BackgroundMore than 50 per cent of Africa’s population lives in rural areas, which hold considerable potential for economic growth and livelihoods. However, rural areas are also characterized by severe decent work challenges: high rates of unemployment and underemployment, high levels of temporary or casual employment, limited social protection, prevalence of child labour especially in agriculture, low levels of unionization and general poor working conditions. Furthermore, rural areas are chronically underserved by financial service providers, which is a limiting factor for economic development. Even where financial services are accessible, evidence shows that social concerns are often not fully incorporated in funding decisions and delivery of services.
PurposeStriving to unleash the potential of agriculture on a sustainable basis, the German government, together with its development bank KfW and Deutsche Bank, set up the Africa Agriculture and Trade Investment Fund (AATIF) in 2011. This innovative public-private partnership aims to provide food security and create employment and income for farmers, entrepreneurs and workers by investing patiently and responsibly in efficient local value chains.
Since 2012, the ILO has been collaborating with the AATIF to improve the social impact of agricultural investments. In 2013, the UN Environment Programme (UNEP) joined the collaboration, adding expertise on environmental matters.
Phase I: Developing sustainable investment assessment toolsIn the first project phase, the ILO developed an assessment methodology for social and environmental risks and impacts of agricultural investments. The ILO tested the methodology on 15 projects in 11 countries and fine-tuned the process. In addition, the ILO and UNEP advised the AATIF in updating its social and environmental safeguard guidelines and establishing a monitoring and evaluation framework. Realizing that many projects applying for AATIF funding lacked social and environmental capacity, the ILO started offering small-scale technical assistance to enable partner institutions to make social and environmental improvements.
Phase II and III: Establishing impact and building capacity for sustainable investingThe subsequent project phases expanded on the collection of assessment tools by adding the monitoring dimension. In addition, all collaboration partners stepped up their efforts to implement the evaluation framework through rapid appraisals, social and environmental studies and an impact evaluation. The ILO was responsible for technically backstopping all studies to establish the development impact of a blended finance instrument like the AATIF. The ILO also developed a capacity building strategy with related training materials on social and environmental risk and impact management for agricultural finance.
Phase IV (current): Sustainability managementThe current project phase repositioned the role of the ILO and UNEP as the AATIF’s Sustainability Advisor. Phase IV builds on the outputs and lessons from the earlier phases and aims to increase outreach within the financial industry and along the agricultural value chain by building their capacity to create positive social, environmental and development impact. Phase IV consists of (a) expanding the social and environmental assessment methodology, (b) establishing the impact created through the AATIF’s impact investments, (c) building capacity of the AATIF and its partner institutions, (d) communicating and disseminating project outcomes, and (e) developing sustainability management training materials for a broader audience interested in responsible agricultural finance.
AATIF portfolioThe table below summarizes the main characteristics of the AATIF’s portfolio companies and their activities and value chains in 2022:
|Direct and intermediary investments||Benin, Nigeria and Tanzania||Soybeans and sunflower seeds trader|
|Côte d’Ivoire||Cocoa trader|
|Kenya||Input provider for livestock sector|
|Pan Africa (focus: Malawi, Mozambique and Tanzania)||Agricultural commodities processor and trader|
|Zambia||Maize and soya processor|
|Zambia||Wheat, maize and soy farmer|
|Zambia||Wheat and maize processor|
|Zambia||Edible oil producer|
|Financial institutions||Côte d’Ivoire||Universal bank|
|ECOWAS||Regional development bank|