Strengthening the Supply of Seed to Small and Medium Entreprises

As part of GCARD 2010, Farming First hosted a session entitled ‘Better Benefiting the Poor through Public-Private Partnerships for Innovation and Action.’ Within the discussions, our panel of experts addressed several case studies that present different ways that partnerships have helped to empower smallholder farmers around the world.

Lucy Muchoki – Pan-African Agribusiness Consortium

The Africa Seed Investment Fund is a $12 million investment facility that offers the opportunity to seed businesses to access the capital they require in order to increase seed production volumes, seed quality and take advantage of the opportunity to commercialise new improved seed varieties.

One of the key reasons for a non-competitive nature of agribusiness in Africa is due to the lack of access to quality and innovative inputs. One major shortcoming has been the empowering of the input suppliers who are in most cases small and medium enterprises. Since most of these businesses are undercapitalized and lacking in expertise and innovation, they have not been able to develop and make available high yielding seeds to meet the growing demand. The need for programs that strengthen the access and financing to small and medium seed companies is therefore an important step in improving this aspect of the value chain.

The Alliance for a Green Revolution in Africa (AGRA) in partnership with the African Agricultural Capital (AAC) group, a venture capital based in Kampala, Uganda, and 20 seed companies launched a partnership to ensure availability and access of seed to these smaller businesses.

Alongside capital investment, the fund provides business development services, including continual advice on seed production, storage and distribution and seed company management. The distributors are also to be trained on the appropriate use of seeds and other inputs such as fertilizer, to ensure the most efficient, safe and environmentally sound use of all. The fund also implements a gender policy that works to involve women actively as entrepreneurs, workers and smallholder farmers. In addition to its larger loans to the 20 African seed companies, the project is also investing in about 10 early-stage businesses with big potential. These loans range from $50,000 to $1,500,000 each. The fund attracts a net return of 3% on its investment. To qualify, companies need to meet investment criteria in three main areas: enterprise, performance and development criteria. The latter includes measures such as overall job creation, skills development in rural communities and an environmentally benign footprint.

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