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Private Sector Development in Agriculture:
Tracking the developmental performance of investments for smallholder farmers.
By David Priest - [email protected]
By David Priest – Consultant to African Agricultural Capital (AAC)
3rd December, 2008
David Priest - [email protected] www.aac.co.ke
Gatsby Charitable Foundation
• Established: in 1967 by David Sainsbury
• Endowment: £580M
• Annual spend: £50M pa - £6M in Africa.
African Agricultural Capital (AAC)
Investment fund established in 2004
Shareholders: Gatsby Charitable Foundation, Rockefeller Foundation Volksvermogen
Purpose:To invest in agricultural businesses in Kenya, Uganda, Tanzania
• positive financial returns (12 % gross)• affordable and flexible capital• development impact on smallholder farmers
Fund size: 8 million USD
Deals: 16 investments of 100,000 – 1,000,000 USD
David Priest - [email protected] www.aac.co.ke
Smallholder Farmers
Why support smallholder farmers ?
• Agriculture 1/3rd of GDP, 2/3rds of labour
force
• Under-supported – 4% public spending
• Twice as effective at reducing poverty as growth in
non-Agriculture sectors
Who is smallholder farmers ?
•
generally 1\4 - 2 ha,
certainly < 5ha
David Priest - [email protected] www.aac.co.ke
Avocados Poultry Seed
Palm Oil Real IPM Vanilla
HybridSeed
Seed
Developmental Performance System
Little Time / Resource
Realities of Business Situation•½ hour to 1 day•What data is available?
Where? How?• FAO, IFAD, DFID, • IFC, Commonwealth Development Corporation• Acumen• Incofin, PSOM
Cheap & Simple`Investment team are making better decisions`
David Priest - [email protected] www.aac.co.ke
To develop a system for investees to report their own developmental impacts.
Adapted Incofin Modelby David Dewez
1. Mission & Vision (5)
2. Company Viability & Growth (9)
3. Market & Competition
(12)
4. Job Creation & Quality (12)
5. Smallholder Engagement (50)
6. Community & Environment (12)
David Priest - [email protected] www.aac.co.ke
Dimensions
David Priest - [email protected] www.aac.co.ke
David Priest - [email protected] www.aac.co.ke
Reporting of Data - Comparison
by David Priest from 18 - 27 February 2008
Overall score /100Mission & Vision /5 3.0 /5 0.0 /5 4.0 /5 2.0 /5 4.0 /5 4.5 /5Economic & Market 1.0 /5 1.6 /5 3.0 /5 2.5 /5 2.9 /5 2.6 /5Job Creation & Quality /5 2.2 /5 2.3 /5 2.3 /5 2.7 /5 3.5 /5 4.3 /5Smallholder Engagement /5 1.0 /5 3.0 /5 2.8 /5 2.8 /5 3.3 /5 1.3 /5Training and Capacity /5 4.0 /5 2.3 /5 4.0 /5 4.0 /5 3.3 /5 4.2 /5
AAC InvestmentTurnover (USD)Expenditure (local)
Jobs Created (direct)
Smallholders
Employees trained
DEVELOPMENTAL IMPACT REPORT: COMPARISON
Mission & Vision
Company Viability & Growth
Market & Competition
Job Creation & Quality
Smallholder Engagement
Community & Env ironment
0
1
2
34
5
Mission & Vision
Company Viability & Growth
Market & Competition
Job Creation & Quality
Smallholder Engagement
Community & Env ironment
012345
Poultry
Seed2
Mission & Vision
Company Viability & Growth
Market & Competition
Job Creation & Quality
Smallholder Engagement
Community & Env ironment
0
1
23
4
5
Seed4
Mission & Vision
Company Viability & Growth
Market & Competition
Job Creation & Quality
Smallholder Engagement
Community & Env ironment
012345
Real IPM
Mission & Vision
Company Viability & Growth
Market & Competition
Job Creation & Quality
Smallholder Engagement
Community & Env ironment
0
1
2
34
5
Honey- new
Mission & Vision
Company Viability & Growth
Market & Competition
Job Creation & Quality
Smallholder Engagement
Community & Env ironment
012345
Plant Product Export
Challenges:
General
Consensual • Assumes information provided is true• Not independent• Reluctance to search for historical information
Absence of baseline data
Time lag till impact realised
Impressionistic/ repeatability
Impact of Investee not Impact of Investment
Expensive to monitor
Market & Competition
Little knowledge of competition
Smallholder EngagementHow to define smallholderLittle direct contact with farmers
1. Before Investment• Agree with investee• Collect baseline data• Set developmental targets• To be considered by investment
committee
David Priest - [email protected] www.aac.co.ke
2. Routine Reporting by Investee• Annual reporting extending two years• Investment managers and board nominees – follow up
3. Independent M&E Exercise
Link Bonuses / Interest on Loans
to Social Returns on Investment
Thanks to
Tom Adlam (CEO) [email protected] Ssemukaaya Patrick Ndagu
Joe Devries (Rockefeller/ AGRA)
Walter Vandepitte
Justin Highstead (Gatsby)
David Dewez (Incofin)Julian Bolt (PSOM, EVD)
Investees
David Priest - [email protected] www.aac.co.ke
