28 June 2022
Alliance for Bioversity and CIAT project on Agriculture Investment Cases in West Africa (https://alliancebioversityciat.org/)
FACS is pleased to announce that work on impact investment in the agricultural sector in West Africa has been completed. The project implemented in partnership with Alliance of Bioversity and CIAT sought to provide insights on investment landscape in West Africa by identifying key investment pipelines for agricultural financing, assessing the dynamics of impact investing, and determining best fit Climate Smart Agriculture (CSA) related investments in the sub-region. The countries selected for this project were Ghana, Nigeria, Mali and Senegal.
Achieving the 2030 Agenda for Sustainable Development and the Sustainable Development Goals requires an estimated USD 5 trillion to 7 trillion in yearly investments (UN Global Compact, 2019). For developing countries, this translates into an annual investment gap of about USD 2.5 trillion required for meeting these goals. To facilitate access to capital in the developing countries, several Development Finance Institutions (DFI’s), philanthropic foundations, and mainstream private investors continue to establish and accelerate the creation of impact funds aimed at addressing problems through direct investments and technical assistance.
To understand better the agricultural impact investment landscape in the aforementioned countries, FACS studied the deployment of impact investments in various agricultural value chains. The FACS team analyzed the financial instruments used in disbursing funds and investment business models employed. It was realized that the investment business models utilized were designed to de-risk the investments as operating in a rather young capital market has proven overtime to have high risks. Direct investments were the focal point of investment analysis in this project. FACS scoped several impact investors and industry players including Sahel Capital, FMO and IFAD who have deployed impact investments in various value chains.
This project was necessitated by the increase in impact investments in the sub-region and the need to assess value chains where investments will yield the greatest impacts and returns. It was found in general that the larger economies, Ghana and Nigeria, which are also Anglophone, received more impact investments in comparison to Francophone Countries. However, the advantage Francophone countries enjoy is the stability of the currency due to its pegging with the Euro and their membership of the West African Economic and Monetary Union (WAEMU).