AV Ventures, a for-profit subsidiary of ACDI/VOCA, has recently invested $500,000 in the Warc Group to support the expansion of its operations in Ghana.
Founded in 2017, the Warc Group operates in West Africa with established agricultural production and consulting operations in Ghana and Sierra Leone.
The investment from AV Ventures is in the form of a risk-sharing revenue-based loan, in which AV Ventures’ return will be linked to the Warc Group’s revenue growth over the life of the loan.
“By providing such innovative financing structures to companies like the Warc Group who often make up the missing middle, AV Ventures aims to close the financing gap faced by such agribusinesses in emerging economies.” — Geoffrey Chalmers, Managing Director of AV Ventures
Warc Ghana Limited, incorporated in 2018, designs and sells regenerative agricultural inputs as a service, on credit, to smallholder farmers in Ghana.
They also manage the commercial production of maize and soybean on two training farms in Ghana, located in Akokoa, in the Bono East Region, and Babator, in the Savannah Region.
Supporting Smallholder Farmers
With the support of AV Ventures, Warc Ghana will replicate the Warc Group’s Service Delivery Unit (SDU) model by enabling smallholder grain farmers to access markets, trainings, and inputs and mechanization as a service to help them improve their productivity and incomes.
In exchange for the inputs and services provided in kind, the produce of the smallholder farmers is aggregated with Warc Group’s own production for sale to large grain off-takers in Ghana.
With Warc Ghana as a secure buyer, these smallholder farmers gain access to an economic market at guaranteed, predictable selling prices for their produce. Warc Ghana plans to provide this support to over 3,000 smallholder grain farmers in Ghana over the next five years.
“Unlike other smallholder support programs that focus on marginal income increase, our bundled SDU package helps farmers commercialize for sustained transformative change. With support from AV Ventures, Warc can continue to create deeper impact on more farmers.” – Christopher Zaw, Managing Director of Warc Ghana
Promoting Environmental Benefits
Warc Ghana will continue the use of its sustainable, no-till farming methodology with smallholder farmers. This regenerative methodology protects the soil and minimizes the removal of vegetation cover normally caused by tilling the soil for replanting.
This, plus the cultivation of soybean, which is a nitrogen-fixing plant, will improve soil fertility and result in positive environmental impact, while also benefiting smallholder farmers who will have more crop cycles per year.
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Coping With Pandemic Disruptions
The COVID-19 pandemic has caused disruptions in Ghana’s local supply chains that can jeopardize food security.
The funding from AV Ventures will inject new liquidity into the food and agricultural sectors in Ghana by enabling Warc Ghana to increase the production of maize and soybeans and bridge the supply gaps caused by COVID-19.
The revenue-based loan provided to the Warc Group will enable Warc Ghana to ensure a reliable production and supply of locally produced, high-quality, and affordable maize and soybean in Ghana.
Building Knowledge And Skills
Through its investment in Warc Ghana, AV Ventures is also supporting the long-term economic growth of Ghana by unlocking investment in the agricultural sector that will positively impact commercial agriculture in Ghana.
Through the SDU model, Warc Ghana trains smallholder farmers, which allows the farmers to benefit from new knowledge of agronomic practices, skills, and connections. This will help smallholder farmers improve their yields, land use, and incomes, thereby facilitating their eventual transition from subsistence to commercial farmers.
A spillover effect of AV Ventures’ investment in Warc Ghana will be the strengthening of commercial agriculture. It will also demonstrate the viability of partnerships between large-scale producers and smallholder farmers as a model for attracting private sector investment into the agriculture sector in Ghana.