Jasmin Hidanovic, Investment and Technical Assistance Facility Manager at AgDevco, talks to SAFIN about why the specialist impact investor joined the Network, plans for its new investment capital worth US$ 90 million, and how the organization adds value through Technical Assistance.
Can you please tell us about AgDevCo and its history?
AgDevCo was established in 2009, with a vision to develop a thriving commercial agriculture sector in Africa that benefits both people and planet. We provide investment capital and technical assistance, or TA, to early-stage and mid-sized agri-SMEs across the agricultural value chain from primary agriculture to associated downstream activities. We provide debt, mezzanine and equity capital to agri-SMEs with high growth potential. Our specialist teams are also key to the success of our investments and the delivery of our TA programmes.
Today, we have a committed portfolio of about US$ 140 million across more than 40 companies in 10 sub-Saharan African countries. Our investments have directly created or sustained more than 15,000 jobs, 23% of these for women, and linked 750,000 smallholder farmers, 39% of them women, to markets and training. Many of our investees are pioneers who are demonstrating innovative commercial agribusiness models and catalysing the development of new industries, which encourages investment by others.
Please tell us about yourself and your role at AgDevCo.
I joined AgDevCo in 2016 as part of the investment team, bringing the expertise from my background in international business and finance. In my current role as Investment Manager and Technical Assistance Facility (TAF) Manager, I work closely with investee businesses, investment teams and specialist teams to co-design and implement high-quality TA projects that help to reduce investment risk and strengthen the impact of our investees.
I was previously part of the Smallholder Development Unit (SDU), a specialist US$ 15 million TA Facility with the objective to link hundreds of thousands of smallholder farmers to markets in a sustainable way. I designed out-grower schemes and managed TA projects for agri-SMEs that work with smallholder farmers. I have also been extensively involved in AgDevCo’s gender work over the years. I work closely with our specialist teams to ensure that our projects mainstream gender and climate resilience considerations and, where relevant, include targeted gender and climate resilience initiatives.
AgDevCo recently received US$ 90 million in funding towards its investment activities in sub-Saharan Africa. How is this funding expected to address agri-SMEs?
Securing US$ 90 million in new funding was a major milestone in the company’s history. It represents a 50% increase in the capital that we can deploy. The new funding demonstrates investor confidence in AgDevCo as a specialist investor in African agriculture and enables us to expand our investment activities across sub-Saharan Africa.
We expect to make new investments of US$ 40-50 million per year, with ticket sizes of US$ 3-15 million in the form of mezzanine loans and equity. This will be targeted at medium-sized agri-SMEs in a variety of sectors and crops, including high-value export crops like avocados and macadamias. In the future, we plan to raise concessional capital to allow us to make smaller investments of less than US$ 2 million in earlier-stage companies. This is where AgDevCo started out a decade ago, and our experience is that the economics in this part of the market can be particularly challenging for investors because of the high transaction costs.
In addition to the new investment capital, CDC, Norfund and the UK’s FCDO have provided supplementary funding of US$ 5.4 million for our integrated TA Facility. We plan to use this to support our investees to strengthen their ESG practices and develop smallholder out-grower schemes that mainstream climate resilience and gender equality considerations, among others.
Please tell us about AgDevCo’s technical assistance work.
At AgDevCo, we know that it takes more than capital to build profitable, sustainable and impactful agribusinesses in Africa. Through our Technical Assistance work, we support investee businesses to grow in a financially, environmentally and socially sustainable way. TA funding can both reduce commercial and ESG risks, and maximise the impact of our investees. It also provides an opportunity for investees to learn from each other through the TAF’s knowledge sharing programme which includes publications, webinars and workshops.
In 2021, AgDevCo launched its integrated TAF, which builds on 10 years of experience from the SDU programme in providing “inclusive business support” such as linking small-scale farmers to transparent markets that pay fair and premium prices or digitalizing value chains to improve traceability. The TAF also integrates “core business support” to AgDevCo investees like improving their financial systems and ESG performance. Where we can, we support the development of local markets for TA delivery by collaborating with local consultants.
We track the Key Performance Indicators of each TA project to assess the effectiveness of these interventions and share any lessons learned with our investees as well as the wider TA and impact investment communities. For selected projects, we also conduct detailed impact assessments.
Through SAFIN, AgDevCo benefits from the experiences and lessons learned of other organizations operating at the intersection of investment and technical assistance.