundnuts in the country, became ineffectual after its disorganized takeover by the private sector and the dissolution of its monopoly. And thirdly, higher levels of aflatoxin in Malawian peanuts clashed with tighter global quality requirements.
“We are backing Afri-Oils to tackle the aflatoxin challenge and put Malawi back on the map as a major international peanut producer,” said Jim Henderson, AgDevCo’s Malawi’s associate director, in a statement at the time.
The aforementioned investment was preceded by AgDevCo partnering with the African Agricultural Capital Fund managed by Pearl Capital Partners to each invest $2 million as part of a $6 million financing round in Malawian macadamia nut producer Tropha Estates Ltd. The remaining $2 million was contributed to the round by Jacoma Estates Ltd. – Tropha Estates’ parent company.
Zambia Daily Mail | 7 June 2017
Local company to invest over $7 million in Northern Province
by TRYNESS TEMBO
A LOCAL company has pledged to invest over US$7 million in Northern Province to undertake cropping, livestock and seed treatment operations.
Katito Farming Enterprises Limited, which is under the management of agro-experts with experience from managing a renowned agro-fund called AgDevCo, and are expected to employ over 170 people comprising skilled and unskilled labour.
This is according to an environmental impact assessment (EIA) report submitted to the Zambia Environmental Management Agency (ZEMA) and obtained by the Daily Mail last week.
The project will also include rearing of beef animals and establishment of seed storage and treatment sheds.
“Katito Farming Enterprises Limited intends to develop the farm to be an integrated farming unit to include growing of wheat, barley, soya beans, maize, seed maize, groundnuts, Irish seed potatoes, beans, coffee, macadamia nuts, avocadoes and a seed treatment facility.
“The above aligned projects are in line with the efforts of Government through private sector investment to shift the main stay of the economy from mining to agriculture of which 1,100 hectares was previously used for cropping and cattle ranching operations among others,” the report reads.
It says the company also intends to implement the project in a phased approach using a five-year plan starting this year after approval from relevant authorities.
The EIA anticipates that the success of the project will depend on the construction of various support structures on the farm for ease of project implementation and operations.
Under the project, crops will be grown both during the rainy season and the dry season.
“Crops grown in the dry season will be irrigated using centre pivots. The project will be implemented using four different phases; preparation, construction, operation and closure. Each phase will be undertaken in line with the provisions of relevant regulations,” the report reads.
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