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Home > Media Center > AGRA Launches Fund To Jumpstart African Seed Industry

AGRA Launches Fund To Jumpstart African Seed Industry

AGRA partnership to boost 20 homegrown African seed companies; Avail one millionfarm households with improved seed

KAMPALA, UGANDA (2 April 2009) The Alliance for a Green Revolution in Africa (AGRA), in

partnership with the African Agricultural Capital (AAC) group, today launched the African Seed

Investment Fund (ASIF). Over the next five years, it will invest in at least 20 small- and

medium-size seed companies in Southern and Eastern Africa, infusing equity and expertise into an

industry that has languished for decades, and paving the way for raising the productivity and

incomes of at least one million farm households.

The sole purpose of ASIF is to provide high quality seeds to smallholder African farmers, thereby

improving income and quality of l ife, said Dr. Namanga Ngongi, President of AGRA. Direct

investment in local seed companies will allow African enterprises, working with local public crop

breeders and local farmers, to seed prosperity.

ASIF is the first fund of its kind: African-owned and targeted

specifically at promoting the growth of small- and

medium-sized African seed companies through long-term

loans provided at below-market rates. ASIF will thus fill a

critical funding gap in African agricultural development

financing for its seriously underdeveloped and

undercapitalized seed sector.

Across Southern and Eastern Africa there are over 50 small-

and medium-sized African seed companies, compared to

hundreds that operate in Europe or in the United States. To

help fill this gap, ASIF will operate in eight countries--

Kenya, Tanzania, Uganda, Rwanda, Ethiopia, Mozambique,

Malawi and Zambia.

Having more than doubled in four years, sales revenues of African seed companies stood at about

US$2.5 million in 2006. Yet, in Eastern and Southern Africa alone, only about one-third of maize

the regions largest staple food crop is produced from improved varieties. And African seed

comprises only a fraction of the global seed market, estimated at US$30 billion.

While recent growth of the African seed sector demonstrates the high demand for good quality

seed, it falls far short of meeting that demand, said Josephine Okot, Managing Director of Victoria

Seeds Ltd in Uganda. Our womens collectives are working hard to grow good seed for

distribution.

Okots company contracts with some 200 growers, most of whom are womens groups, to produce

high quality seed of a range of crops that includes such staples as maize, rice, sorghum and

groundnut. Companies like Ms. Okots stand poised to benefit from the new fund.

The lack of a robust African seed industry has left these farmers with few choices. Smallholder

farmerswho grow most of the food consumed in Africacan neither afford nor access

high-yielding quality seed varieties of their staple food crops. Whereas improved seed has been

responsible for more than half of global yield increases, African smallholder farmers must rely on

saved seed whose quality has deteriorated over time, producing the worlds lowest cereal yields

and ensuring chronic hunger and malnutrition.

Yet, Africas plant breeders have begun developing high yielding, locally-adapted seed that would

enable farmers to double or triple their yields, said Joseph DeVries, director of AGRAs Seeds

Programme. We now need a vibrant seed sector that gets these varieties to farmers. ASIF will

enable this--it is venture capital for Africas seed entrepreneurs.

The AGRA-AAC partnership aims to jumpstart a well-capitalised, competitive and efficient regional

seed industry; with commercial incentive to produce, distribute and market improved seed varieties

that meet farmers demands.

Until recently, only well-off, large-scale farmers bought improved seed, DeVries said. The seed

market is evolving to recognize that the real markets is at the pyramids base, among millions of

smallholder farmers. The prices, crops and varieties marketed need to reflect that.

AGRA is an African organization that finds practical solutions across the agricultural value chain to

sustainably boost smallholder farm productivity. Its investment in ASIF is part of a comprehensive

approach to helping millions of small-scale farmers and their families end poverty and hunger. AAC

is a diversified agri-business fund, incorporated in Uganda in 2004, with a track record of spurring

the growth of pro-poor African agri-businesses.

Venture Capital for Seed Entrepreneurs

Alongside capital investment, the fund will provide business development services, including

continual advice on issues like seed production, storage, and distribution and seed company

management. Distributors will also 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.

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ASIF will implement a gender policy that works to involve women actively as entrepreneurs,

workers, and smallholder farmers. Women make up the majority of Africas smallholder farmers

and have the greatest impact on the livelihood of their families, yet face many impediments to

education, training and access to finance.

In addition to its larger loans to at least 20 African seed companies, ASIF will invest in about 10

early-stage businesses with big potential, said Tom Adlam, Managing Director of AAC. These loans

will range from approximately about $50,000 to $1,500,000 each. The fund overall will seek a net

return of 3% on its investment.

AACs management of the fund will build on our successes in reaching smallholder farmers, Adlam

said. These include working with more than one thousand farmers of organically-certified vanilla in

Uganda, and an investment in Kenyas Western Seed company which distributes hybrid maize seed

that is drought-resistant and stress-tolerant.

The drought-resistant maize varieties now reach about 200,000 farmers in Kenya, and has enabled

them to significantly increase maize yields.

African farmers need improved varieties of maize more than any other farmer in the world. Their

livelihoodstheir very survivaldepends on it, DeVries said.

And while maize will be an important crop for the program, it will not be the only one. Companies

producing seed for such staple crops as beans, cowpea, pigeonpea, rice, sorghum, millet and others

will be encouraged to apply.

To qualify, companies will 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.

Rather than having to chose between poor quality low-yielding seed or high-cost hybrid seed

marketed by multinationals, African farmers will have another choice, Ngongi said. We can

foresee the day when dozens, if not hundreds, of small- and medium-sized African seed companies

are working across the region with local, public sector breeders to get low-cost, high-quality seed to

farmers from Ethiopia to Mozambique.

####

About the Alliance for a Green Revolution in Africa (AGRA)

AGRA is a dynamic partnership working across the African continent to help millions of small-scale

farmers and their families lift themselves out of poverty and hunger. AGRA programmes develop

practical solutions to significantly boost farm productivity and incomes for the poor while

safeguarding the environment. AGRA advocates for policies that support its work across all key

aspects of the African agricultural value chain from seeds, soil health and water to markets and

agricultural education.

AGRA's Board of Directors is chaired by Kofi A Annan, former Secretary-General of the United

Nations. Dr Namanga Ngongi, former Deputy Executive Director of the World Food Programme, is

AGRA's president. With support from The Rockefeller Foundation, the Bill & Melinda Gates

Foundation, the UK's Department for International Development and other donors, AGRA worksacross sub-Saharan Africa and maintains offices in Nairobi, Kenya, and Accra, Ghana.

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