Fund Strategy
IACHL invests a combination of debt, equity or quasi-equity instruments into each investee company. IACHL also provides technical assistance to build managerial and financial capacity within investee companies. In order to achieve the dual goals of financial returns and positive social impact, IACHL proactively seeks investment opportunities that match the following investment themes:
i. Sustainably increasing the supply and affordability of improved seeds for smallholder farmers
IACHL seeks to improve poverty alleviation and to contribute to West Africa's long term food security by increasing farm yields for staple crops cultivated by smallholder farmers. The availability of improved high-yielding seeds is the most critical element for improving farm yields for West African smallholder farmers. By focusing on affordability, IACHL aims to ensure that improved yields are widespread and supplied by a self-sustaining local seed production industry to be catalyzed by IACHL's investment.
ii. Capitalizing on value creation opportunities along agricultural value chains
The agricultural value chain forms the basis for a key investment theme for two main reasons: the majority of West Africa's populations are engaged in agriculture thus improving the probability of impacting significant numbers of people including many at the bottom of the pyramid; and food demand and food prices are generally expected to rise over the next decade thus also offering the possibility of making good financial returns.
iii. Capitalizing on competitive advantages for selected export markets
West African countries produce certain cash and food crops for which they have a competitive advantage arising from one or more of lower product cost, lower transportation costs to key markets, countercyclical supply peaks relative to global market, local capability to adopt essential technologies etc. The Company intends to target the local processing of crops that display such structural cost advantages and will seek to invest in SMEs that intend to become large-scale efficient producers of such products.
iv. Supplying essential products and services to the growing local consumer markets
A June 2010 McKinsey report identified consumer goods as a major growth area for Africa based on consumer spending increasing between 2005 and 2008 at an annualized rate of 16% per annum – more than twice the GDP growth rate of the continent.
This has been driven by many consumers moving from the 'destitute' level of income i.e. less than US$1,000 to the 'basic needs' (US$1,000 to US$5,000 per year) and to the 'middle income group' (up to US$25,000 per year) levels. The 'basic needs' and 'middle income' groups are expected to expand from 46% to 64% of the total population between 2005 and 2014. Many among this group will live in urban areas and will increasingly adopt consumer habits typical of large towns and cities.
