CDC, the UK’s development finance institution, and impact investor AgDevCo have invested $11.5 million in Jacoma Estates Group, a Malawian farm operator.
The financing includes $8 million of equity from CDC, while AgDevCo provided the remaining $3.5 million in the form of debt and preference shares.
The funds will be used to help Jacoma expand farming operations at its Tropha Estates in Northern Malawi, where it produces high value macadamia nuts, chilli and paprika, and will provide up to 100 hectares of year-round irrigation to local smallholder farmers, according to a joint announcement from the parties involved.
“With investment in irrigation and processing we can help the country further build a globally competitive macadamia industry,” said Duncan McDavid, CEO of Jacoma. “Smallholders can play an important role in the value chain. This will in turn give their families a reliable source of income.”
AgDevCo is a social impact investor and project developer focused on Sub-Saharan Africa. The company provided a previous $2 million loan to Tropha Estates in 2014, which alongside equity from the founding shareholders helped Jacoma install irrigation systems, plant an additional 370 hectares of macadamia trees and build a macadamia processing factory on-site, which is nearing completion.
The new financing is expected to create at least 350 new jobs and enable 1000 local farmers “to reach export markets and benefit from a company scheme that provides yield-boosting seedlings and other agricultural inputs,” according to the announcement.
“Jacoma plays a vital role in Northern Malawi, providing good quality jobs, as well as new markets for local farmers,” said Daudi Lelijveld, CDC’s investment director.
Tropha’s current outgrower program for chillies and paprika engages with over 4,000 smallholder farmers, providing seeds and training to farmers who purchased 540 tonnes of their produce over the past three years, injecting more than $900,000 into the local community through sales to clients in South Africa and Europe.
Grant support from AgDevCo’s Smallholder Development Unit, backed by the MasterCard Foundation, will expand the program to include macadamia, distributing over 50,000 seedlings through 2017. CDC is providing an additional technical assistance grant that will initially support Jacoma’s environmental and social practices.