Impact fund manager Aavishkaar Capital has provided a US$5mn loan from its US$250mn global supply chain support fund (GSCSF) to help an African spice processing firm access an export market worth hundreds of millions of dollars.
The loan will be used to support Horizon Group Africa’s working capital needs, including growing its farmer outreach and purchasing raw materials to fulfil increased client orders.
GSCSF was launched in 2022 with a €50mn commitment from KfW, the German state-owned investment and development bank.
The fund, which primarily invests in non-diluting self-liquidating structures to meet the growth needs of SMEs across Asia and Africa, has a “mandate to deliver strong ESG outcomes while achieving both commercial returns and positive social impact”.
It recently received a US$40mn investment from the Japan International Cooperation Agency to expand support for SMEs across Africa and Asia.
With the fresh funding, Horizon aims to triple the number of farmers it works with to 10,000 within three years.
Horizon aggregates and processes spices such as ginger, turmeric, cloves, cinnamon, cardamom and black pepper through facilities in Nigeria, Tanzania and Madagascar, and supplies markets in the EU, Asia and the US.
Darren Lobo, director at Aavishkaar Capital, tells GTR: “Horizon is directly sourcing from these farmer groups, ensuring that there’s higher value transferred to the farmer rather than getting lost in the value chain.”
“The challenge was getting these farmers access to market,” he says, noting that there are many layers of agents between the farmers and the customer.
Much of Africa’s spice harvest is still exported raw or not exported at all, leaving farmers with only a fraction of the potential value, Aavishkaar says.
While Nigeria is the second-largest producer of ginger, it captures less than 3% of global export revenues, according to data from the Food and Agricultural Organization and the World Bank.
The country produced 781,000 tonnes of raw ginger in 2023, but earned just US$47.5mn – while China produced 697,000 tonnes and secured US$581mn.
Eventually, Lobo says, the aim is to raise equity, which will enable Horizon to do much higher-value processing, including extracting active ingredients for use in pharmaceuticals and skin care products.
“The plan with Horizon is to formalise this institution, moving from a family business to becoming a corporation,” says Lobo. “There’s a real, substantial earning potential for the farmers.”
Jomy Antony, chief executive of Horizon Group, says Aavishkaar’s “experience in scaling businesses, strengthening governance systems, enabling access to global customer markets, and unlocking capital will be invaluable as we build Horizon into the leading African spice processing company”.
Markus Aschendorf, head of division at KfW, adds: “Our investment in the Horizon Group through the global supply chain support fund reflects KfW’s commitment to strengthening sustainable supply chains across Africa and in Asia.
“Horizon’s work in ethical sourcing and regenerative agriculture aligns with our vision for resilient, ecologically conscious businesses that are ready to meet global standards and thrive in international markets.”
Facilitating farmers’ access to export markets has long been a challenge and is often supported by development institutions.
Last year, the International Finance Corporation and Absa partnered to provide a commodity trade finance facility to Singapore-based Valency International for the purchase of African agricultural commodities, including ginger.
