Zebu Investment Partners GP Limited (ZIP) has successfully closed its investment in AMC Trade Finance Limited (AMCTF) through its sophomore fund, Africa Food Security LP (AFS LP). AMCTF is a specialist trade finance institution, providing bespoke, secured and structured trade finance solutions for Africa-focused trade. The investment from AFS LP is a combination of equity and preference shares, enabling AMCTF to leverage and expand its loan book, to benefit trade and SMEs across Sub-Saharan Africa.
With its inaugural transaction in 2016, AMCTF has since completed transactions in soft commodities such as cocoa, cashew and coffee, facilitating export and import trade in African countries including Cameroon, Ghana, Kenya, Nigeria and Tanzania with a strategy to bolster its Pan-African origination, going forward. A recent AfDB and Afreximbank report estimates the African trade finance gap as of 2019 at US$81 billion (from a peak of US$120 billion in 2011), with SMEs being the most adversely impacted. This gap has been further exacerbated by the Covid-19 pandemic, due to impediments in logistics, production and trade. For a continent still heavily reliant on world markets, the potential detrimental impact on perennial challenges such as food security cannot be over-emphasized. The implementation of Africa Continental Free Trade Area (AfCTFA) is expected to improve trade within the continent at the SME level, which will mostly be food and agriculture-based products. These trade activities will elevate at least 30 million households from poverty.
ZIP Managing Partner, Brian Frimpong, notes the Covid-19 pandemic impact on food security across the continent; “We believe that food security is a basic human right, and the pandemic came at a time when Africa was still grappling with food scarcity issues, with an estimated 73 million people on the continent acutely food insecure. AMCTF’s secured trade financing model is ideally positioned to enable our fund’s mandate of catalyzing increased food security within the continent. We look forward to our partnership with AMCTF, which we believe can play an instrumental role in accelerating Africa’s post-pandemic economic recovery.”
Co-founders, Cobus Visagie and Jan Louis van den Berg, both PwC South Africa trained Chartered Accountants, are passionate about unlocking the potential of African SMEs. Cobus, AMC Group CEO, explains the reason the Company has decided to partner with AFS Fund; “The investment of the Africa Food Security Fund in AMC Trade Finance comes at a very opportune time for us as an SME focused boutique specialist lender to address the need for trade finance and fill the void created by Covid restrictions and liquidity concerns for local banks on the continent. The AMCTF founders and management are excited to broaden its client network and collective deal making expertise with the very experienced Zebu team. Zebu’s focus on SMEs in the food and Agri value chains is complementary and strongly aligns with AMCTF’s vision of providing structured trade and commodity finance for high impact sectors in Sub-Saharan Africa.”
The AFS LP’s Technical Assistance Facility (TAF), once fully funded, will explore funding inclusive projects targeting agricultural input suppliers and exporters within the SME value chains.