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CDC Group commits $100m to ETG Group

Africa Global Funds
May 10, 2021, 9:59 p.m.

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CDC Group, the UK's development finance institution and impact investor, has announced a $100m debt commitment to ETG, an agricultural conglomerate connecting smallholder farmers to global  markets through its operations in 48 countries worldwide.

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CDC Group, the UK's development finance institution and impact investor, has announced a $100m debt commitment to ETG, an agricultural conglomerate connecting smallholder farmers to global  markets through its operations in 48 countries worldwide.

Tony Morgan, Managing Director & Head of Private Equity and Corporate Debt at CDC Group, said: “Agriculture and rural development are vital engines that are accelerating Africa's  economic transformation and meeting global food and health needs. As these sectors continue to evolve and grow exponentially, this shift will be bolstered by a diversified, technologically-enabled, and commercially-oriented agro-industry –one that connects Africa’s markets regionally and internationally.  

The food and agriculture sector is a fundamental part of the development agenda, increasing the  availability and accessibility of agricultural goods brings more nutritious food to the market, with the  longer-term goal of improved food security and nutritional outcomes in countries where we invest. 

We are delighted to deepen our partnership with ETG and look forward to the tremendous impact and  economic development that CDC’s patient capital will support.” 

The debt commitment will support the growth of ETG's food and agriculture business, and it will help ETG strengthen food value chains by expanding its logistic networks, boosting agriculture yields and the production of staple foods such as grains, rice  and cocoa. 

ETG has long standing relationships with over 550,000 smallholder farmers across Africa, it helps to  significantly improve their livelihoods by providing consistent future demand for their produce through access to regional and global markets; this enables their business to grow and ultimately improve their way of life. Operating a two-way logistics model, ETG drops fertilisers at the farmgate - improving crop  quality - and then picks up the farmers produce to sell on the global market.

ETG also provides  warehousing and distribution centres giving farmers flexibility to store and sell their produce at the optimal time, thereby increasing their income potential substantially. 

Furthermore, farmers supplying produce to ETG benefit from training, expert farming support and  mechanisation which all lead to significantly improved yields. Its team of agronomists guides farmers on  production of higher margin cash crops and crop rotation to ensure year-round stability. 

As part of the funding facility, CDC will support ETG's ongoing efforts towards implementation and  alignment with international Environmental & Social standards with enhanced focus on supply chain risk management, safeguarding work and procedures. ETG has strong ESG credentials, recently launching a data driven agricultural intensification pilot project in Kenya to improve farmer productivity whilst enhancing the environmental risk management and climate resilience of ETG Kenya’s food staples.  

Anish Jain, Chief Treasury Officer of ETG, said: “We are extremely grateful for the support of CDC  Group. ETG is excited to expand its existing presence in various markets and further offer support to  communities across our extended footprint. ETG puts special focus on the development of smallholder  farmers, linking them with international markets by utilizing its proprietary end-to-end supply chain.  

Given CDC’s focus on ESG frameworks, this facility marks a solid achievement for ETG to further  strengthen its world class supply chain and mitigate risks in its operations. Including this CDC capital  commitment, ETG has one-third of the loan book linked with ESG and Sustainability standards.” 

Emma Wade Smith OBE, Her Majesty’s Trade Commissioner for Africa at the UK  Department for International Trade, said: “Improving access to markets for Africa’s farmers is  critical to food security, across the continent and the world. It is also essential to sustain and improve the  livelihoods of Africa’s farmers and their families.  

The positive impact of this CDC investment goes well beyond the hundreds of thousands of smallholder  farmers – many of whom are women - whose lives will be directly and positively affected. It also speaks  to the UK Government’s ambition to be Africa’s investment partner of choice, providing support for the  long-term that sustains jobs and enables technology-driven improvements to the way we do business  together.” 

At $100m, the capital provided to ETG marks one of the largest corporate debt investments in CDC history.  

The long-term partnership between CDC and ETG brought about by this commitment is a testament to  the catalytic role that the agriculture and rural development sector will play in Africa’s next phase of  growth, over the next decade.

This commitment also contributes to UN Sustainable  Development Goals (SDGs) 2 (Zero hunger) and 8 (Decent work and economic growth). 

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