Pura Organic Agro Tech Ltd has raised $2.5 million (about Shs8.8 billion) from Yield Uganda Investment Fund (Yield Fund) to fund its acquisition of a cassava processing plant.
Yield Fund, jointly supported by the European Union (EU), the National Social Security Fund (NSSF), the Open Society Foundation (OSF) and FCA Investments -- is managed by Pearl Capital Partners.
The funding to Pura is structured in both straight equity and patient debt investment, reads an August 6 joint statement.
It's the Fund’s eighth investment into the Ugandan agriculture sector and its first substantial value addition investment into the cassava value chain.
Incorporated in 2011 and found in Nakasongola District, Pura has been developing its nucleus farm, expanding the acreage cover of its cassava portfolio, producing cassava cuttings for smallholder farmers, and is now evolving into cassava processing and value addition.
The company will now use the investment to acquire and install a vertically integrated cassava processing plant that is envisaged to produce an assorted line of three products comprising of High-Quality Cassava Flour (HQCF), Tapioca starch, and Sago (an edible starch delicacy that is made from cassava).
Pura also separately raised another $225,250 grant from the International Fund for Agricultural Development (IFAD) to among others, develop a cassava out-grower scheme, which will guarantee the company’s cassava supply to the new processing plant.
“Pura is expected to yield a high social impact derived from the supply chain, where the company will source most of its raw material i.e., fresh cassava roots from a combination of the smallholder farmers and the commercial cassava farmers. The company shall also supply smallholder farmers with cuttings of improved cassava varieties that are disease and drought-resistant and higher-yielding,” reads the statement.
“The supply model is positioned to provide the subsistence cassava farmers with a sustainable market for their cassava produce and consequently an opportunity to commercialize cassava as a cash crop as well as increase their household incomes in the process. The investment in Pura is also expected to foster industrialization in the country as the company will process locally grown cassava (a subsistent commodity) for industrial use, therefore having a wider economic implication beyond the direct 2,000 farmer incomes over the seven years investment hold period.”
Wanjohi Ndagu, a partner at Pearl Capital, said the investment presents an opportunity to provide sustainable solutions to key challenges faced by cassava farmers as well as contributing to Uganda’s lofty development goal of decreasing her dependence on agro-processed imports.
European Union (EU) Ambassador to Uganda Attilio Pacifici said the investment is part of a broad partnership between Uganda and the EU to promote sustainable investments, especially in the agriculture sector.
“This long-standing partnership has been bringing concrete results over the years and this investment is one of them. One of the key objectives of this intervention is to support the agro industrialisation of the country while ensuring the full engagement of smallholder farmers and promoting food quality and security,” he said.