The Tony Elumelu Foundation Announces inaugural impact investment
deal with Mtanga Farms in Tanzania
deal with Mtanga Farms in Tanzania
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Pioneering Move in African “Impact Investing” Is an Attempt to Drive Economic
Transformation In Key Development Sectors While Changing the Lexicon of African
Philanthropy.
LAGOS, Nigeria, April 8, 2011 – Setting a new precedent for impact investing in
announced the completion of their inaugural deal, an impact investment in Mtanga
Farms, a farming operation at the heart of Tanzania’s national initiative to combat
food insecurity.
Mtanga Farms Limited is a mixed arable farming business operating in the
Southern Tanzanian Highlands. MFL owns approximately 2,200 hectares under
long-term lease and is currently planting wheat, barley, maize and certain oil
crops. It has further established a livestock operation consisting of local cattle for
fattening and a herd to cross breed higher quality cattle for premium meat. The
Southern Tanzanian Highlands are the focus of Tanzania's effort to promote
agriculture, are a cornerstone to Tanzania's 'Kilimo Kwanza' (agriculture first)
initiative and have significant potential to improve Tanzania's food security. All of
MFL's crops, including livestock, are for domestic consumption and will substitute
imports, thereby contributing to Tanzania's emergence as a major food commodity
producer.
The deal marks the first time an African philanthropic organization and investment
firm have engaged together in impact investing, an approach that, unlike traditional
grant-making, uses for-profit methods to solve intractable social and environmental
problems – in this case agriculture development.
“With this deal, we hope to set a new standard for both philanthropy and investing
within Africa,” said Founder and Chairman Tony O. Elumelu. “Through impact
investing, we seek to drive African economic growth from within by investing in
businesses that generate social, environmental, and financial returns. This can
also change the paradigm of how development takes place on the continent.”
The deal was made jointly by two partner institutions: TEF, a newly established
“catalytic foundation,” and Heirs Holdings, a principal investing company with a
long term investment horizon. Both TEF and Heirs Holdings, promoted by the
former CEO of United Bank for Africa ; one of Africa’s largest financial services
instructions, are based in Nigeria, where some of the continent’s most innovative
financial deals have been struck in the last decade. London-based Lion’s Head
Global Partners acted as financial adviser to Mtanga Farms. The deal was the first
outside of Nigeria for Heirs Holdings.
Aside from the broader, continent-wide implications of the investment, the Mtanga
deal will touch the everyday lives of hundreds of thousands of low income people in
rural Tanzania, improving farmers’ access to inputs and technology, creating
infrastructure for farmers to bring their products to markets and contributing to the
development of the Southern Tanzanian Highlands, one of the most promising
untapped areas of agriculture production in East Africa.
Specifically, this deal will help Mtanga establish a seed potato industry, which will
significantly benefit more than 125,000 local smallholder farmers who have proven
able to increase yields threefold when provided with clean seed potatoes. The effort
is remarkable in that it unblocks a market that has been neglected for the past 30
years, with no new potato varieties registered in Tanzania and no clean seed
available for farmers for decades.
Integral to this effort is Mtanga’s partnership with TransFarm Africa, a non-profit
initiative established to enhance the link between commercial farmers and
smallholders, to promote agricultural growth corridors and to unblock barriers
where they arise for the farming sector.
What makes the deal so crucial as an impact investment is this that its operations
are focused on delivering commercial returns while also delivering development
benefits to local farmers and communities. Further, the farm is operated at the
highest standards of environmental sustainability for soil and water management.
Mtanga interacts closely with local farmers by sharing equipment, collaborating
with the government to grow seeds and providing access to markets for local cattle
herders.
“Mtanga Farms is an example of how responsible foreign investment in agriculture
can be commercially viable, environmentally sustainable, and also create
substantial social impact through the benefits to small holder farmers and the
contribution to food security. These are the kinds of sector specific criteria TEF
considers when making impact investing funding decisions,” said Dr. Wiebe Boer,
the Foundation’s chief executive. “This is a great example of why impact investing
is such a powerful concept – in this case because the financial return potential was
attractive, we were able to catalyze private funds into an effort that has a
substantial development impact.”
Impact investing is TEF’s primary tool for supporting Africa’s small and growing
businesses. Unlike most philanthropies, TEF sees grants as a last resort, and
believes impact investing is a much more sustainable means of capitalization
because of the entrepreneurial rigour that comes with requiring a financial return.
When impact investments also attract traditional private capital, the impact goes
even further. Any proceeds from an eventual exit from the investment on the part of
TEF will be put back into the endowment of the Foundation for additional impact
investments and other Foundation activities.
Dr. Boer noted that the Mtanga investment is a prime example of African investors
reaching across borders to inject capital into other economies, facilitate trade, and
deliver new or improved products and services.
TEF’s strategy mirrors Heirs Holdings, which is based on a conviction that Africa’s
economic prowess rests not only on much-needed infrastructure development but
also on a vibrant private sector operating in key development sectors, represented
in Tanzania by the Mtanga deal.
Mtanga Farms was set up in 2008 by a group of Tanzanian business people and a
local farmer, and has since received investments from Lion's Head Global Partners,
a UK merchant bank focused on Africa, and the Calvert Foundation.
About The Tony Elumelu Foundation
The Tony Elumelu Foundation seeks to contribute to the economic transformation
of the African continent through fostering Africa’s business and entrepreneurial
leadership. It is focused on building and engaging the African private sector to take
the lead in driving Africa’s equitable economic transformation. Prior to establishing
the Foundation, Tony O. Elumelu led United Bank for Africa, one of Africa’s leading
financial services groups, through its transformation from a single-country focused
bank to a diversified business, operating across Africa and the world.
About Heirs Holdings
Heirs Holdings Limited is a principal investment company with a diversified
portfolio, including interests in the financial services, real estate, infrastructure,
resources and other key sectors critical to Africa’s economic development.
Transformation In Key Development Sectors While Changing the Lexicon of African
Philanthropy.
LAGOS, Nigeria, April 8, 2011 – Setting a new precedent for impact investing in
announced the completion of their inaugural deal, an impact investment in Mtanga
Farms, a farming operation at the heart of Tanzania’s national initiative to combat
food insecurity.
Mtanga Farms Limited is a mixed arable farming business operating in the
Southern Tanzanian Highlands. MFL owns approximately 2,200 hectares under
long-term lease and is currently planting wheat, barley, maize and certain oil
crops. It has further established a livestock operation consisting of local cattle for
fattening and a herd to cross breed higher quality cattle for premium meat. The
Southern Tanzanian Highlands are the focus of Tanzania's effort to promote
agriculture, are a cornerstone to Tanzania's 'Kilimo Kwanza' (agriculture first)
initiative and have significant potential to improve Tanzania's food security. All of
MFL's crops, including livestock, are for domestic consumption and will substitute
imports, thereby contributing to Tanzania's emergence as a major food commodity
producer.
The deal marks the first time an African philanthropic organization and investment
firm have engaged together in impact investing, an approach that, unlike traditional
grant-making, uses for-profit methods to solve intractable social and environmental
problems – in this case agriculture development.
“With this deal, we hope to set a new standard for both philanthropy and investing
within Africa,” said Founder and Chairman Tony O. Elumelu. “Through impact
investing, we seek to drive African economic growth from within by investing in
businesses that generate social, environmental, and financial returns. This can
also change the paradigm of how development takes place on the continent.”
The deal was made jointly by two partner institutions: TEF, a newly established
“catalytic foundation,” and Heirs Holdings, a principal investing company with a
long term investment horizon. Both TEF and Heirs Holdings, promoted by the
former CEO of United Bank for Africa ; one of Africa’s largest financial services
instructions, are based in Nigeria, where some of the continent’s most innovative
financial deals have been struck in the last decade. London-based Lion’s Head
Global Partners acted as financial adviser to Mtanga Farms. The deal was the first
outside of Nigeria for Heirs Holdings.
Aside from the broader, continent-wide implications of the investment, the Mtanga
deal will touch the everyday lives of hundreds of thousands of low income people in
rural Tanzania, improving farmers’ access to inputs and technology, creating
infrastructure for farmers to bring their products to markets and contributing to the
development of the Southern Tanzanian Highlands, one of the most promising
untapped areas of agriculture production in East Africa.
Specifically, this deal will help Mtanga establish a seed potato industry, which will
significantly benefit more than 125,000 local smallholder farmers who have proven
able to increase yields threefold when provided with clean seed potatoes. The effort
is remarkable in that it unblocks a market that has been neglected for the past 30
years, with no new potato varieties registered in Tanzania and no clean seed
available for farmers for decades.
Integral to this effort is Mtanga’s partnership with TransFarm Africa, a non-profit
initiative established to enhance the link between commercial farmers and
smallholders, to promote agricultural growth corridors and to unblock barriers
where they arise for the farming sector.
What makes the deal so crucial as an impact investment is this that its operations
are focused on delivering commercial returns while also delivering development
benefits to local farmers and communities. Further, the farm is operated at the
highest standards of environmental sustainability for soil and water management.
Mtanga interacts closely with local farmers by sharing equipment, collaborating
with the government to grow seeds and providing access to markets for local cattle
herders.
“Mtanga Farms is an example of how responsible foreign investment in agriculture
can be commercially viable, environmentally sustainable, and also create
substantial social impact through the benefits to small holder farmers and the
contribution to food security. These are the kinds of sector specific criteria TEF
considers when making impact investing funding decisions,” said Dr. Wiebe Boer,
the Foundation’s chief executive. “This is a great example of why impact investing
is such a powerful concept – in this case because the financial return potential was
attractive, we were able to catalyze private funds into an effort that has a
substantial development impact.”
Impact investing is TEF’s primary tool for supporting Africa’s small and growing
businesses. Unlike most philanthropies, TEF sees grants as a last resort, and
believes impact investing is a much more sustainable means of capitalization
because of the entrepreneurial rigour that comes with requiring a financial return.
When impact investments also attract traditional private capital, the impact goes
even further. Any proceeds from an eventual exit from the investment on the part of
TEF will be put back into the endowment of the Foundation for additional impact
investments and other Foundation activities.
Dr. Boer noted that the Mtanga investment is a prime example of African investors
reaching across borders to inject capital into other economies, facilitate trade, and
deliver new or improved products and services.
TEF’s strategy mirrors Heirs Holdings, which is based on a conviction that Africa’s
economic prowess rests not only on much-needed infrastructure development but
also on a vibrant private sector operating in key development sectors, represented
in Tanzania by the Mtanga deal.
Mtanga Farms was set up in 2008 by a group of Tanzanian business people and a
local farmer, and has since received investments from Lion's Head Global Partners,
a UK merchant bank focused on Africa, and the Calvert Foundation.
About The Tony Elumelu Foundation
The Tony Elumelu Foundation seeks to contribute to the economic transformation
of the African continent through fostering Africa’s business and entrepreneurial
leadership. It is focused on building and engaging the African private sector to take
the lead in driving Africa’s equitable economic transformation. Prior to establishing
the Foundation, Tony O. Elumelu led United Bank for Africa, one of Africa’s leading
financial services groups, through its transformation from a single-country focused
bank to a diversified business, operating across Africa and the world.
About Heirs Holdings
Heirs Holdings Limited is a principal investment company with a diversified
portfolio, including interests in the financial services, real estate, infrastructure,
resources and other key sectors critical to Africa’s economic development.
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April 12, 2011
April 12, 2011
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Contents (1)
mbanugo omezi fromPortHarcourt Nigeria said on,
Tuesday, April 12, 2011 12:19 PM
I congratulate but ask why not in Nigeria. Why not i Aniocha North LGA of
Delta State, improving the lives of your people. We can things like this and
even make us bigger in Garri production through producing high yield
cassava in collaboration with IITA. Common, lets start at home. My humble
suggestion.
mbanugo omezi fromPortHarcourt Nigeria said on,
Tuesday, April 12, 2011 12:19 PM
I congratulate but ask why not in Nigeria. Why not i Aniocha North LGA of
Delta State, improving the lives of your people. We can things like this and
even make us bigger in Garri production through producing high yield
cassava in collaboration with IITA. Common, lets start at home. My humble
suggestion.