

Early stage funding for any agriculture project can be tough but the world’s development finance institutions should step up and do more, writes Paddy Docherty, chief executive of Phoenix Africa Development Company.
It has taken a couple of years of hustling for finance, but Phoenix Africa is now gaining capital commitments for Lion Mountains, our agriculture startup in Sierra Leone; although we still have some way to go, my expectation is that we will finally start work on the ground this autumn. It has been a long and winding road, and while nobody would expect it to be easy to create a new business in a post-conflict country in Africa, it has been harder than it should be, for one particular reason.
Having been through this fraught process, I feel strongly that the Development Finance Institutions (DFIs) should be doing a great deal more to invest early and to ensure that projects like Lion Mountains get off the ground: we tick every single box they have for social impact and operational standards.
As everyone knows, getting the first million or two in place is exceptionally challenging, especially when the project is based in a developing country, with the added perceived risk. The DFIs exist precisely to help overcome that obstacle, and to promote the creation of businesses that will provide jobs and inject investment into local economies, thereby having the development impact that they are seeking. However, at present the DFIs (and their multilateral cousins in the region and globally) are simply aping the conservative investment practices of regular investors, and therefore failing to deploy capital where it is needed in a sufficiently timely manner. This means that they are not in fact achieving quite the development impact or catalytic effect that they would like to.
We have spoken to all the DFIs in our quest for finance for Lion Mountains. With next to no exceptions, we have had highly positive feedback on our project from DFIs who then went on to say that they would look at committing later on in the fundraising process, once we are established.
We are thus in the slightly curious position of getting in some of the most aggressive forms of investment first (i.e. private equity), with the DFIs likely following on later. Of course, I don’t really care where the money comes from as long as we have what we need to start work, but many people would say that this is the wrong way round… Moreover, if the DFIs are largely replicating the behaviour of private investors (and doing it less effectively, given their bureaucratic ways), there is a serious question remaining about whether they should continue to command such large pots of public money.
Phoenix Africa remains extremely keen to work with the DFIs since we share many of the same goals of commercialising development and achieving a social impact. However, we strongly urge them to adjust their investment appetite and to embrace startups – this is the only way that they will have a truly transformative impact, and can help create a pipeline of new companies that private investors will then grow into major players.