The firm is committing $20m to the Silverlands Fund, an investment fund which will back locally-run, commercial farms which often struggle to raise the necessary backing to help them grow.

The fund is managed by SilverStreet Capital, and is aiming to raise a total of $300m for investment in up to 15 agribusinesses across the main fertile growing areas of Central and Southern Africa. The fund, which is one of only a tiny number of private equity fund investing in African agribusiness, has attracted backing from other development finance institutions such as Finnfund, as well as large European pension funds.

The Silverlands fund focuses on primary agriculture by targeting farms producing crops such as grains, soya, fruits, vegetables, sugar, tea, and coffee. Capital will also go into the processing and marketing of produce as well as into businesses making agricultural machinery and equipment.

CDC’s investment will back farming businesses in Zambia, Tanzania, Malawi, Mozambique and Uganda and help them expand agricultural production and improve food security in the region.

The fund also operates a pioneering scheme which supports local small-scale farmers by linking them up to the operations of Silverland’s bigger farms giving them access to larger markets, as well as seed and fertilizer, education and technical assistance.

Rod Evison, CDC’s acting CEO and managing director, Africa, said, “CDC is committed to supporting agribusiness in Africa and our $20m investment will add to the essential flow of capital going to the sector. Increasing financing for farms and making the commercial agribusiness sector more efficient are vital if African countries are to increase food production and move away from being net importers of staple foods.

“While global demand for food rises, the amount of agricultural land in production in Africa has barely increased since the mid-1960s. Silverlands is dedicated to investing with world class social and environmental standards and I’m confident that CDC’s support for the fund will help attract other investors.”

While the main investment focus of the fund will be on primary farming, CDC’s capital may also back businesses that process and market farm produce; provide farming services and equipment and offer agricultural financial services in order to support the wider agricultural sector.

Evison added,“For countries in Central and Southern Africa it is often possible with the help of better irrigation to have two crops a season.  We’re encouraged that Silverlands will focus on improving irrigation systems which will mean higher yields and will provide insurance against drought.”

The fund already engages with local smallholders as well as farming communities and its investments will follow the UN Global Compact Guidelines on ethical employment practices, positive social impact and environmental sensitivity. Conservation farming practices will be promoted, including no-tillage methods which allow for less use of fertilisers and fuel.

CDC made a total return of £269m (€304m) in 2010, the firm revealed earlier this year, boosting its value to £2.8bn (€3.2bn).

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