AgDevCo and CDC Invest $11.5M in Malawian Farming Group

March 20, 2017

UK-based, sub-Saharan-focused social impact investor AgDevCo and the UK’s development finance institution, CDC, announced an investment of US$11.5 million in Jacoma Estates – a Malawian farming company specializing in the production of macadamia nuts, chilies, and paprika.

“Malawi is a high-quality macadamia nut producer. With investment in irrigation and processing we can help the country further build a globally competitive macadamia industry,” said Duncan McDavid, CEO of Jacoma.

Under the terms of the investment, which will be structured as debt and preference shares, CDC will provide $8 million of the funds, with AgDevCo contributing the remaining $3.5 million. Jacoma plans to use the funds to help expand its farming operations at its Tropha Estates located in Northern Malawi, and also use the funding to strengthen Jacoma’s existing outgrower schemes that will enable more than 1000 farmers participate in a scheme that will support greater ability to reach the export market, gain access to higher-yielding seeds and valuable agricultural inputs, and will provide up to 100 hectares of year-round irrigation to local smallholders.

Smallholders can play an important role in the value chain,” noted McDavid. “This will in turn give their families a reliable source of income. This investment is an important step in making this vision a reality.”

Second Time Around

This is the second investment by AgDevCo in support of Tropha Estates. In the last quarter of 2014, the fund, along with Agricultural Capital Fund, managed by Pearl Capital Partners, each invested $2 million in a $6 million round for the macadamia nut producer. The remaining $2 million was provided by parent company, Jacoma Estates.

At the time, the company was developing a 518 hectare irrigated macadamia operation and a processing plant, which is nearing completion, with the capacity to produce 938 tons per year to tap into global trends of increasing demand.

Tropha Estates has also extended this business model to include chilies and paprika through a separate working capital loan from AgDevCo of $450,000 –  engaging more than 4,000 smallholders through the provision of seeds and training. Through the program, AgDevCo went on to purchase 540 tons of produce from its participating growers over the last three years which was in turn sold on South African and European markets.

Going Nuts

This is also not the first investment within the wider Malawian nut industry for AgDevCo. In September of last year, the fund invested $1.5 million under a debt and equity deal in Malawian peanut processor, Agri-Oils Limited.

At one point Malawi exported more than 50,000 tons of peanuts per year, but at the end of the 1980s the country’s exports plunged due to a combination of factors according to the report, Monitoring African food and Agricultural Policies – Analysis of Incentives and Disincentives for Groundnuts in Malawi, published by the UN’s Food and Agriculture Organization (FAO). Smallholders began switching to tobacco as their main cash crop; in addition, the state-owned Agricultural Development and Marketing Corporation (ADMARC), which was the only trader of groundnuts in the country, became ineffectual after its disorganized takeover by the private sector and the dissolution of its monopoly. And thirdly, higher levels of aflatoxin in Malawian peanuts clashed with tighter global quality requirements.

However, through the implementation of improved processing protocols including more advanced handling and sorting methods, along with farmer training programs, Afri-Oils aims to control aflatoxin levels and lift Malawi back onto the global market for groundnuts.

Setting the Standard

Along with its participation in this investment, CDC also will provide Jacoma with an additional technical assistance grant that will help Jacoma set a benchmark for sustainable agricultural production and social management. Through enhancing environmental and social practices designed to bring the company in line with international standards, Jacoma will employ smart agricultural production methods and integrate efficient irrigation infrastructure to raise yields and increase resilience in plants and trees faced with significant challenges from climate change.

“Jacoma is a good example of the benefits a socially-responsible agribusiness can deliver to local communities. We are particularly pleased that irrigation will be extended to smallholder farmers in an area prone to drought,” said Chris Isaac, investment director – Malawi with AgDevCo.

Jacoma also will be the recipient of support from AgDevCo’s Smallholder Development Unit, which is backed by the MasterCard Foundation, for the expansion of the macadamia outgrower scheme, under which the company is already actively enrolling and training farmers before distributing 50,000 seedlings which have been grown on the company’s farm.

Macadamias Gain Ground in Africa

For the 2014 and 2015 seasons, South Africa beat out Australia to be named the largest macadamia nut producer in the world after the country’s production increased 20 percent year on year to reach 48,000 tons.

For 2016 however, the significant impact of drought cut South African production to 38,000 tons, and opened a window for African countries to establish themselves as more stable suppliers of the nuts and their byproducts.

In December 2016, Sasini Limited, an agriculture and plantation company owned by Kenyan millionaire Naushad Merali, announced the investment of $4 million to begin macadamia production and to establish a macadamia processing facility in Kenya.

Rejecting the notion that the inclusion of macadamia plants on coffee plantations will reduce coffee output, the company plans to inter-plant its macadamia seedlings on its plantations with its coffee bushes.

“This is being planted at desirable spacing which will not compromise on coffee production,” Merali told The Star. “We anticipate to generate a further Sh300,000 (about $3,000) per hectare from this venture within the coming six years when we shall be at optimal production of macadamia nuts.”


-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at


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