Kenyan agribusiness firms receive US$4.48m from the AgriFI challenge fund

KENYA – AgriFI, an EU-funded blending facility has awarded eight Kenyan based small scale agribusiness enterprises ksh.460m (US$4.48m) to support their business expansion and create new employment opportunities.

The agri-business firms that benefitted through the AgriFI Kenya Challenge Fund are, Coconut Holdings Ltd, Olivado EPZ Ltd, Premier Foods Ltd, Ndumberi Dairy Farmers Co-operative, Transu Ltd, Vehicle and Equipment Leasing Ltd, Sunculture Kenya Ltd and Real IPM Company Ltd.

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The programme, funded by the European Union and SlovakAid, will see the eight companies reach 50,000 smallholder farmers and create 3,800 jobs.

The AgriFI Kenya Challenge Fund supports productive and market-integrated smallholder agriculture through the provision of financial support worth 8 million euros to agri-enterprises.

The Fund aims at providing financial support to 50 companies thus, creating markets for over 100,000 small-holder farmers and pastoralists and creating more than 10,000 new jobs.

The Challenge Fund is part of the wider AgriFI programme funded under the 11th European Development Fund (EDF) to unlock, accelerate and leverage investments within value chains.

Additionally, the European Investment Bank (EIB) is providing long term local currency financing to Equity Bank (Kenya) Limited for on-lending to eligible food and agriculture sector projects. This facility is also available for match funding to the successful applicants.

The EU Ambassador to Kenya Simon Mordue, while congratulating the awardees for receiving the competitive support, acknowledged EU’s longstanding relationship with Kenya in furthering the country’s development agenda.

“What is most remarkable is that the eight selected companies in different sectors will positively impact over 50,000 smallholder farmers and strengthen different value chains thus increasing incomes for farmers,” he said.

Self Help Africa’s Kenya Country Director Rebecca Amukhoye acknowledged the significant financial contribution made by the European Union and SlovakAid in supporting the initiative, and thanked the Ministry of Agriculture for the implementation of the programme.

Agriculture Principal Secretary Hamadi Boga lauded the AgriFI initiative for supporting agriculture and in particular agri-enterprises who have had difficulties in accessing financial support from banks.

“At the ministry we welcome initiatives to bridge the financing gap in the agriculture sector and to involve the private sector in supporting agriculture,” he said.

It has emerged that African startups face a set of hurdles in attracting funds to boost their businesses and for expansion according to financial data and software company PitchBook, which tracks and aggregates data on deals across the globe.

Out of an estimated 530 transactions which took place in Africa in 2018 and whose ticket size was disclosed, 222 were below $1.0 million in size.

Of note is that 81.5 percent of these 222 transactions were below $250,000 in size, an indication of the concentration of small ticket size deals within the continent.

With investors keen on ploughing capital into companies with established track records, however, deals of this size tend to attract very little appetite for investment.

“At less than $1.0 million, you are likely looking at companies which are in the pre-seed stage. In other markets where the private capital ecosystem is well developed, these businesses would typically be funded by angel investors,” says Eva Warigia, Executive Director at the East Africa Private Equity and Venture Capital Association (EAVCA).

“In Africa, however, the angel investor landscape is still very young and left to entities which are deliberate in playing in the pre-seed stage funding space.”

Fred Murimi, the Managing Partner of Centum Capital Partners, argues that the depressed appetite for small ticket size deals reflects the chase for efficiency in portfolio administration and unlocking value for investors, reports Business Daily.

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