Namanga Ngongi and Hugh Scott

Guest Post: Africa Enterprise Challenge Fund’s Competitions Focusing on Agribusiness, Climate Change

Editor’s Note: This post was originally published on Business Fights Poverty and has been reposted here with permission. To hear audio of the announcement event and to access presentations, click here.

The Africa Enterprise Challenge Fund (AECF), which invests in businesses wishing to implement commercially viable and high development impact projects in Africa, is launching three new competitions to spur business innovation and investment in: agribusiness development across Sub-Saharan Africa; renewable energy and adaptation to help small farmers in East Africa to adapt to climate change; agri-business development in South Sudan.

Through an open and transparent “competition” for investment support in the form of grants and interest free loans, AECF co-invests alongside companies looking to implement innovative business ideas that are both commercially viable and also create opportunities for the rural poor.

A growing number of companies and entrepreneurs supported by AECF are showing that investing in agriculture and associated sectors can deliver significant business benefits and opportunities. AECF wants to back more businesses with great ideas, whether this be large companies looking to strengthen their supply chains, or small companies and start-up entrepreneurs launching new product or service innovations.

At the same time, AECF is looking for high development impact. Agriculture is a powerful driver for growth and poverty reduction. It is also a sector extremely vulnerable to climate change. Sub-Saharan Africa´s population is predominantly rural (70 percent). Agriculture employs 60 percent of the working population in the region, and generated 32 percent of GDP growth in 2008. According to the World Bank, economic growth in the agriculture sector is at least twice as effective at reducing poverty as growth in other sectors.

Speaking at an event in London to launch the new competitions, which are being funded by DFID and the Danish government, Rt. Hon Andrew Mitchell MP, Secretary of State for International Development said: “Stimulating economic growth is the surest way to help people pull themselves out of poverty. Unlocking the creativity and dynamism of the private sector will help to create thousands of jobs in the poorest countries. To businesses I say this: we will support you to grow and move into new markets if you can prove that you will help improve the livelihoods of the poorest. Africa is booming, with predicted growth of 6 percent next year. Our aid will help ensure the poorest are not left behind. This will help Britain as well, opening up new markets and trading partners for British goods.”

The AECF’s three new competitions are open for applications from Oct. 15 2011 to Dec. 13 2011 and interested companies should visit the AECF website to download the initial application form.

Applications are assessed during competitive rounds which each have their own entry criteria. AECF provides grants and interest free loans from a minimum of US$100,000 for the South Sudan Window, and from a minimum of US$250,000 for the Africa Agribusiness Window and REACT Window. For all three, the maximum is US$1.5 million per project. Applicants must provide matching funds at least equal to the amount requested from the AECF.

Since June 2008, the AECF has run 11 competitions, resulting in 87 projects being approved for funding. Some examples include a project in South Sudan with SABMiller to introduce an innovative local sourcing model for cassava that will bring significant long-term market opportunities for small farmers, while providing SABMiller with a reliable supply of cassava at the right quality and cost.

In Nigeria, AECF has invested in Monitise to provide mobile banking and payment services to enable the rural poor, and others, to gain access to secure and reliable financial services without the necessity of having a physical banking infrastructure. In Kenya, AECF has supported Virtual City, a technology company that aims to improve the dairy value chain and increase farmer incomes by providing reliable and accurate information to improve milk production and increase milk deliveries to processors.

The AECF is a US$150 million fund backed by leading donors including DFID and hosted by the Alliance for a Green Revolution in Africa (AGRA). It focuses exclusively on supporting private sector projects and enterprises in Sub-Saharan Africa.

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