ETC Group Limited

East Africa, Africa Food and agriculture

ETG is an African agribusiness with operations in crop buying, warehousing, distribution and merchandising that employs over 7,000 people and reaches hundreds of thousands of small-scale farmers.

Founded in 1967, the company owns and manages a vertically-integrated agriculture supply chain with operations in procurement, processing, warehousing, transport, distribution and merchandising.

  • Active
  • Exited

This investment was made when British International Investment was named CDC Group.

Our investment

ETG is expected to support economic opportunity for 579,000 farmers across 21 countries through direct purchasing of agri commodities at the farm gate. Farmers report improved incomes, access to agri inputs and extension services compared to those that do not sell to ETG.

Impact

Economic opportunity for farmers (SDG 8 & 2.3)

How?

Direct: ETG purchases agri commodities from farmers at the farm gate indirectly linking them to regional and international markets. ETG sources a large number of agricultural commodities across the African continent; 80% of these are purchased at the farm gate with cash through a network of 450 all-year and seasonal procurement centres. Through these centres, ETG also offers inputs and extension services to the farmers. This enables two things: (1) farmers are able to sell surplus to ETG directly and are generally paid in cash; (2) through quality inputs and extension services yield will increase and (post-harvest) losses decrease.

Stakeholder Geography Characteristics
Farmers, as suppliers to, buyers of inputs from and recipients of extension services by ETG.

Pan Africa and Asia (21 countries). A country can have 5 to 150 procurement centres.

ETG purchases from small, medium and large farmers. In the three countries sampled, farmers selling directly to ETG typically have larger landholdings and a lower poverty likelihood. Over 85% of these farmers depend on agriculture as their primary source of income and are entrepreneurial using agricultural inputs and some mechanisation to improve yield. Majority of the farmers have started working with ETG recently and 83% sell nearly half of their produce to ETG with the balance sold to local markets and other middlemen. Farmers selling to the company are mostly male (70%) and young (60%<50 years old).

Scale Depth/Duration

In 2020, ETG procured from c.579k farmers in our geographies. For our $100 million investment, we estimate attributable reach at c.45k farmers annually.

  • Depth: Farmers selling directly to ETG report improved livelihoods. This results from 1) fair market prices (c. 75% mention better price as primary reason to sell to company); 2) improved quality and quantity of crop, as a result of inputs and extension services from the company (c. >60% of farmers also purchased fertilizer and seeds from ETG with 43% of the farmers engaged with agronomists for advice on best practice).

  • Duration: The impact will occur over 1 year (or tenor of facility if renewed).

Grid Score Contribution

3.24

To help us direct our investments, we use a tool called the Development Impact Grid. The Grid scores every investment we plan out of a score of four, based on two factors: the difficulty of investing in the country and whether investment in that sector will lead to jobs.

  • Financial: Capital not available in sufficient quantity. BII and other DFIs are plugging a gap in funding left by commercial banks. The combination of increased bank regulations and COVID-19 saw several commercial banks in Africa scaling back operations.

  • Value-add: Our ESAP will support ETG’s journey towards alignment with international E&S standards focusing on key areas such as pesticide management, supply chain risk and safeguarding processes, and environmental and social risk assessments.

Risk
  • Unexpected impact risk: Our markets often have agricultural supply chain risks. ETG has largely good procurement practices related to transparent pricing and timely payment. There are supply chain risks related to farmers supplying to ETG. This risk is being addressed through the execution of the ESAP.

  • Evidence risk: Because of the nature of pooled funding, ETG doesn't measure the impact of financing facilities attributable per lender. This evidence risk will need to be tolerated. The key KPI will be number of farmers reached. Our due diligence concluded that the assumptions used by ETG to estimate farmers reached are sound. In addition, we will require additional reporting metrics, such as female farmers as a percentage.

Environmental and social aspects

We agreed an environmental and social action plan (ESAP) with the client. ETG is working on continual improvement of its ES Management System.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.

:
Africa, East Africa
Countries:
Tanzania
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.

:
Food and agriculture
Website:
https://www.etcgroup.org/
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).

:
Direct Debt
Start date

For direct investments, this is the date British International Investment committed capital to the business or project.

For funds, this is the date that British International Investment committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e

:
November 2012
Amount

For direct investments, this is the total amount that British International Investment has committed to the business or project (it may be a combination of equity and debt).

For funds, this is the total amount that British International Investment has committed to the fund.

:
$132.5m
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.

:
Mauritius

This investment was made when British International Investment was named CDC Group.

We are invested in ETC Group Limited through Pembani Remgro Infrastructure Mauritius Fund I LP, which is managed by Pembani Remgro MU GP Limited.

We do not hold direct relationships with the companies that investment funds invest in. Instead, we hold relationships directly with the fund. When investing through investment funds, British International Investment takes an active role as a limited partner to the fund, working with the fund manager to ensure best practices, including in environment, social and governance matters, and investment management oversight.

For further information on the fund, the fund manager, and the expected impact of the fund’s investment, click here.

Key facts

Status:
Active
Region

Since 2012, we’ve only invested in Africa and South Asia. Investments outside these regions are from our pre-2012 portfolio.

:
Africa, East Africa
Countries:
Tanzania
Sector

We have seven priority sectors. However, we continue to invest outside these sectors, largely in the most challenging regions, as new investment supporting any sector helps to underpin the private sector, and create jobs and livelihoods for people.

:
Food and agriculture
Website:
https://www.etcgroup.org/
Investment type

We provide capital in three broad ways: direct equity, debt, and intermediated equity (principally through investment funds).

:
Intermediated investment
Fund:
Pembani Remgro Infrastructure Mauritius Fund I LP
Fund Manager:
Pembani Remgro MU GP Limited
Start date

For direct investments, this is the date British International Investment committed capital to the business or project.

For funds, this is the date that British International Investment committed capital to the fund.

For underlying fund investments, this is the date that the fund invested capital into the business.e

:
November 2012
Domicile

This is the investee company’s place of incorporation; or a fund’s jurisdiction.

:
Mauritius

We are now British International Investment