A growing understanding among Small and Medium Enterprises (SMEs) that best environmental, social and governance (ESG) practices are good for business is fuelling the uptake of impact funding with loans disbursed ranging from $3-5 million for a period of 5 years, according to venture capital and impact financing fund Aavishkaar Capital.
- •Privamnuts, Embu based processor and exporter of macadamia nuts from Kenya from Kenya to Europe, USA and the Far East is the latest beneficiary of such funds receiving ESG First Fund of KES 387 million (USD 3Mn) from Aavishkaar Capital in partnership with German state-owned investment and development bank (KfW)
- •The fund’s earlier investments in Africa was in Hela Apparel Holdings PLC, a company providing sustainability-focused apparel supply chain solutions to some of the world’s leading apparel brands.
- •It also invested in Balaji EPZ, an apparel manufacturer with two decades of manufacturing experience for the world’s leading denim brands.
According to Impact Fund Managers stringent measures placed by buyers in markets such as Europe has also created awareness among local exporters on the need to integrate ESG into their processes making it easier for pro-ethics investors to pump capital into such entities.
“The uptake of ESG Funds is on a stable growth in Kenya and around Africa. Market driven need to integrate best practices makes it attractive for investors to work with such entities in raising capital,” Darren Lobo, Associate Director (Credit) at Aavishkaar Capital said recently.
“The capital ranges from USD3-5 million with 20 export driven high ESG footprint businesses across Africa in Apparel, food and logistics lined to be supported in the next 10 years,” he added.
Privamnuts’ Nuts
Privamnuts works with 10,000 small-holder farmers maintaining strong relationships by providing input support, training on good agricultural practices and making timely payments. These initiatives have helped the company build a consistent supply base and loyalty from the farmers.
The company maintained its profitability during the Covid period as well as through 2023 when the global macadamia prices were at an all-time low.
“We are excited to be partnering with Aavishkaar Capital, with whom our goals are aligned, Privamnuts and Aavishkaar Capital believe in creating high quality jobs that can improve the economic and social well-being of farmers and workers and uplift communities while delivering high quality agri & food products to global customers.” Patrick Mbogo, Founder & Managing Director, Privamnuts EPZ Kenya said.
Kenya enjoys a significant global competitive advantage in macadamia production given the favourable agro-climatic conditions in key growing areas and is the 3rd largest exporter of macadamia nuts. The industry has significant job creation potential and is very environmentally sustainable. Macadamia trees are low resource intensive and are good for carbon sequestration.
“Privamnuts is emerging as a leading exporter and is already one of the largest employers in Embu County, the company’s traceability initiatives have helped it position itself as a reputable global supplier. We are confident that this partnership with Privamnuts will go a long way in accelerating business growth, creating employment opportunities and cementing Privamnuts’ position as one of Kenya’s leading exporters of macadamia nuts.” Dr. Markus Aschendorf, Head of Division, KFW said “It is important that environmental and social aspects are not only respected but treated as an essential part of the broader business strategy.”