Nairobi, Kenya (PRWEB) January 18, 2011
Acumen Fund, a nonprofit global venture firm addressing poverty in South Asia and East Africa, and Root Capital, a nonprofit social investment fund that is pioneering finance for grassroots businesses in rural areas of developing countries, today announced an investment in Gulu Agricultural Development Company (GADC), a for-profit cotton ginning company in Uganda. The $2.2 million co-investment, Acumen Fund’s first in Uganda, aims to help GADC rebuild the cotton industry in Northern Uganda and provide former refugees with critical support to regain their livelihoods.
“A critical criterion for all the companies in which we invest patient capital is that they not only have sustainable business models but also the capacity for significant social impact in their communities,” said Jacqueline Novogratz, CEO, Acumen Fund. “GADC has great potential to bring renewed life to Northern Uganda’s cotton industry and empower thousands of small landholder farmers with the skills to compete in today’s global market. We are excited to make our first investment in Uganda and look forward to being a part of GADC’s, and Uganda’s, future.”
For Root Capital, this loan builds on a portfolio that includes six other small and growing businesses in Uganda and more than 35 businesses across sub-Saharan Africa. “Root Capital is proud to contribute to the revitalization of Northern Uganda – an area ravaged by the Lord's Resistance Army (LRA), a brutal rebel group that has waged Africa’s longest-running insurgency,” said William Foote, Founder and CEO of Root Capital. “This investment will help GADC create livelihoods for thousands of people who lost everything to decades of violent conflict.”
GADC is the only commercial ginnery with operations based in the Gulu District of Northern Uganda, and it sources both organic and conventionally-produced cotton from approximately 42,500 smallholder farmers in and around the area. The joint Acumen Fund, Root Capital investment will be used to purchase conventional and organic seed cotton sourced from local smallholder farmers in the 2010-11 growing season.
Gulu District is currently recovering from nearly 25 years of armed conflict and civil strife that left the North the poorest region in Uganda, with an estimated 61 percent of the people living in poverty, almost twice the national poverty level of 31 percent. The UN’s World Food Program estimates that nearly 1.4 million people in northern Uganda were made homeless by the fighting, most taking shelter in internal refugee camps (Source: http://www.cidi.org/report/8874). Two years ago, farmers in Gulu and Amuru Districts began returning to their farms where they face the challenge of reconstructing their lives as subsistence farmers, requiring a reliable cash crop, such as cotton, to enable them to meet basic needs such as school fees, medical bills, and other necessities. GADC’s long-term vision is to reduce poverty and serve as a catalyst for the economic recovery of the entire region by re-building the once-vibrant “cotton ecosystem”—an ecosystem that before the conflict provided livelihoods to tens of thousands of smallholder farmers.
In addition to the impact on farmers, the co-investment by Acumen Fund and Root Capital will enable GADC to take full advantage of a year with record highs in cotton prices and a bumper harvest in the region. In the upcoming season, GADC will gin the cotton it buys—from both conventional and organic growers—and sell the cotton lint to international cotton buyers. This will provide farmers with much-needed market access in an area with few buyers. GADC will also sell cotton seed, a byproduct of the ginning process, to local merchants for use in oil processing or for export as a garnishing. Additionally, GADC has established a tree nursery and distributed thousands of seedlings to farmers in order to reverse deforestation caused by the cutting of trees to produce charcoal.
To help farmers generate income year-round, GADC will distribute sesame seeds to roughly 2,000 of its farmers at the end of the cotton growing season, as sesame is a high-value cash crop which grows in the cotton off-season. Helping cotton farmers grow sesame is one example of GADC’s efforts to build a stable growing environment for cotton farmers in Gulu area. In subsequent seasons, GADC will continue to expand its organic cotton operations, develop its extension services model for its organic farmers, and extend its operations into value-added activities such as spinning and weaving of cotton, as well as other off-season crop processing.
“GADC is passionate about alleviating poverty in the Gulu District and enabling local farmers to attain a sustainable livelihood,” said Bruce Robertson, CEO, GADC. “Acumen Fund and Root Capital’s investments will help GADC buy cotton from local farmers, sell the lint to international buyers and provide access to larger markets. All of these components are key to achieving a seamless value chain, maximizing return to the farmers and leading Northern Uganda on its road to recovery.”
“We are excited to make Acumen Fund’s first investment in Uganda. The expansion of our investments beyond Tanzania and Kenya will allow us to better serve East Africa and become a truly regional fund,” said Biju Mohandas, East Africa Manager, Acumen Fund.
About Acumen Fund
Acumen Fund is a pioneering not-for-profit venture fund that is changing how the world addresses poverty. Acumen Fund invests patient capital in business models that deliver critical, affordable goods and services to the world’s poor, improving the lives of millions. Since its founding in 2001, Acumen Fund has invested more than $40 million in companies that provide access to water, health, energy, housing and agriculture inputs to low-income consumers in South Asia and East Africa. For more information on Acumen Fund’s activities and investments, visit http://www.acumenfund.org and http://www.acumenfundblog.org.
Acumen Fund in East Africa
Acumen Fund has been investing in East Africa since 2001, focusing on a wide range of sustainable, scalable businesses that use market-based approaches to deliver products and services to millions of rural and urban poor. Investments made by Acumen Fund East Africa in local enterprises include a manufacturer of insecticide-treated bednets that are providing protection against malaria to millions of Africans; public sanitation facilities in Kenya’s underserved urban centers; microfranchises for quality healthcare and drug distribution; and a microfinance institution that is creating affordable, legal housing for former slum-dwellers. Leveraging strong relationships with local academic institutions and businesses as well as the global Acumen Fund network, Acumen Fund East Africa is actively exploring further investments in healthcare services, as well as potential investments in housing and energy services.
About Root Capital
Root Capital is pioneering finance for grassroots businesses that build sustainable livelihoods and transform rural communities in poor, environmentally vulnerable places. By working with small and growing businesses, it aims to fill the "missing middle" of finance in developing countries - the underserved gap between microfinance and commercial banking. Root Capital is a founding member of the Aspen Network of Development Entrepreneurs (ANDE) and the Global Impact Investing Network (GIIN). It receives support from a wide variety of investing and philanthropic sources, including foundations, corporations, socially responsible investment firms, religious institutions, government agencies and individuals. Since its launch in 1999, Root Capital has provided more than $200 million in credit to 282 grassroots businesses, representing 400,000 individuals in 30 countries throughout Latin America and Sub-Saharan Africa. Root Capital maintains an impressive 99% repayment rate from its borrowers and a 100% repayment rate to investors. For more information, visit http://www.rootcapital.org.
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