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Annual Report

Annual Report & Financial
Statements for Year Ended
30th June 2010.

Find the full report here

AAC's Vision

To improve the livelihoods of small-holder farmers in East Africa

AAC's Mission

To be a leading agribusiness-focused investment fund in Africa that delivers positive financial returns to its investors, supports its investees through the provision of affordable and flexible capital, and has a high social and development impact on smallholder farmers and rural economies, thereby encouraging greater investment in the agriculture sector.
Africa Seed Investment Fund (ASIF)
Friday, 08 May 2009 06:35
African Agricultural Capital (AAC) is the investment manager for ASIF. AAC, which was established in 2005, has developed specific expertise in investing in the agriculture sector in sub-Saharan Africa.

Objectives

  1. To provide affordable and flexible risk capital to seed companies operating in agriculture value chains in eight countries in eastern and southern Africa (Ethiopia, Kenya, Malawi, Mozambique, Rwanda, Tanzania, Uganda and Zambia) to improve the delivery of quality certified seed to smallholder farmers.
  2. To provide business development support to build healthy, long-term viable businesses that can attract additional capital to the seed sector.

Strategic focus

  1. Investment in businesses with committed and competent management with the vision and desire to grow the business
  2. Focus on early stage businesses where risk capital is needed and where high long-term investment returns can be generated
  3. Leveraging of ASIF's funds and capacity through active cooperation with other investors active in the region and the sector
  4. Establishment and maintenance of strong relationships between the investee companies and ASIF through the provision of active and relevant business management expertise

Investment criteria

Invest in business principally engaged in the provision of seed or vegetatively propagated products for delivery to markets within ASIF's geographic area, where investees are able to demonstrate that their products are delivered to a significant number of smallholder farmers.

Investees will be required to satisfy three additional investment evaluation criteria (exceptional under circumstances):

1. Enterprise criteria
  • Segment and market growth
    Growth trend shown in historic and forecast demand volume
  • Competitive advantage
    Regionally competitive cost of production
    Product quality matching or exceeding regional industry standards
  • Stable prices
    Increasing or stable forecast product prices

2. Performance criteria
  • Track record
    Minimum one year audited financial record
    Positive reputation with banks, suppliers and customers
  • Management team
    Entrepreneurial quality
    Professional and technical skills present in management team
    Continuity: low management and workforce turnover
    Team approach: not excessively reliant on one or two individuals
  • Growth plan
    Well-researched and realistic marketing plan
    Defensible business assumptions
    Appropriate risk-sharing financial structure
    Proper and achievable implementation plan

3. Developmental criteria
  • Social impact
    Overall job creation resulting from growth plan
    Skill development in rural communities
    Equal opportunities by age, gender and health status
  • Economic impact
    Benefits from economic growth accruing to rural communities
  • Enviromental impact
    No adverse environmental impact
For qualifying businesses, AAC will design appropriate investment instruments in consultation with the investees. The investment instruments will include but not limited to equity participation, term loans or a variety of intermediate quasi-equity instruments tailored to the specific financial requirements of the business. AAC will apply best fund management practice to ensure that investees achieve the set investment objectives.

Early stage and sub-scale businesses


AAC recognises that a number of early-stage seed businesses may not be eligible for investment under the proposed investment criteria above. We have therefore earmarked up to $1 million for small investments of between $50,000 and $150,000, specifically for capital investment in small (normally early-stage) businesses with high potential.

Target beneficiaries


ASIF's target beneficiaries are poor farm families. ASIF expects to achieve a demonstrable and measurable positive impact on poverty alleviation in the region, primarily through increasing household income levels, either through direct employment creation or through linkages to smallholder farmers. ASIF's approach is to reach these beneficiaries through its investees. ASIF will work with entrepreneurs who are building successful seed companies that:

- Create direct employment in poor rural areas, especially of women; who are more conscientious workers and who have the greatest impact on the livelihoods of their families.
- Provide quality seed inputs to smallholder farmers, thereby allowing them to increase yields and quality of production.