MICROCAPITAL BRIEF: CDC, DFC, Norfund Investing $95m in AgDevCo for Agribusiness in Sub-Saharan Africa

AgDevCo, an investor in smaller agribusinesses in Africa, is receiving a funding package of USD 90 million from three development finance institutions (DFIs): USD 50 million in equity from the UK-based CDC Group, USD 20 million in equity from Norway’s Norfund and USD 20 million in debt from the US International Development Finance Corporation (DFC). The organizations are also providing funding of up to USD 5.4 million that AgDevCo will use to provide technical assistance to its investees.

Vicky Ford, a Parliamentary Under Secretary of State for the UK, said, “This new investment will bring continued growth, by enabling agribusiness SMEs [small and medium-sized enterprises] to expand, improve farmer incomes, create new jobs and strengthen climate resilience across Africa.” DFC’s Head of Global Gender Equity Initiatives, Algene Sajery, added, “DFC’s loan, alongside financing from our partner DFIs, will enable AgDevCo to link more farmers to markets… with a focus on women farmers.”

AgDevCo, which was launched by the UK government in 2009, provides financing and technical assistance intended “to grow sustainable and impactful businesses across the agricultural value chain” in sub-Saharan Africa. As of 2022, it reports 47 placements valued at a total of USD 150 million.

Established in 1948, CDC was formerly known as the Colonial Development Corporation. It issues debt, equity and “fund-of-funds” investments with the aim of fostering growth in “sustainable” businesses to raise living standards in Africa and South Asia. During 2020, CDC reported issuing new commitments worth GBP 1.8 billion (USD 2.5 billion), ending the year with an investment portfolio of USD 6.2 billion.

Norfund invests risk capital in low- and middle-income countries in companies active in the following sectors “clean energy, financial institutions, green infrastructure and scalable enterprises.” During 2020, Norfund issued investments totaling NOK 4.8 billion (USD 540 million), bringing its portfolio to NOK 28 billion (USD 3.1 billion).

DFC was launched in 2020 to “help businesses expand into emerging markets, foster growth and improve lives in the developing world while reinforcing US foreign policy and national security interests.” The organization issues equity placements, insurance, technical assistance and research in sectors such as energy, medicine, infrastructure and technology. Upon its founding, DFC took over the work of the Overseas Private Investment Corporation (OPIC) as well as the Development Credit Authority of the US Agency for International Development. During 2020, DFC brought in net income of USD 232 million, closing the year with assets of USD 12 billion.

By Sheen Gupta, Research Associate

Sources and Additional Resources

CDC press release
https://www.cdcgroup.com/en/news-insight/news/agdevco-secures-90m-of-dfi-funding-to-further-invest-in-african-agribusinesses-to-deliver-jobs-incomes-and-food/?fl=true

AgDevCo homepage
https://www.agdevco.com/

CDC Group homepage
https://www.cdcgroup.com/

DFC homepage
https://www.dfc.gov/

Norfund homepage
https://www.norfund.no/

Norfund financials
https://www.norfund.no/key-figures/

Previous MicroCapital article on CDC
https://www.microcapital.org/microcapital-brief-satisfied-producer-of-palm-oil-in-drc-has-been-brought-back-from-the-brink-dfis-sell-debt-holdings-in-phc-to-maku-funding-to-improve-community-relationships-wil/

Previous MicroCapital article on DFC
https://www.microcapital.org/microcapital-brief-scott-nathan-takes-helm-as-ceo-of-dfc-major-funder-of-microfinance-in-low-middle-income-countries/

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