1. Private Sector Development in Agriculture: Tracking the developmental performance of investments for smallholder farmers.
By David Priest – Consultant to African Agricultural Capital (AAC)‏
3rd December, 2008
By David Priest -

2. Gatsby Charitable Foundation
Established: in 1967 by David Sainsbury
Endowment: £580M
Annual spend: £50M pa - £6M in Africa.
David Priest

3. African Agricultural Capital (AAC)‏
Investment fund established in 2004
Shareholders: Gatsby Charitable Foundation,
Rockefeller Foundation
Volksvermogen
Purpose:
To invest in agricultural businesses in Kenya, Uganda, Tanzania
positive financial returns (12 % gross)
affordable and flexible capital
development impact on smallholder farmers
Fund size: 8 million USD
Deals: 16 investments of 100,000 – 1,000,000 USD
My role: to develop a system of indicators for AAC to track the developmental performance of its businesses.
David Priest 3

4. Smallholder Farmers Why support smallholder farmers ?
Agriculture 1/3rd of GDP, 2/3rds of labour force
Under-supported – 4% public spending
Twice as effective at reducing poverty as growth in non-Agriculture sectors
Who is smallholder farmers ?
generally 1\4 - 2 ha, certainly < 5ha
David Priest

5. Palm Oil Real IPM Vanilla
Avocados Poultry Seed
Palm Oil Real IPM Vanilla
Hybrid Seed
Seed 5 5

6. Developmental Performance System
To develop a system for investees to report their own developmental impacts.
Little Time / Resource
Realities of Business Situation
½ hour to 1 day
What data is available?
Where? How?
FAO, IFAD, DFID,
IFC, Commonwealth Development Corporation
Acumen
Incofin, PSOM
Cheap & Simple
`Investment team are making better decisions`
Commercial entities Easy to collect What are we looking for?
Overburden – time \ money Already available What is starting point?
Consensual - self reporting Useful to the business Who is the ´small farmer´
Different models of business
David Priest 6

7. Adapted Incofin Model by David Dewez
Dimensions
Mission & Vision (5)‏
Company Viability & Growth (9)‏
Market & Competition (12)‏
4. Job Creation & Quality (12)‏
5. Smallholder Engagement (50)‏
6. Community & Environment (12)‏
David Priest

8. David Priest - dmpriest@gmail.com

9. David Priest - dmpriest@gmail.com

10. David Priest - dmpriest@gmail.com

11. David Priest - dmpriest@gmail.com www.aac.co.ke

13. Reporting of Data - Comparison
David Priest

14. Poultry
Seed2
Seed4

15. Real IPM
Honey- new
Plant Product Export

16. Challenges: General Consensual Assumes information provided is true
Not independent
Reluctance to search for historical information
Absence of baseline data
Time lag till impact realised
Impressionistic/ repeatability
Impact of Investee not Impact of Investment
Expensive to monitor
Before Investment
Agree with investee
Collect baseline data
Set developmental targets
To be considered by investment committee
2. Routine Reporting by Investee
Annual reporting extending two years
Investment managers and board nominees – follow up
3. Independent M&E Exercise
Market & Competition
Little knowledge of competition
Link Bonuses / Interest on Loans
to Social Returns on Investment
Smallholder Engagement
How to define smallholder
Little direct contact with farmers
David Priest

17. Thanks to Tom Adlam (CEO) Tom.Adlam@aac.co.ke Joel Ssemukaaya
Patrick Ndagu
Joe Devries (Rockefeller/ AGRA)‏
Walter Vandepitte
Justin Highstead (Gatsby)‏
David Dewez (Incofin)‏
Julian Bolt (PSOM, EVD)‏
Investees
David Priest