Agri09 Day IV-Workshop III-Chris Isaac-Infraco

Commercial solutions for smallholder agriculture “Modernising agriculture is crucial to development and industrialisation in Africa, to food security, sustained poverty reduction and integration of Africa in the global economy” (Economic Report on Africa, May 2009).Chris Isaac, Corporate Executive, InfraCo EMRC Conference, Cape Town, June 2009

Overview1. About InfraCo2. InfraCo‟s project portfolio3. InfraCos agriculture projects4. AgDevCo: a new initiative to promote commercial solutions for smallholder agriculture Page 1

About InfraCo• InfraCo is a publicly-funded, privately-managed infrastructure development company (est.2005) operating in low-income countries in Africa and Asia• Mission is to promote economic growth and reduce poverty through enterprise-led solutions to infrastructure shortages• Part of the Private Infrastructure Development Group (PIDG) owned by six European governments and the World Bank group• InfraCo has main offices in London and New York, with a presence in Singapore, Kampala, Lusaka and Accra; employs c20 full-time project developer staff recruited from the private sector.• InfraCo Africa recently launched a $300 million investment fund backed by $100m commitment from OPIC (USA) PIDG www.pidg.org www.infraco.com InfraCo EAIF GuarantCo TAF InfraCo Africa InfraCo Asia Page 2

What InfraCo does• Identifies greenfield infrastructure opportunities• Establishes local subsidiary and develops projects from concept to financial close at own cost and risk (typically the project development process takes 2-3 years)• Raises targeted grant funding where necessary to ensure affordability of services for the poorest• Secures commercial debt financing and sells majority of equity in local company to domestic and international investors• Reinvests proceeds from successful sales in developing more projects (InfraCo itself is non-profit distributing) InfraCo makes projects “bankable” in situations where the private sector would otherwise be unwilling or unable to invest because of high upfront costs and risks Page 3

InfraCo‟s project portfolio in SSA InfraCo business model is working. >$20 invested by private sector for every $1 invested by InfraCo Page 4

Chanyanya Smallholder Irrigation, Zambia• A $25m smallholder irrigation project in Zambia designed to be commercially sustainable.• Farmers benefit through access to irrigation for their farmland, job creation and a share of profits of the commercially managed central farming operation.• Once loans are repaid over a 10-12 year period the smallholder farmers will have100% ownership of the full project. Page 5

Chanyanya Smallholder Irrigation, Zambia• InfraCo took the project from a „concept‟ through successful implementation.• Activities included o negotiating and implementing the corporate structure; o financial analysis and business planning; o design, costing and procurement of irrigation equipment; and o arranging finance• Project benefitted from “patient capital” for irrigation equipment for Phase 1 (income notes paying 5% interest)• InfraCo is currently raising finance for the installation of irrigation on all 2,600 hectares. Page 6

Other agriculture projects in early developmentNairobi wholesale fresh produce market• $40m greenfield, modern wholesale market facility with 1m tonnes/ annum capacity• Value-added services including cold storage and banana ripening• PPP structure with funding from private and public sources• Governance arrangements ensure affordable rents for market traders• Projected benefits for at least 140,000 SME farmers and 500 SME wholesale traders Gdansk wholesale market, Poland• Support from Africa Enterprise Challenge Fund (AECF) Beira Agricultural Growth Corridor • Partnership between Government of Mozambique, InfraCo and Yara International • Support from international agencies including World Bank, African Development Bank and AGRA • “Investment blueprint” underway led by InfraCo to identify commercial agriculture opportunities, including commercial outgrower schemes • Proposed project development company to establish PPPs and catalyse private investment into agriculture Page 7

AgDevCo: promoting sustainable agricultureBased on the successful InfraCo model, AgDevCo is a new initiative which aims to stimulate amajor increase in profitable agricultural production in Africa. It uses aid to stimulate commercialinvestment in profitable and socially-responsible agriculture businesses. AgDevCo does this by:• Investing development capital in early stage agricultural ventures with outgrower schemes• Deploying patient capital to develop, and lease to SME farmers, new irrigation services.• Investing along the value chain, including in farming, processing and storage• Partnering with InfraCo to provide supporting hard infrastructure AgDevCo is supported by CAADP and AGRA AgDevCo business plan finalised in Q1 2009. Currently raising funding to launch full-scale operations. Page 8

www.infraco.com www.agdevco.comwww.beiracorridor.com

Agri09 Day IV-Workshop III-Chris Isaac-Infraco

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