MICROCAPITAL BRIEF: Bill & Melinda Gates, Gatsby Charitable, Rockefeller Foundations and JP Morgan Invest $25m to Establish African Agricultural Capital Fund

Several members of the Global Impact Investing Network (GIIN), a US-based nonprofit organization dedicated to increasing the effectiveness of market-based solutions to social and environmental problems, together with the United States Agency for International Development (USAID), a government agency that provides international economic and humanitarian assistance, have created the African Agricultural Capital Fund (AACF), which is intended to boost Africa’s agriculture sector. The Bill & Melinda Gates Foundation, the Gatsby Charitable Foundation and the Rockefeller Foundation have supported the fund through a combined USD 17 million equity investment; the breakdown of the investment among the three foundations is unavailable. Additionally, USAID’s Development Credit Authority is guaranteeing 50 percent of an USD 8 million loan from JP Morgan’s Social Finance Unit. The fund is intended to boost small and medium-sized agricultural enterprises in sub-Saharan Africa.

Pearl Capital Partners (PCP), an African agricultural investment fund manager based in Kampala, Uganda, will be the manager of the newly created fund. PCP plans on investing the money in 20 agriculture-related businesses in East Africa, with the aim of increasing the capacity of the local management teams to generate both strong financial returns and significant social impact. PCP manages USD 46 million in funds to support agribusinesses in Africa as of September 2011.

USAID established the Development Credit Authority as a means of using credit guarantees to cover up to 50 percent of loan losses made by financial institutions to poor borrowers. USAID offers a suite of resources aimed at improving the outcomes of microenterprise development research and practice at http://microlinks.kdid.org/.

By Cameron Milani, Research Associate

About the United States Agency for International Development: The United States Agency for International Development (USAID) is a government agency that provides international economic and humanitarian assistance. It focuses on areas such as economic growth, agriculture, trade, health, democracy, conflict prevention and humanitarian assistance. Under the Development Credit Authority (DCA), it provides credit guarantees that cover up to 50 percent of defaults on wholesale loans made by private financial institutions to lenders to underserved borrowers. The proposed USAID budget for 2011 is USD 18.8 billion.

About The Rockefeller Foundation: The Rockefeller Foundation is an organization that was created in 1913 with the mission of promoting the well-being of humanity. The foundation works to overcome social, economic, health and environmental challenges; it also seeks to promote growth that offers poor and vulnerable people more access to opportunities that can improve their lives. The Rockefeller Foundation has offices in Kenya, Thailand, Italy and the United States, and its total assets stand at a little over USD 3 billion.

About the Bill & Melinda Gates Foundation: Guided by the belief that every life has equal value, Bill Gates, Melinda Gates and Warren Buffet frame the work of the Bill and Melinda Gates Foundation around devising strategies to meet specific goals. In developing countries, the foundation focuses on improving people’s health and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to ensure that all people, especially those with the fewest resources, have access to the opportunities they need to succeed in school and life. The foundation has USD 36 billion in assets as of June 2011.

About The Gatsby Charitable Foundation: The Gatsby Charitable Foundation, whose capital has been provided by founder David Sainsbury, typically gives grants in the fields of science and engineering education, plant science, neuroscience, poverty alleviation in Africa, the arts and public policy. The foundation was created in 1976. The amount of assets it holds is not available.

About JP Morgan: JP Morgan is involved in investment banking, consumer financial services, small-business and commercial banking, financial transaction processing, asset management and private equity. A component of the Dow Jones Industrial Average, JP Morgan Chase & Company serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients. JP Morgan operates in approximately 60 countries and has assets of USD 2.2 trillion. In 2000, Chase Manhattan Bank acquired JP Morgan, making the company the investment arm of JP Morgan Chase.

About Pearl Capital Partners: Pearl Capital Partners is an African investment fund manager that finds, raises and manages capital to invest across agricultural value chains with the aim of boosting smallholder farm productivity and offering smallholders improved access to markets. PCP manages USD 46 million in funds to support agribusinesses in Africa as of September 2011.

About the Global Impact Investing Network: The Global Impact Investing Network (GIIN) is a nonprofit organization based in New York City that is dedicated to increasing the effectiveness of impact investing, which it defines as for-profit investment intended to solve social and environmental problems. GIIN consists of 43 impact investors that work to increase “the level and effectiveness of capital that is supporting market-based solutions to social and environmental problems.”

Sources and Additional Resources:

MarketWatch, “USAID and Impact Investors Capitalize new Equity Fund for East African Agribusinesses” http://www.marketwatch.com/story/usaid-and-impact-investors-capitalize-n

MicroCapital Universe Profile: United States Agency for International Development, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+States+Agency+for+International+Development+%28USAID%29

MicroCapital Universe Profile: The Rockefeller Foundation, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=The+Rockefeller+Foundation

MicroCapital Universe Profile: Bill & Melinda Gates Foundation, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bill

MicroCapital Universe Profile: The Gatsby Charitable Foundation, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Gatsby+Charitable+Foundation

MicroCapital Universe Profile: J.P. Morgan, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=J.P.+Morgan

MicroCapital Universe Profile: Pearl Capital Partners, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Pearl+Capital+Partners

MicroCapital Universe Profile: Global Impact Investing Network, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Glo

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