CFC to boost positive impact on smallholders with new ACT Fund introduced at LDC5
The Common Fund for Commodities showcased its new Agricultural Commodity Transformation (ACT) Fund at the 5th UN Conference on the Least Developed Countries (LDC5) in Doha, Qatar, which will increase our ability to enhance the livelihoods of smallholder farmers.
At a side event moderated by CNBC Africa journalist Terryanne Chebet we explored how the fund will support farmers by financing small and medium sized enterprises (SMEs) in the agricultural sector.
ACT is designed to enable private sector institutions to invest in viable SMEs that have the potential to bridge the gap between smallholders and high-value markets in some of the poorest regions of the world. It is part of our mission to transform the agricultural sector in least developed countries (LDCs), landlocked developed countries (LLDCs) and small island developing states (SIDS) by strengthening their food, climate, and income resilience.
The fund will benefit from the CFC’s three decades of experience working with agribusinesses across the globe and its extensive established deal flow. ACT Fund aims to raise US$100 million in impact funding that will drive prosperity in developing countries. From an investor’s perspective it is expected to deliver consistent returns and is backed by US$20m in first-loss capital from the CFC.
CFC Managing Director Amb. Mohammed Belal and COO Nicolaus Cromme were part of an expert panel that included Amadeu Nunes, Secretary of Trade in the Ministry of Trade, Angola; Paul Akiwumi, Director of the Division for Africa and LDCs at UNCTAD; and Sunny George Verghese, the Co-founder, and Group CEO of Olam International Limited.
Speaking at the event Sunny Verghese said: “Initiatives like ACT Fund are a critical part of the puzzle in catalyzing smallholder farmers’ livelihoods.”
Two CFC investees also joined us to show the positive impact targeted financing can have on smallholders. Tammy E. Newmark, Chief Executive Officer (CEO) and Managing Partner of EcoEnterprises, discussed the organization's achievements as an impact investor in Latin America. And Ruth Kinoti, CEO of Shalem, explained how CFC investment helped her Kenyan agribusiness to transition from a grain aggregator to an added-value manufacturer. “We’re grateful to the CFC – they invested in our dream”, she shaid.
Amb. Belal commented: “ACT Fund is our response to the overwhelming demand the CFC is experiencing from SMEs in the developing world. We want to support them to continue sourcing from smallholders by providing the financing they often struggle to access, and ACT fund enables us to do this."
We also hosted a side event with UNCTAD, highlighting the export potential of nutraceuticals (health foods and supplements) to diversify the economies of LLDCs. The event presented a joint CFC and UNCTAD publication on how LLDCs can benefit from the growing nutraceuticals market. The panel was composed of Amb. Mohammed Belal and Nicolaus Cromme of the CFC, UNCTAD Director Paul Akiwumi, and CEO of Aduna Andrew Hunt.
Paul Akiwumi said “the case of nutraceuticals is a case of micro-interventions, with macroeconomic results”. While Amb. Belal highlighted how tapping into international demand for nutraceuticals could create vital economic opportunity for young people in LLDCs.
Ultimately, supporting smallholder farmers and agribusinesses in LLDCs to specialize in higher value products will enable them to turn potential into prosperity. Given the private sector’s growing interest in purpose-driven investments, the case for investing in nutraceuticals is increasingly strong.
If you missed either of our side events and would like to catch up, you can watch the recordings using the links below: