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Agricultural Investment Funds for Development

Descriptive Analysis and Lessons Learned from Fund Management, Performance and Private-Public Collaboration

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This publication explores agricultural investment funds as a vehicle for financing agricultural businesses and projects. It looks at the capital needs of the different agricultural actors along the agricultural value chain and taking into consideration investment funds involving all kinds of investors (private, public as well as joint initiatives) and investment objectives. The publication draws heavily from the FAO 2010 publication “Agricultural Investment Funds for Developing Countries”, which was developed from an FAO-ConCAP research study that identified a broad range of investment funds that target agriculture in developing and transitioning countries. The identified funds were classified according to various criteria such as geographic distribution, capital, shareholder and investor base, investment instruments, target group served and financial performance, as well as organizational and operational structure. In this context, 63 agricultural investment funds fitting the selection criteria were identified and used in this study.

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Executive summary

Despite the prevailing view that investment in agriculture is risky, this sector has been experiencing noted growth due both to improved profitability projections and the interest of development agencies and governments to increase investment in the sector to achieve food security. Investment is essential for the growth of the agricultural sector; it is estimated that net investments of USD 83 billion a year must be made in the agricultural sector in developing countries if there is to be enough food to feed the world population of 9.1 billion in 2050. In sub-Saharan Africa, where investment fund growth has been the highest, the figure was estimated to be approximately USD 11 billion per year (FAO, 2009). The major sources of capital need to come from private investors; public investment cannot meet the needs, but can be effective in stimulating and leveraging private investment in the sector.

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