COVID-19 and agricultural investments in Africa: the year 2020 in review

The ILO’s Social Finance Programme has collaborated with the Africa Agriculture and Trade Investment Fund (AATIF) since 2012, developing knowledge to improve the social impact of agricultural investments. In this article, we reflect on the last 12 months of embracing the realities of COVID-19 and our continued work on capacity building, sustainability management and impact measurement.

Article | 27 October 2021
The last 12 months have passed with us living through a global emergency, first and foremost caused by the COVID-19 pandemic but also fuelled by worsening climate change effects in some geographies. What started as a health emergency, quickly turned into a deep socio-economic crisis that shook up the investment world. It was the sustainable investing community, which is driven by AATIF and its likes, that stood up, and while the crunch continued, reconfirmed their strong commitment to addressing core issues like employment, health, access to health care, food security, women’s empowerment and keeping businesses afloat by continuing financing and revisiting non-financial support through technical assistance as emergency response. Living through this challenging year, the AATIF and its partner institutions embraced the new realities, driven by the conviction that the recovery needs to elevate sustainability to the frontline, now and in the future.

COVID-19

On a constant basis, we reached out to all AATIF investee companies to learn how they continued being affected by COVID-19, what measures they put in place and with what effects on the companies, their workers and their families. The companies with stronger social and environmental management acted from the outset of the pandemic, building on their healthy relations with their employees, suppliers, surrounding communities, clients and industry networks. One and a half years into the pandemic, we have seen waves going up and down and illness caused by the virus not spearing the workforce of partner institutions. Here we can summarise some COVID-19 lessons, learnt across AATIF investee companies including financial institutions, agricultural producers and other value chain actors:
  • Business continuity plans were immediately activated and response teams composed with representatives from across operations, including human resources and occupational safety and health officers;
  • All partners welcomed national Covid-19 guidance which was followed;
  • No staff lay-offs;
  • On-site measures, including hygiene and social distancing as well as temperature checks, applied to staff but also third party workers;
  • Constant communication (helpdesks, mailing) with internal and external stakeholders including partners along the value chain to address anxiety and concerns;
  • Developed staff counselling services;
  • Adapted business operations and embraced innovations, such as:
    • Incentivizing digital payments,
    • Using alternate working arrangements like telework/part-time work/reallocating staff to different tasks/using leave,
    • Accelerating teleworking policy design and implementation plus ensuring that adequate equipment and stable internet connection are provided to staff,
    • Transforming training for staff and clients into digital formats all allow management, staff and clients to stay in touch and continue business;
  • Implemented Corporate Social Responsibility actions, supporting government and communities in their efforts to fight COVID-19.
Furthermore, the AATIF Technical Assistance Facility Manager and the AATIF Compliance Advisor commissioned a study on the effects of COVID-19 on the livelihoods of smallholder farmers in value chains where AATIF is invested. In addition to generating recommendations for smallholder TA interventions, investee companies active in these value chains suggested possible areas where AATIF could provide support to further assist managing COVID-19 risks. These activities ranged from operational support of provision of sanitary equipment and consumables required to control the spread of the virus (face masks, sanitizers, handwashing equipment) and provision of COVID-19 tests, to vaccine procurement for staff and local communities. The responses underline that in face of a global pandemic, a whole range of stakeholders needs to each play their role, involving private and public entities, from the North as well the South.

Capacity building for sustainability management

Following its bi-annual revision schedule, AATIF’s Social and Environmental Capacity Building Strategy was updated in September 2020. Despite operational challenges, several AATIF team members attended training courses including members of the compliance advisor team focussing on agri-specificities.

AATIF impact measurement

Build on lessons learnt measuring impact of AATIF investment activities, we overhauled AATIF’s development impact statement and elaborated a set of impact dimensions with related impact indicators and new templates for analysing self-reported data of investees companies.

We now distinguish the impact of direct and indirect investee companies in seven dimensions relevant for investments along the agricultural value chain: (i) primary agricultural production, (ii) outreach to producers; (iii) local processing; (iv) trade; (v) employment; (vi) environment and (vii) social and environmental management.

For investments in financial institutions, we measure impact along five dimensions, (i) agricultural portfolio, (ii) innovative financial and non-financial services, (iii) environment, (iv) social and environmental management system (SEMS) and (v) employment.

Going forward, the analysis will allow AATIF to assess actual and potential areas of impact with more precision, as well as to provide comparability across different investments and reporting periods. See an example of such “impact spider” for a direct investee company in Figure 1. These new tools will facilitate mission-driven decision making by AATIF’s Investment Committee and the Board of Directors. We have applied this new framework, for the first time, in AATIF's Annual Report and you will find several “impact spiders” in the investee company descriptions.

AATIF impact spider

The AATIF continued conducting rapid appraisals on several investments, including Amsons, Mount Meru Millers, Africa Milling and, with Oragroup, for the first time on a financial institution. While the editing deadline for the annual report does not allow including the results, they will be soon available in four new Impact Briefs easily accessible on the AATIF website.

Lastly, two AATIF investee companies participated in employment effects studies. The case studies focused on the cashew value chain in Tanzania and a financial institution supporting smallholder schemes in Zimbabwe. The analyses concludes that the investments triggered not only an increase in employment numbers, but also improved the skills of the labour force, management systems of the investee companies and labour practices. The findings have been discussed with the investee companies and within the AATIF for determining consequences on business operations and investment strategy. The findings are also geared at informing the development of the EU’s External Investment Plan and can be found here.