The African Green Revolution Forum held in ‘’Wakanda-like” Kigali in the first half of September 2018, delivered on many fronts. 2,800 people came, from businesses, governments, institutes, international organisations, investors, civil society organisations and more. It served up a huge variety of opportunities: networking, new topics such as a pitching competition for youth entrepreneurs, a deal room to link investors and investees, and nutrition sensitive agriculture.

I could say more positive things about the conference: for instance, how a high-level leadership agenda for performance on agricultural transformation is steadily building momentum, as told by President Kagame of Rwanda and President Akufo-Addo from Ghana, amongst others (though admittedly, this advancement of this agenda did not quite meet the practical hopes I laid out in my last blog.) I could elaborate how interesting it was in a private lunch to hear Tony Blair and Hailemariam Desalegn (former UK and Ethiopian Prime Ministers respectively) discuss useful tools to help lead governments for performance on agriculture and ending hunger, to a room full of ministers of agriculture and international organisations.

But in reality, the most exciting conversation I had was in the back of a minibus. I was returning from the conference venue to my hotel. It was the most inspiring because I felt a connection between what I learned with making real things happen on the ground in across the continent.

I’ve been steadily learning about the gap in the pipeline that exists for institutions wishing to invest in agribusiness in Africa. Wasafiri’s review of the DFID £100m support for AgDevCo, carried out in 2017, provided grounded insight into the challenges and progress made. A steady increase in the supply of investment $s from investor institutions with diverse interests, far outweighs the number of ‘investment ready’ SME businesses that produce, process and bring to market nutritious food across Africa. A greater number of agribusinesses could benefit, but investors compete with each other to invest (and often co-invest) in a relatively small pool of larger, investment-friendly businesses. Investment is skewed towards faster growing countries like Kenya, Rwanda, Ethiopia and Senegal, with other countries remaining marginalised, struggling to find access to finance.

The result is wasted opportunity, as many potential investors are surveying the landscape and struggling to land investments. For example, those on the look-out include the African Development Bank as part of its Feed Africa strategy, and a scale-up of investment funds in agribusiness is also part of the UK government’s growing commitments through the Commonwealth Development Corporation.

To create bigger future investment opportunities, a much greater number of smaller agribusinesses must be invested in the next five years. Currently though, because larger investments require virtually as much due diligence assessment (cost in), but typically less hand-holding over time and can provide better returns, it isn’t surprising that few commercial investors have a model that provides large numbers of lower-value investments. Stakeholders are collectively failing to create a pipeline for future investment.

The challenge has two parts:

• Building knowledge around how the investment supply mismatches with investment demand: too many large institutions invest at higher value levels of investment ($3m-$10m) and too few invest at low levels (<$1m).
• Encouraging collaboration across the ecosystem between investors to fix the pipeline challenge, probably by creating the means to invest in greater numbers of agribusiness SMEs with smaller volumes ($100,00 – $1m)

This issue really matters now, when African leaders are becoming increasingly committed to agricultural transformation, ending hunger, and creating jobs for hundreds of millions of future African people.

But with what financial and technical support do the 10,000s of agribusiness entrepreneurs that are needed in countries throughout Africa reach a threshold of investment at or above $2-3m? I learned in the Kigali minibus how one German-based investment business, GreenTec Capital Partners, is making commercial investments at a lower value (typically investing between $100,000 and $1m) and thereby building the pipeline for others higher up the chain. This lower value of investment is not their CSR agenda, but is the company’s core commercial business. They provide investment financing, but perhaps more importantly, provide high quality business management support over a substantial period, prior to and during the investment period. Yet like many great market leaders it lacks the necessary scale for large-scale impact, despite their best efforts to grow. I am inspired by their market leading model and feel this approach could be spread more widely across Africa to support the tens of thousands of businesses, that are needed to transform Africa’s future economies and national food systems in the years ahead.

With Africa’s thirst for job creation, youth entrepreneurship, migration and conflict prevention, the incentives to get this right are strong. A thriving investment pipeline for agribusinesses of all sizes is a part of the solution. Despite the valuable discussions at the AGRF, I am not aware of multi-stakeholder collaboration among some of the major actors to advance the issue. A new collaboration and set of models appear to be needed soon, that can deliver investments in new ways to many thousands of businesses to achieve growth, improved productivity and better (nutritious) food systems in Africa. If I can’t see the creation of the partnerships necessary, maybe it is up to me to point this out, learn a bit more and see what can be done…I’d be interested in your thoughts!