FMO invests US$7.5m in the Acumen Resilient Agriculture Fund

AFRICA – Dutch development bank FMO has invested US$7.5 million in the Acumen Resilient Agriculture Fund (ARAF) to support the provision of climate resilience resolutions to smallholder farmers in East and West Africa.

Impact investment firm Acumen set up Acumen Capital Partners in 2008. ACP closed the Acumen Resilient Agriculture Fund (ARAF)LP in 2019. It was established to support smallholder farmers to enhance their livelihoods and climate resilience. The project has an estimated lifespan of 12 years.

The fund, which has a target size of US$56 million, will provide financing and technical support to early stage and early growth agribusiness.

ARAF will invest in the following types of companies:

  • Aggregators: companies that provide bundled solutions such as climate resilience inputs and/or affordable credit bundled with extension services or access to markets;
  • Agritech businesses: companies that provide digital solutions such as online marketplace that connect farmers with input providers and/or offer extension support to improve farmer productivity;
  • Financial services providers: companies that provide farmers with access to innovate financial services enabling them to diversify their income base by investing in additional productive assets and making it affordable to them to purchase farm inputs.

The purpose of the Technical Assistance Facility (TAF) is to support ARAF’s investment strategy of building profitable, scaling, and socially responsible climate adaptive businesses.

The TAF serve as the base of the pyramid (BoP) markets, support greater gender integration through targeted technical assistance (TA) interventions and provide a financial return to ARAF and its investors.

The TAF shall provide funding to the following types of TA projects: Funding for Climate Adaptation Interventions, including gender specific initiatives, BDS and Management/Employee Training projects, Lean Data projects, and TAF Support projects.

The ARAF will improve climate resilience to ensure long-term sustainable increases in agriculture productivity and incomes for smallholder farmers.

It will shift the pattern of investment in climate change adaptation activities in Africa from grants to a long-term capital approach, enabling smallholder farmers to respond to climate change more efficiently and effectively.

It will support innovative private social entrepreneurs in micro-, small, and medium-sized enterprises (MSMEs) by providing aggregator and digital platform and innovative financial services to smallholder farmers.

Agriculture is a major industry in the target countries, and up to 80 percent of farmland is managed by smallholder farmers who are highly vulnerable to the impacts of climate change.

Climate resilience is key to ensuring a long-term sustainable increase in agriculture productivity and incomes for smallholder farmers.

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