The CGIAR, the world’s largest agricultural research for development organization, is breaking down silos between the development and private finance sector through the implementation of the first science-driven accelerator program for climate-smart agribusinesses in Zambia.

The program is operated under AICCRA, a three-year, six-country project that that is funded by the World Bank and that helps deliver a climate-smart African future driven by science and innovation in agriculture. 

AICCRA Zambia Accelerator Program

One of the focus countries of AICCRA is Zambia, where four of the 14 CGIAR research centers (IWMI, IITA, ICRISAT, WorldFish) are developing services and innovations to help Zambian farmers and communities safeguard their livelihoods in the face of climate change. In a participatory process, four climate-smart innovation bundles were designed that are now being scaled in partnership with high-performing Zambian agribusinesses with the aim to increase the livelihoods of 300.000 Zambian farmers by the end of 2023.

The AICCRA Zambia Accelerator Program operates similarly to a conventional startup/business accelerator, with the added benefit of using scientific excellence to leverage the potential of Zambian agriculture while increasing the investment readiness of its agribusiness portfolio for both public donors and impact investors. The process is divided into four main steps.

STEP 1: Innovation Bundling

In a series of workshops, the four centers developed four climate-smart agriculture innovation packages, which aimed to cater to different value chains and regions in Zambia:

• Sustainable finance for off-grid solar irrigation
• Integrated agriculture/aquaculture systems
• Drought-tolerant seed varieties
• Circular Economy for mixed livestock/legume systems

The bundles consist of a mix of research innovations developed by the CGIAR and tailored to the market needs of the Zambian agriculture ecosystem.

AICCRA Zambia then took a demand-led approach focusing on the gaps in the market and technical assistance needs of key actors such as agribusinesses and the farmers they serve. This was done by conducting a market assessment exercise that involved gathering information from agribusiness ecosystem actors. In addition, multiple info sessions involving >300 Zambian SMEs were held to co-validate the bundles and adapt them to SMEs’ and farmers’ needs. This ensured that the process was demand-driven and farmer-centric. 

STEP 2: Sourcing

AICCRA Zambia launched an open call for applications on VC4A.com, Africa’s largest platform for entrepreneurship, to find private sector players (SMEs, startups, cooperatives) that were well aligned with the demand-led innovation bundles that had previously been developed. Successful applicants received 50.000USD in grant money to de-risk involved activities as well as a tailor-made technical assistance program (more information on the VC4A AICCRA website). Applicants were able to apply in partnership to either of the four bundles. An additional grant was given to the application which made the strongest case for Gender and Social Inclusion (GESI).

Applicants could apply to either one of the four innovation bundles but had to fulfil certain hard criteria for eligibility. This included a company registration in Zambia as well as proof of existing revenues and customers. Further, the design for the call for applications was informed by CGIAR’s gender experts to ensure that it was gender sensitive and encouraged applications from female-led businesses.

Selecting which businesses to accelerate is one of the most important factors of any accelerator. It was important for the AICCRA team to choose the right type of businesses for which the program would have the means, network and experts to provide the right type of support. This process was strongly linked to the innovation bundling and market assessment exercise – the AICCRA Zambia team needed to match the demands of the market, with the supply of technical assistance available. 

After a two-month call for applications process, the next step was evaluating the applications. Evaluating the applications was managed using the VC4A platform over a period of two months. This investment of time was necessary to allow for the complexity involved in identifying the most promising businesses for the program. It involved a three-step process which included the online application followed by a first round of reviews by the core team to shortlist applicants, and finally the final review to select the top fourteen agribusinesses. Central to the evaluation design process was ensuring that gender was well integrated and strategically positioned. Further application criteria included innovation of the business case, commercial viability and sustainability and implementation plan.

STEP 3: Acceleration

Fourteen agri-SMEs clustered into four bundles, including an additional application that presented the strongest case in the area of gender equality and social inclusion, were onboarded by February 2021 (find more information on the onboarding here). 

The technical assistance facility of the science-driven accelerator program consists of three distinct categories:

1. Scientific excellence: Bundle-specific research advisory supporting the climate-smartness of the activities, but also the inclusion and use of climate information services as well as gender-sensitive strategy development. These services are provided by the scientists leading the individual bundles as well as the respective CGIAR subject matter experts
2. Investment-readiness: Tailor-made services to strengthen the commercial capacity of the portfolio as well as to increase likelihood of investments by private investors, conducted by Open Capital Advisors. 
3. Impact-measurement and management: Assessment of the CSA-impact of the intervention on an SME- and farm-level. This science-based evidence can be anything from CO2 emissions saved to hectares of land irrigated sustainably. This assessment is being conducted by CGIAR monitoring & evaluation specialists and the outputs are being tied into the narrative of investment readiness, strengthening the case for impact investors.

STEP 4: Access to Finance

One of the key objectives of AICCRA Zambia is to de-risk and support these agribusinesses with technical assistance that would position them for follow-on funding from private sector investors. Therefore, a further key step was identifying and engaging with best fit investors who have a mandate to invest in agriculture in Zambia and with the ticket sizes that could be absorbed by the AICCRA Zambia portfolio. Businesses, particularly those operating in the agriculture sector, often struggle to access networks of investors. It is important for the program to provide those linkages to the cohort of agribusinesses, not just as suppliers of capital but also crowd in the right kind of investors who understand the investment landscape and the growing pains of early-stage businesses.

Further to this, another objective of the Accelerator Program was to strengthen partnerships and knowledge sharing among suppliers of capital in Zambia, to grow the pool of investors and facilitate more investment into climate smart agriculture through innovative mechanisms that mitigate risks and other investment concerns.

Conclusion and Outlook

The agriculture sector is the backbone for most developing countries and is crucial for strengthening food security, increasing incomes and driving inclusive and sustainable growth. However, the sector remains untapped due to low levels of productivity exacerbated by the effects of climate change. To strengthen resilience to climate change and efficient functioning of food systems, we need significant financial investment. The public sector and donors cannot handle this alone; we need involvement of the private sector. Yet high perceptions of sector and country risks and the inability to assess and manage these risks, lack of available market data and high transaction costs hinder the private sector’s investment in agriculture.

The mission of programs such as AICCRA Zambia’s Accelerator Program is to support the private sector in addressing some of these challenges by identifying high-impact, high-growth bankable projects and de-risking them to unlock additional sources of financing. At the center of this approach is encouraging partnerships between the private and public sector to strengthen food systems, promote healthy diets and inclusive growth.  

 

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The Accelerating Impact of CGIAR Climate Research for Africa (AICCRA) project is supported by a grant from the International Development Association (IDA) of the World Bank. IDA helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 76 poorest countries, 39 of which are in Africa. Annual IDA commitments have averaged about $21 billion over circa 2017-2020, with approximately 61 percent going to Africa.

Authors

By Hauke Dahl and Mercy Zulu-Hume

The authors are both part of international teams working across the CGIAR towards the development of market strategies and sustainable finance mechanisms to bring agricultural innovation to scale. Hauke is a member of the CGIAR/GIZ Task Force on Scaling, funded by the Fund for International Research (FIA) of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). Mercy is a member of the CGIAR Sustainable Finance Team, also funded by FIA.