1. Summary

Rod Bassett:              Director, Asset Green Ltd

Chief Executive Officer, Agrium Capital Ltd (Agri-Food Investment subsidiary of Asset Green Ltd)

Asset Green Limited (part of United Green Group Family Office) is a UK-based strategic private equity firm with a global food security investment thesis focused on frontier markets. This submission is in response to the IDC’s call for evidence on the effectiveness of Official Development Aid (ODA).

With the support of the UK-funded Manufacturing Africa programme, we formed a landmark strategic investment partnership with Ethiopia Investment Holdings (EIH) to establish Ethiopia’s largest and most technologically advanced crops and dairy farming and processing agri-food system. The joint venture will mobilise $300 million of domestic and foreign capital.

The integrated livestock project will use over 15,000 hectares of land employing advanced technology and techniques to produce alfalfa (lucerne), a high-value commodity generating over $35 million USD in exports and providing excellent protein for cattle. The business model envisions at least 10,000 milking cows producing at least 300,000 litres of milk daily while creating 1,500 jobs.

FCDO’s Manufacturing Africa programme has supported this initiative since our initial meeting at the UK-Africa Investment Summit in 2020. Their support included market assessments of the Ethiopian dairy market, shaping our Environmental, Social and Governance (ESG) approach, developing sustainability and impact measurement frameworks, and facilitating our engagement with key stakeholders, including EIH, leading to our strategic partnership.

2. Company Background

Asset Green Ltd, a private UK-based strategic investment group, proposes to invest in Ethiopia’s crop farming, dairy livestock, and consumer-branded dairy processing sectors as part of its global food security investment strategy. The investment aims to partner with local public investment institutions to deliver attractive economic returns, positive environmental and social outcomes, and a constant supply of high-quality, nutritious, and safe agricultural commodities and dairy products for Ethiopian consumers.

The project is being delivered in collaboration with our strategic partner EIH and its subsidiary Ethiopian Agricultural Businesses Corporation (EABC). EIH is the strategic investment arm of the Ethiopian Government and will facilitate the proposed investment by mobilising the support and participation of relevant subsidiaries with significant capability and market leadership in related fields.

The Joint Venture company specialises in fodder production, dairy livestock rearing and branded consumer dairy products; with the aim to have over 10,000 milking cows producing over 300,000 litres of milk daily. It will also produce fodder crops on 15,000 hectares of land using modern technologies for their own use and potential export. Which makes it the largest single investment in dairy farming and processing in Ethiopia.

The project is expected to create at least 1,500 direct employment opportunities, many of which will be highly skilled and relatively well-paying jobs. The company will also employ a contract farming model, which is expected to improve livelihoods for at least 10 times the number of direct employees across the project zones (estimated 10,000 farmers).

3. From Donor to Investor: How the UK Adds Value and Mobilises Private Capital

a) Enhancing access to investment and finance

Challenges we faced before MA engagement:

We faced the following three core challenges that were significant barriers to market entry:

• No prior experience in Ethiopia: The combination of establishing a greenfield project and the lack of experience in Ethiopia was a significant barrier to our market entry. We needed advisory support to understand the country, the regulatory landscape, and the market.
• Land acquisition: Land is state owned in Ethiopia. A project involving the leasing of 15,000ha requires strong connections and complex negotiations with both federal and regional authorities.
• Sustainability standards: We are a UK-based private equity investment fund, targeting DFI capital for the debt component of the investment. All of whom have significantly stringent financial, impact, and ESG requirements as well as other in-depth due diligence processes and requirements which creates an obstacle to acquiring funding

How MA support changed our trajectory for the better:

MA support has helped us address the three key challenges in the following ways:

• Understanding the market: MA supplied us with a dairy market assessment that helped address many of the uncertainties we had entering a frontier market. It was a critical and insightful tool in understanding the Ethiopian dairy sector. It provided a structured evidence-based foundation for our decision to invest into an integrated livestock project in Ethiopia, that had both a crop and livestock component.
• Land acquisition: The procedures and processes to acquiring are often opaque, and the negotiations can be long and protracted. MA speeded up that process by helping identify risks (including social) associated with land access in Ethiopia and making introductions with key stakeholders in the federal and regional government.
• Sustainability standards: Manufacturing Africa provided an ESG gaps assessment for project locations. Subsequently, developing sustainability solutions, and establishing strong measurement and reporting frameworks to manage ESG risks and opportunities. This kind of high-quality advisory services on ESG issues is not currently available in Ethiopia.

b) Catalytic finance and VfM

Manufacturing Africa’s high-quality, comprehensive advisory helped a UK private equity firm invest in a profitable and developmentally impactful venture in Ethiopia, which, without this support, is unlikely to have been achieved. The business is expected to generate over $150m USD in annual revenues, an EBITDA of 25%+, and be valued at $750m USD by 2030. The project will also address Ethiopia’s development constraints, create over 1500 direct jobs (at least 50% women), and another 5000 indirect jobs. It will also generate over $35 million in foreign exchange earnings from exports of animal forage. In addition, the increased rural incomes will support access to better social services, including education, health, and financial services. This will also help rural communities remain attractive to rural youth and reduce rural-urban or overseas migration.

The significant job creation and livelihoods impact, as well as, the foreign exchange earnings will contribute towards the development of Ethiopia and as a result improve the stability of Europe and British interests by working to address migration while building critical trade partners.

c) Local partnerships and capacity

Our project model exemplifies the building and utilisation of local partnerships to deliver real value for smallholder farmers and private sector partners. Specifically,

• Local partnerships: Our partnership with EIH and the EABC is a rare example of a successful public-private partnership in Ethiopia. It complements the UK’s partnership with the Ethiopian government, ensuring to build strong relationships between the two governments while supporting their recent macroeconomic reforms and wider economic development.
• UK expertise as a force multiplier: The project will transfer and develop skills and capacity to Ethiopian, individuals, businesses and investors, enabling high-quality roles to be transferred from expatriate employees and creating highly skilled jobs for national employees over time

Recommendations

Scale technical expertise: Focus-on and significantly increase funding for targeted technical assistance and transaction facilitation programmes like Manufacturing Africa. This support is vital for structuring complex, market-creating funds and ventures to ensure they are commercially viable, locally embedded, and achieve systemic, rather than isolated, development impact.

Support businesses through their growth journey, particularly small and medium-sized businesses that traditional investors and incubators cannot support. This is strong additionality and support that we can't get anywhere else. Sometimes the gap is significant and makes it unfeasible without the support of programmes like Manufacturing Africa and particularly without the tailored support to navigate the environment.