Voxtra East Africa Agribusiness Fund (www.voxtra.org), a Norwegian social investor, has completed an inaugural investment of US$1.5 million in Mtanga Farms Limited (MFL), a commercial farm in Tanzania which grows seeds, crops and livestock. This is first of Voxtra’s target of 8 to 10 investments targeting companies with pivotal roles in improving the livelihoods of smallholder farmers. The adviser for MFL was the UK’s Lion’s Head Global Partners (www.lhgp.com).
MFL is an integrated agri-business based in Iringa, Tanzania. Its farms on 2,600 hectares of land that was previously farmed but had been long neglected in 2009, when MFL secured its long-term lease of the land. It has made progress in rehabilitating the land and putting in place essential infrastructure. The focus is on high-value seed crops, centred around setting up a seed potato operation providing clean seed potatoes to smallholder farmers across Tanzania. It also works in protein including growing animal feed, livestock breeding and downstream processing of meat. The company is run by a dedicated team of farmers and business developers, and is now recognized as the leading integrated farming operation in the Southern Tanzanian Highlands. Core to the company’s strategy is the provision of improved seed material to local smallholder farmers.
Voxtra’s investment will enable MFL to take its seed potato business to a commercial scale, triple its farmed acreage and significantly ramp up its expanding livestock operation.
Leading impact investors
Several leading impact investors are backing Mtanga Farms, including Thirty Degrees East (Mauritian investment company), Lion’s Head Global Partners, Calvert Foundation (US), Nigerian investment firm Heirs Holdings and its philanthropic arm, The Tony Elumelu Foundation, as well as the African Enterprise Challenge Fund.
African green revolution
According to a LHGP press release: “African agriculture needs a green revolution that is powered by an emerging class of sustainable small and medium enterprises. SMEs are best placed to increase local food production and integrate local farmers into value chains and create employment.” Kim Wahl, Chairman of Voxtra, said: “MFL is a prime example of a business whose commercial success goes hand-in-hand with its social impact. The company is already playing a catalytic role in transforming potato farming in Tanzania, and we are excited about this opportunity to help grow the business.”
In partnership with the Tanzanian Government, MFL recently announced the registration of 4 new potato varieties – the first varieties to be released in Tanzania in 30 years. Whilst potatoes are a major cash and food crop for Tanzanian smallholder farmers, the lack of clean seed material has long been a major impediment to farmers’ productivity. MFL’s clean seed potato will enable a tripling of smallholder farmers’ yields: whereas the national average potato yield is 5-7 tonnes/ha, smallholders have demonstrated yields of 15-20 tonnes/ha when planting clean seed. By scaling up its production of clean seed potato, MFL will provide a pathway out of poverty for a sector employing an estimated 150,000 smallholder farmers.
Voxtra intends to make use of its technical assistance facility – funded by the Norwegian Agency for Development Cooperation (NORAD) – to evaluate, support and increase the social impact made by MFL.
About the investors
The Voxtra East Africa Agribusiness Fund invests growth capital in commercially viable but capital-constrained agribusinesses that play pivotal roles in improving the livelihoods of smallholder farmers. First closing was on 9 November 2011, at NOK 65m (approximately US$12m). Among the shareholders are institutional investors such as Norfund, Grieg International and Kavlifondet, as well as private individuals in Scandinavia.
Lion’s Head Global Partners is a UK-based merchant bank, offering financial advice and fund management with a focus on emerging markets and Africa. For more information, visit www.lhgp.com.
Thirty Degrees East is a private Mauritian-based investment company focused predominantly on East Africa and South Africa.
The Calvert Foundation provides impact investment opportunities that aim to bring a financial return to investors and a social benefit to low-income communities in the U.S. and around the world. A pioneer in the impact investment field, Calvert Foundation investors have created over 528,000 jobs, built over 20,000 affordable homes, and financed over 27,000 non-profit facilities and social enterprises through investment in the Community Investment Note. Learn more at www.calvertfoundation.org.
Heirs Holdings is an African proprietary investment company with a long-term investment horizon in key economic sectors that can propel Africa’s economic development. Heirs Holdings is committed to the economic transformation of Africa through investments that create both economic prosperity and social wealth. For more information, visit www.heirsholdings.com.
The Tony Elumelu Foundation is an Africa-based and African-funded not-for-profit institution dedicated to the promotion and celebration of excellence in business leadership and entrepreneurship across Africa. As a 21st century catalytic philanthropy, the Foundation is committed to the economic transformation of Africa by enhancing the competitiveness and growth of the African private sector. Founded in 2010 by Tony O. Elumelu, MFR, the Foundation identifies and addresses systemic challenges that inhibit African entrepreneurs. For more information on The Tony Elumelu Foundation, visit www.tonyelumelufoundation.org, follow us on Twitter @TE_Foundation or like The Tony Elumelu Foundation Facebook page.
The Africa Enterprise Challenge Fund (AECF) invites private sector companies to compete for investment support for their new and innovative business ideas in agri-business, rural financial services and renewable energy. To qualify for AECF funding, a business idea must have a positive impact on the rural poor in Africa, delivering increased employment, reduced costs, and improved productivity. The AECF runs competitions open only to for-profit-companies. For more information on the AECF please visit www.aecfafrica.org or email firstname.lastname@example.org.”