Funding catalyst for commercialisation

Port of Beira, MozambiqueIn the busy port of Beira (Mozambique), containers of fertiliser are offloaded
© AgDevCo/H Derksen

Launched in 2009 at the World Economic Forum, the Beira Agricultural Growth Corridor (BAGC) is a multi-stakeholder initiative in Mozambique. BAGC seeks to stimulate a major increase in agricultural production and trade involving smallholder farmers in an area whose growth potential has yet to be fully realised.

Towering steel cranes lower containers of fertiliser bound for Malawi, in the busy port of Beira, Mozambique. Hours later, the cranes offload rice into freight containers heading west to Zimbabwe, while Mozambican cashew nuts bound for the European market are loaded onto a cargo ship. The port is a vital part of the BAGC initiative, which aims to transform local and regional trade and enable Mozambican smallholder farmers to break into commercial production. One of three trade corridors in Mozambique, the BAGC also provides a vital link between the land-locked countries of Malawi, Zambia and Zimbabwe and overseas markets.
Under a public-private partnership involving the Government of Mozambique, the private sector, local farmers and international investors, about 4,000 smallholders have so far signed outgrower contracts, which guarantee a market for their maize, groundnuts and honey. Spearheading one of the most ambitious agriculture development projects in post-war Mozambique, the BAGC initiative aims to have 50,000 smallholder farmers benefiting by 2015. A total investment of US$1.7 billion (€1.3 billion) from international business – including Agriterra, SABMiller, Green Resources, Olam International, and YARA International – is expected to generate US$1 billion (€0.77 billion) annually in farming revenue and stimulate investment along the entire agriculture value chain.
For Emerson Zhou, BAGC executive director, the initiative represents a significant opportunity for increased food production, trade growth and economic expansion, both for Mozambique and the Southern African region. "The Beira Corridor is the route of choice for regional imports and for stimulating agricultural productivity in Mozambique," says Zhou. "Beira port is also crucial in terms of its location, just 300 km from Mutare (Zimbabwe's fourth largest city) and closer than Harare to Durban. The challenge has been sorting out the infrastructure inefficiencies, the rail and road infrastructure, which are the target of current investments." Piggybacking on the Beira Corridor's reputation as the transport hub and trade gateway for the region, the BAGC initiative has bolstered Southern Africa as a target for investment in infrastructure and mining, but also for agriculture. The corridor incorporates about a third of Mozambique's 36 million ha of arable land, 85% of which is unutilised, largely through lack of irrigation and other infrastructure.

Commercial catalyst

To kick-start commercially-viable agriculture in the corridor region, BAGC has created a US$20 million (€15.7 million) social venture capital fund, which supports early-stage businesses. Managed by AgDevCo, the catalytic fund provides low-cost funding between US$200,000 (€154,000) and US$1 million (€0.77 million) to businesses that satisfy social criteria in providing direct benefits to smallholder farmers and local communities. "The fund has been operating for 18 months now and we have made 12 investments to date in Mozambique, in a range of agriculture businesses, including horticulture, livestock and grain production. We have disbursed US$2.8 million (€2.15 million) and plan to invest a further US$8 million (€6.2 million) in 2013," says AgDevCo Mozambique country director, Chris Isaac.

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