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Investment in ARAF to finance innovative solutions for smallholders in Sub-Saharan Africa

Project

Signature date
Location
Ghana, Kenya, Nigeria, Uganda, Multi-country Africa
Financing tool
Equity investment
Financing amount (Euro)
4200000
Financing details
USD 5m Equity Investment
Customer
Acumen Resilient Agriculture Fund, LP
Type of customer
Investment fund
Project number
IZZ1089
Environmental and social ranking
IF-B
Climate co-benefits
Project with climate co-benefits
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This information is given at the time of signature, without prejudice to any developments in the operation/project.

The operation involves an equity investment in the ARAF fund of the NGO Acumen to finance innovative solutions aiming at improving the conditions and climate resilience of smallholders in East and West Africa. This financing is organized by FISEA+, a facility deployed under the Choose Africa initiative implemented by AFD Group.

Client presentation

ARAF is a USD 58m investment fund managed by Acumen, an American NGO specialized in supporting social enterprises offering goods and services to disadvantaged people. Acumen was set up 20 years ago and, at the end of June 2021, had invested over USD 137m in 139 social enterprises which have served some 263 million beneficiaries. With the ARAF fund, Acumen is targeting the themes of food security and climate change, which are essential for Africa’s development.

Project description

ARAF aims to invest tickets ranging from USD 1m to USD 5m in about 10 start-ups offering innovative solutions to improve the conditions and climate resilience of smallholders in East and West Africa. The initiative aims to prove the commercial viability of investments in innovative solutions for smallholders and attract more private financing in this field. The Green Climate Fund (GCF) is the lead investor and is providing USD 23m of first-loss guarantee capital. The manager Acumen is providing USD 2m, also as a first-loss guarantee.

Project impact

The fund is expected to maintain some 1,200 jobs and indirectly support a total of 2 million smallholders over the next 5 years. The fund will benefit from a technical assistance budget of USD 6m to maximize the impact of its investment strategy. The project meets AFD’s climate eligibility criteria (adaptation) through the climate component of the solutions proposed by the companies selected by the fund.