A coffee trading company that says it buys coffee from rural farmers at fair prices and pays them on time, freeing them from extortionate middlemen, has received almost Shs3.2 billion in investment funding.
The Agri-Business Capital (ABC) Fund – a blended finance impact fund managed by Bamboo Capital Partners, a private equity firm with offices in Nairobi, Geneva, Luxembourg, Singapore, and Bogotá – has committed a total of €800,000 to JKCC General Supplies.
In the development sector, blended finance involves the use of both commercial and public capital – parties with usually different impact objectives – to achieve ‘reasonable’ financial gains and social and environmental outcomes. Organisations providing blended finance typically provide what’s known as ‘catalytic capital’ – funding that takes on more risk or lower returns, and incentivises private investors to make investments with the potential for development impact they wouldn’t otherwise make.
JKCC started in 2017 and partners with over 4,600 farmers spread across sixteen districts. The company was founded by a family with a history of growing coffee who recognised the importance of “improving coffee markets and preventing farmer exploitation by large corporations and middlemen.”
The company buys all the coffee grown by its partner farmers, and processes some of it in its factories in Namanve for sale on the local market. The rest, it exports.
“In 2020, JKCC secured its coffee export licence and started processing coffee. Since then, JKCC has recorded a significant improvement in sales volumes, driven by increased international demand. JKCC now exports around 80 per cent of its produce and also produces roast and ground coffee on a small scale under the brand name JK Coffee Roasters. The upward trajectory of JKCC’s growth is expected to continue in the short-to-medium term,” ABC said in a statement.
The ABC Fund says it offers loans and equity investments to underserved sectors of agribusiness value chains in developing nations, with an emphasis on farmer organisations, small to medium rural enterprises, and financial institutions, owing to their enormous potential for growth and job creation, particularly for young people and women.
In March, the fund announced that it had lent $257,200 (Shs973.5mn) to Matale Hill Brothers Limited, a Ugandan company involved in the secondary processing of coffee. ABC said the money would be used to source coffee from smallholder farmers, enabling Matale to double the number of farmers it works with to 500.
The ABC Fund was founded in 2019 with funding from the International Fund for Agricultural Development, a specialised UN agency. Other funders since then include the European Commission, the Organisation of Africa, Caribbean and Pacific States, Luxembourg, the Alliance for a Green Revolution in Africa, and the Bank of America.
(€1 = 3975.5882 Ugandan shillings)
