Malawi-focused agriculture company, Jacoma Estates, has received a US$11.5 million investment comprising US$3.5 million in structured debt from social impact investor AgDevCo, and US$8 million in equity from CDC, the private sector arm of the UK state department for development.
Jacoma produces macadamia nuts, chilli and paprika. The joint investment from AgDevCo and CDC is meant to grow its farming operations through improved irrigation at its Tropha Estates in Northern Malawi. Around 100 hectares of irrigation could be opened up to more than 4000 local smallholder farmers, who each year struggle to capture reliable crop yields.
Daudi Lelijveld, CDC’s investment director, said CDC’s investment in Jacoma would combine the benefits of agricultural growth in Malawi with a reduction of poverty.
He said: “Jacoma plays a vital role in Northern Malawi, providing good quality jobs, as well as new markets for local farmers.”
Around a thousand local farmers can be expected to connect to export markets as a result of the increased crop output. Farmers can also take advantage of a scheme set up by Jacoma that provides them with yield-boosting seeds. Another recently received investment of US$500,000 from the African Agriculture Capital Fund could allow Jacoma to add around 350 new jobs, and improve farming practices around agricultural resilience to climate change.
In 2014, AgDevCo provided a US$2 million loan to Tropha Estates, which allowed Jacoma to begin irrigating its farm in northern Malawi and seed an additional 370 hectares of macadamia trees. The company is now nearing the completion of a factory that will process macadamia nuts, adding value to the exported product.
“The majority of SMEs are too big for microfinance but not large enough to access capital from private equity funds or development finance institutions. We address the ‘missing middle’ gap,” Chris Isaac, director of investments and business development for AgDevCo, told Development Finance.
AgDevCo’s other investments in Malawi include the country’s production of sugarcane and groundnuts. So far, AgDevCo has committed US$10 million to small and medium-sized Malawian agribusinesses, and plans to deploy another US$12 million over the next three years.
CDC’s investment meanwhile also comes with a technical assistance grant to bring Jacoma’s practices in sustainable agriculture and social management in line with international standards.