Inspired by the Social Capital Index located here on xigi.net (see below left), two analysts are posting their take on the enterprises listed in Deals in Play monthly. These DEAL REVIEWS highlight some of the market opportunities and challenges, and are based on reviews of publicly available information. Our hope is that these reviews - and importantly the dialogue and feedback on the deals that follows - will add further clarity to the growing social venture finance space. * The following analysis of Africa Invest by Jason Rissman is based on partial information - as Africa Invest is not included in this month’s “Deals in Play

AFRICA INVEST

By Jason Rissman

UK-based CRU Investment Management fund has launched two investment vehicles that offer high net worth individuals, institutions and ordinary investors put their money towards combating poverty and hunger in Malawi. The Africa Invest Capital Protected Plan includes a seven-year capital guarantee with a minimum investment of £4,000. Or for institutions and high net worths, there’s the underlying Cru Investment Management Fund with a £50,000 minimum.  That’s right, not charities – but sophisticated investment vehicles that could help over a million people in one of the poorest countries in the world.

Africa Invest CEO John Maguire has spent the last three years learning about Malawi and creating this opportunity. Investment funds are used for a commercial agriculture enterprise. CRU invested over £2 million in their pilot program. They built irrigation systems, roads, and storage facilities. They hired over 2,000 people to farm, and also set up an “outgrower scheme” to let local families sell crops directly back to Africa Invest. The enterprise works with NGOs and has also developed a food program for orphans, elderly, and HIV patients. In total, Africa Invest estimates that its pilot has created new opportunities and income for over 80,000 Malawians. Sounds good, right? Get this: the company expects 30-40% per annum return on capital from this initial pilot.

I’m not going to mask it: I’m flat out impressed with Africa Invest. Their executive team and advisory board are a true A-list, including the former Vice President of Malawi as their Director of Business Strategy. If they’re able to raise the £120million they’re seeking, Africa Invest expects that its program will benefit 1.3 million people, or 9% of Malawi. Of course there’s risk and they acknowledge it. But with food prices on the rise, commercial agriculture in an under-tapped market might even seem commonsensical if only it was not in Africa. Hopefully Maquire and team can help reshape investor perceptions and show that investing in Africa is a real opportunity. There are certainly mixed views on protected investment schemes, and this opportunity might not be right for everyone. Still, I’m excited by the hands-on, innovative approach Africa Invest has taken and I hope it fuels more interest in Africa as a place to invest.