Technical Assistance Facility

Access to finance is an obstacle to entrepreneurship, particularly in the agricultural sector in Africa. The African Agriculture Fund (AAF), a private equity fund, was created to help increase investment in agriculture and agribusiness in the region with the ultimate objective of increasing food security. TechnoServe serves as the implementing agency of the Technical Assistance Facility (TAF), which provides technical assistance to the portfolio companies invested in by the AAF. The TAF is funded primarily by the European Union and managed by IFAD. As of 2016 the TAF has funded 32 projects with 10 portfolio companies across Africa and supported five SMEs with their growth strategies. TAF has committed €3.6m and has €3.4m remaining for projects in the pipeline.

Context

Small and growing businesses (SGBs) play an increasingly critical role in efforts to improve food security and reduce poverty for growing rural populations across the developing world. Agribusiness SGBs can provide key products, services and income opportunities, but in rural Africa, agribusinesses face an unpredictable financing environment. These businesses are often considered too large for microfinance and too small for bank loans. Financial institutions typically lack the rural officers, management experience in agriculture and willingness to assume agribusiness-related risks, while local lenders often base loan eligibility on available collateral, which SGBs may lack. Without intervention, high potential agri- and food-focused SGBs will struggle to get off the ground.

Opportunity

With access to finance and technical assistance, outgrowers and agri SGBs can build sustainable, profitable enterprises that create opportunities in their communities.

Strategy

The Technical Assistance Facility (TAF) was designed to support the African Agriculture Fund (AAF) in addressing food security challenges across Africa. The AAF is a fund managed by Phatisa, an African private equity fund manager, focused on the agriculture and food production sectors.

The purpose of the TAF is to provide technical assistance to agribusiness SGBs that receive investment through the African Agriculture Fund and improve linkages between enterprises and smallholder outgrowers. This allows AAF-supported SGBs to create new opportunities for smallholder farmers, farmer business groups and rural communities.

By providing technical assistance to SGBs and smallholder farmers supplying AAF portfolio companies, TechnoServe aims to boost productivity, increase incomes and improve access to finance and markets across the continent.

Contact 

If you require more information on the Technical Assistance Facility or the African Agriculture Fund, please contact:

Abigail Thomson
Program Director   athomson@tns.org

Results

The project launched in September 2011 with a six-month inception phase focused on establishing the systems and processes required to run a smooth grant management process. The facility is now in full implementation. To date, The TAF has approved funding for nine technical assistance projects and project scoping has been completed for an additional three opportunities. In addition, TechnoServe has processed approximately 150 expressions of interest and established a robust database of technical assistance providers across a range of sectors, countries and areas of expertise. As of 2016 the TAF has funded 32 projects with 10 portfolio companies across Africa and supported five SGBs with their growth strategies. TAF has committed €3.6 million and has another €3.4 million remaining for projects in the pipeline.

Partners

Technical Assistance Facility is funded primarily by the European Commission, overseen by the International Fund for Agricultural Development (IFAD), and co-sponsored by the Italian Development Cooperation, United Nations Industrial Development Organization (UNIDO), Alliance for a Green Revolution in Africa (AGRA) and the African Agriculture Fund (AAF).

The African Agriculture Fund (AAF) is a food and agri-focused pan-African private equity fund managed by Phatisa.