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Musa Capital Blazes Investment Trail In Agriculture

Musa-Capital-Scenes-of-Agriculture

New agricultural division will harness regional and global capital to boost food production and create a more sustainable agriculture sector in sub-Saharan Africa

In a break from traditional funding of agriculture exclusively through public sector spending, NGOs and global capital, Musa Capital, will work with regional capital in the form of pension funds and in-country investment institutions to build a sub-Saharan African agricultural value chain company focused on ensuring regional food security and enhancing capacity among small scale farmers.

Through an agricultural investment company Musa Capital Agriculture (“MCA”), Musa will give investors a long-term horizon for generating wealth for themselves by ensuring better distribution of finance and improved market access to farmers at the base of the pyramid.

MCA will invest in production, processing, distribution, and logistics across multiple geographies.

“As we do with our other investment portfolios, with MCA we will focus on driving synergies that will ensure sustainability for all the components of the agricultural operations in which we invest,” says Musa Capital co-founder and director, Will Jimerson.

“For instance, we will develop or acquire large scale farms to which we will add professional management and processing plants through which the primary production units can increase their share of the consumer’s wallet.

“However, the large scale farms will only account for a portion of the processing plant’s capacity. We will engage with small scale farmers to purchase their off-take and, where feasible, take a stake in the processing business.

“The small scale farmers will also have access to the bigger farms’ equipment, participate in bulk purchasing of seeds, fertilizers, and livestock, and, through the processing plant, gain access to local and international markets that, because of their small output, would otherwise not be interested in them.”

Jimerson says that the MCA agricultural platform would not function as a traditional co-operative, where the producers are also the off-takers and where members’ financial benefits are limited to the prices the off-takers can negotiate with their usual markets.

“MCA’s marketing, distribution, and logistics will be managed by an experienced commercial team. Any farmers, distributors, and logistics companies that become part of the MCA investment portfolio will, therefore, participate in the larger return on investment that the umbrella organisation generates .”

Synergies among MCA portfolio companies will be fully exploited, with, for example, local logistics organisations being guaranteed the transportation of portfolio farmers’ produce and farmers benefitting from special prices from the logistics companies.

“In addition, the fact that MCA will operate across borders will make b oth MCA and its participants more sustainable,” Jimerson says. “For example, temporary adverse political, socio-economic and climatic conditions that may limit output in one region or country will be offset by beneficial conditions in other.

“From a financial perspective, this significantly reduces one of the most serious risks to agriculture and the organisations that fund it. It will therefore encourage institutions that would otherwise not consider investing in agriculture to put their toes in the water. And this will boost food production and, therefore, food security.

“A Pan-African set-up also expands the type and quantity of markets that are available to the agricultural operations. From the perspective of African unity, this is a powerful mechanism by means of which Africans can help Africans.”

Musa Capital’s MCA investment platform will become operational in South Africa in the second half of 2013. It will expand into sub-Saharan Africa, where it has relationships with a number of national ministries of agriculture and in-country investors, during 2014.

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