The International Fund for Agricultural Development has launched a €200m impact fund to scale agribusiness in developing countries.

First commitments of €50m to the ABC Fund came from the European Union, the African, Caribbean and Pacific Group of States, the Luxembourg Government and the Alliance for a Green Revolution in Africa.

IFAD contributes to the Technical Assistance Facility that will support the fund.

The ABC Fund will use first loss capital to catalyse additional funding in the vehicle, which will deploy loans and equity investments in rural SMEs and financial institutions in developing countries.

The first loss capital de-risks investments and mobilises follow-on funding – which is a perennial challenge for viable businesses seeking financing in developing countries. 

Further senior share commitments to the ABC Fund will be used to supplement the first loss capital in the form of blended finance – a combination of public and private sector capital.  

Bamboo Capital Partners in the fund manager of the Fund, whereas Injaro Investments (based in West Africa) is the local fund manager of the ABC Fund. 

Jean-Philippe de Schrevel, Founder and Managing Partner of Bamboo, said: “The launch of the ABC Fund is a momentous milestone for the impact investing industry. The support of organisations such as IFAD, the EU and the Luxembourg Government, coupled with a launch event at IFAD’s annual Governing Council is testament to the maturity of the industry.” 

“We believe that the ABC Fund has the potential to transform small scale farming in developing countries and we look forward to working with IFAD and Injaro as we strive to realise this vision.”

Initially, the ABC Fund will provide small loans and equity investments to rural SMEs, farmers’ organisations, ‘agri-preneurs’ and rural financial institutions. 

The ABC Fund will provide loans below €5m to local intermediaries and make direct investments below €1m, principally in the form of loans.

Small scale farming is one of the biggest industries in the world, with 500 million small farms and 2.5 billion people relying on small scale farming on a daily basis. 

The demand for impact investing in rural agriculture is growing as investors strive to end poverty and hunger to support the UN’s Sustainable Development Goals. 

The ABC Fund will also focus on creating employment, particularly for young people in Africa, to offer them an alternative to migration.

Jerry Parkes, Managing Principal of Injaro Investments, said: “Injaro is excited to participate in this innovative initiative that actively addresses a long-standing and glaring gap by connecting smallholder farmers in Africa with access to a range of financing instruments.” 

“The lack of accessible and affordable working capital, trade finance and term loans consistently prevents farmers from scaling and addressing their local food security needs. The ABC Fund will support farmers through technical assistance to improve yields and reduce post-harvest losses with the ultimate goal of progressively eliminating hunger on the continent.”