Unlocking markets to speed up development

15 January 2014

By Nadia Martinez, Farm Africa's Country Director for Kenya and South Sudan 

As the Cracking the Nut conference was winding down today, I was forced to make choices between equally relevant sessions and competing speakers. I decided to stick with the third cross cutting theme of the event: Enticing Investors to Key Agricultural Value Chains. This is such an important topic. Africa needs investment. Investors are increasingly interested in the region, and the agricultural sector in particular is attracting attention as an area where investment can have significant impact, both financial and in terms of achieving development objectives.

During a session by an investment brokerage company on profiling investors for opportunities in East Africa, I experienced an aha! moment. Farm Africa is experimenting with investment-type approaches to foster rural development and impact thousands of small-scale farmers. This session confirmed my own observations that an abundance of interested investors exist and certainly, good ideas and entrepreneurs abound in Africa. However, investment-ready, bankable businesses are few and far between. The most common constraints include lack of management capacity, weak skills in making a solid business case, cash flow challenges preventing sufficient scale, and even little understanding of the business environment in which these small companies operate: market size, competition, comparative advantage, etc.

Through our Maendeleo Agricultural Enterprise Fund (MAEF), Farm Africa is filling a critical role by providing modest amounts of funding, accompanied by capacity building support to businesses that need that small push to get to the level where investors or banks can engage with them. It’s about creating a pipeline of bankable deals. We are doing this by identifying and making those “market-unlocking” investments that have the potential to speed up development and bring about prosperity for thousands, even millions of people.   

The speaker agreed that there is a vital need for organizations like Farm Africa to work with small agribusinesses to make them “investment ready”. In a market setting, these are the companies that can specifically meet the needs of smallholders.  

Read more about Nadia's first day at the conference in her earlier postcard.