The New York-based Acumen Fund—a non-profit investment firm that seeks social and financial returns while helping reduce global poverty—is now in the East African country of Uganda. The Gulu Agricultural Development Company (GADC) will receive $2.2 million from a co-investment between Acumen Fund and Root Capital, with the goal of improving the company's organic cotton output and helping civil war refugees in the region maintain smallholder farming livelihoods.
"We're looking to help them go beyond just selling cotton to providing them with a means of livelihood when it is not crop season, such as sesame production," Acumen Fund's East Africa Manager, Biju Mohandas, tells Fast Company. "And we provide more than just capital—we provide management support."
GADC was started by South Africa entrepreneur Bruce Robertson, who two years ago was requested by the Ugandan government to take over a cotton ginnery in order to kick-start a cotton-producing ecosystem. Northern Uganda had a long-standing civil war and the land was virtually untouched, says Mohandas. "This is a geography which has been growing cotton for several centuries. The soil is in good condition for cotton."
At that point Robertson started giving farmers in the area increased access to markets and he introduced organic growing. And as with any venture capitalist, an investment is just as much about the entrepreneur behind the idea as the idea itself and Acumen Fund, too, sees this as an investment in both Robertson and GADC.
"Acumen Fund and Root Capital’s investments will help GADC buy cotton from local farmers, sell the lint to international buyers and provide access to larger markets," says Robertson, GADC's CEO. "All of these components are key to achieving a seamless value chain, maximizing return to the farmers and leading Northern Uganda on its road to recovery."
The "recovery" is from Northern Uganda's decades-long civil war that disrupted the local cotton industry—an industry that was thriving prior to the war. The number of people living in poverty in the North is now 61% of the population, nearly twice the national level of poverty, which is 31%.
Acumen Fund hopes that its investment will help spur long-term growth in Uganda—the firm has already invested in Tanzania and Kenya and has plans to expand into West Africa soon. "This whole region is growing dramatically," says Mohandas. "The nature of conversations is changing from that of a continent in shambles that requires aid to a continent that is becoming the next big growth area in terms of economic interest. Acumen Fund is very excited about that development. We've been investing in this region for a decade now. And the fruits of that growth should be shared with all stakeholders involved."
As for GADC, the focus on creating a cotton-producing ecosystem is "a game-changer," according to Mohandas. "Robertson's vision is to create a whole ecosystem," Mohandas says. "He has enterprises all over Africa. He's been doing this for 20 years. Right now the focus is on linking the cotton to European buyers." The investment will help GADC actually process the cotton themselves at some point in the future, and then sell products directly, rather than ship off the raw material for buyers to benefit from.
"GADC has great potential to bring renewed life to Northern Uganda’s cotton industry and empower thousands of small landholder farmers with the skills to compete in today’s global market," says Acumen Fund CEO, Jacqueline Novogratz. "We are excited to make our first investment in Uganda and look forward to being a part of GADC’s, and Uganda’s, future."
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