Overview of the AECF: Key Results and Future Plans

Hugh Scott - AECF Director

Presentation Outline

Overview of the AECF

Introducing the AECF

Finding the right projects

Funding Innovation

Market Systems

Key Results – Progress to date

Windows and Competitions

Applications and awards

Results and Impact

The Future?

Overview of the AECF

Introducing the AECF (1)

Goal: to accelerate pro-poor growth in Africa

Purpose: to make agribusiness, finance, renewable energy and information market systems work better for the poor in rural areas in Africa

Result: Increased jobs and incomes for large numbers of people living in rural areas in Africa

Modus Operandi: The AECF works by supporting private sector companies to develop and test innovative business ideas in agri-business, rural financial services and renewable energy in Africa

Introducing the AECF(2)AECF is – a fund of donor money available to the private sector on a

competitive basis

AECF is – a ‘special partnership’ initiative of the Alliance for a Green

Revolution in Africa (AGRA). – AGRA is chaired by Strive Masiyiwa and funded by Rockefeller

and Bill and Melinda Gates

AECF is - a fund whose initial capital was US$34m in 2008 and is now US$244m and growing (figure as at August 2014)

Finding the Right ProjectsWe seek to support business ideas that are commercially motivated & innovative to get systemic impact

Commercial Motivation: Scale required for systems impact; scale will only be reached if business model is (very) profitable

Disruptive Innovation: as a key indicator of systemic change potential

• Upsetting the market such that others will copy and replicate – the more innovative the better

Principle: Start races rather than picking winners

VFM: Provide minimum amount of money to make business happen that otherwise would not happen

SCALE

(SOCIAL) IMPACTVIABILITY

SUPPORTING FUNCTIONS

RULES

LawsIn

form

al ru

les

&

norm

s

Standards

Regulations

Information

Infra

stru

ctur

eRelated

services

Informing & communicating

Setting & enforcing

rules

Making Market Systems work paradigm

Membership organisations

GovernmentPrivate sector

Not-for-profit sector

Informal networks

MARKET PLAYERS

Demand SupplyCORE AECFAECF

Key Roles of the AECF

Competitions: The Challenge Fund Mechanism is an effective, open and transparent way to find large numbers business ideas and capable entrepreneurs

Finding and funding innovative business ideas that are commercially viable should have impact on large numbers of rural households. Providing capital to “buy-down” risk

Instill sound business/financial management to get businesses more “investment ready”. Actively operate as a feeder fund for next level, more commercial, financial service providers and, Achieve even more impact on even more people

Developing a pipeline of

business ideas

Funding the best business

ideas (that others will not)

A feeder fund for next level

financiers

Raising Further CapitalNew service being offered to AECF grantees

Supporting grantees raise equity and debt

Scaling up post your AECF grant

Made available ‘free of charge’ but– Limited availability

What can we do?– Structuring fundraising process– Introducing investors and lenders– Reviewing investor market materials– Helping negotiate terms with investors and lenders

Contact Seb McKinlay – sebastian@aecfafrica.org or aecfafrica.org/connect

Key Results To Date

Fund Size Growth

2009 2010 2011 2012 2013 2014

37.6M

75.6M

130.8M

183.6M203.4M

244M

8 Funding Windows 19 Competitions so far

South Sudan Window (SSW)

R1-2

Research Into Business (RIB)

R1-2

REACT WindowR1-3 + Moz

Tanzania Agribusiness

Window (TZAW)R1-R3

Agribusiness Africa Window

(AAW)R1

Zimbabwe Window (ZW)

R1-3

Post-Conflict Window (PCW)

R1

General Window (GW)

Early Bird / R1-3

AECF WINDOWS

AECF WINDOWS

AECF Applications Summary

191

372

812

4,788

11,154

Business plans

Shortlisted for IC

Concept notes submitted

Registered companies

18 Rounds completed 5 June 2008 toAugust 2014

Performance to date

Projects Approved

Portfolio Growth – No. of Projects

2009 2010 2011 2012 2013

39

58

91

178191

Portfolio Distribution – By Window

Funding and Geographical Spread

Development Impact 2013

Trends in Development Impact

Development Impact by Primary Beneficiary

Cumulative DRR by Sector

What is the Future?

The Future – Operational Process/Operational Improvements:

Reduce time from competition closure date to contract sign-off

Reduce time from report submission to disbursements of funds

Improve business compliance through more active portfolio management (not less compliance)

Introducing the AECF Grantee Network

AECF Connect playing a bigger role

Strengthen monitoring and results measurement

Ongoing and Forthcoming Competitions:TZAW R3 at Business Plan Stage

REACT R3 – currently “live”

AAW R2 – October?

The Future – StrategicAECF likely to become an independent legal entity (Trust/CLG)

Board of new AECF entity to decide how AECF will be managed and

by whom

More predictable funding – long term (10) year strategy to grow to

US$500m

A funder of innovation or a feeder fund for others (or both)

More windows v fewer, larger, windows (two flagships)?

More or less financial products – grants v loans v ….?

External evaluation and monitoring unit (EMU company)

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