by Lionesses of Africa’s Operations Department
Lionesses of Africa is now ten years old. An incredible decade of serious work and deep-rooted support from so many inspirational leaders, not only across the continent, such as our 100 Lionesses and many, many others within our incredible community, but also the various Governments, banks, DFIs and corporates. All of them have tirelessly supported us and driven to the fore the need for African female founders to be taken seriously by all who profess to care about building our incredible continent from within, and with African businesswomen at the helm strengthening communities and delivering sustainable tax-paying businesses and of course, ‘good jobs’.
Yet there is so much to do we haven’t even started to scratch the surface. The most we can hope is that our highlighting of serious iniquities such as the investment into women-only founded businesses (stuck hard at 2%); or the massive collateral requirements banks put upon loans (ave 211%); or even as António Guterres (UN Chief) points out “Gender equality is growing more distant…UN Women puts it 300 years away,” (here), will all we hope, create the urgency required for less talk and more direct and focussed action from those in real power (i.e. those who control the money).
We were reminded of this whilst watching the latest bun-fight that was the COP29 meeting. For us, this is not just about the climate crisis, but given the huge impact this brings on women, this is a female crisis, as the UN state here: "The climate crisis does not affect everyone equally…When extreme weather disasters strike, women and children are 14 times more likely to die than men…An estimated 4 out of 5 people displaced by the impacts of climate change are women and girls…Given their position on the frontlines of the climate crisis, women are uniquely situated to be agents of change — to help find ways to mitigate the causes of global warming and adapt to its impacts on the ground.”
…And indeed women do, as countless numbers of our community show every day, finding solutions to the issues they and their communities face. However, we can’t help but feel that without action on the part of those who control the purse strings, this opportunity is wasted.
This lack of control over capital by those who “…are uniquely situated to be agents of change” is the issue. As Linda Scott, writing in the Financial Times points out (here): “Women’s limited control over capital is…rooted in a worldwide structural exclusion. For 4,000 years, females have been forbidden, usually by law, from owning land. This exclusion has been so powerful that men now own more than 80 per cent of the world’s surface…[have] a near-monopoly on capital — and virtually total control over trade…this lopsidedness reduces GDP significantly, while perpetuating poverty, hunger, slavery, and violence of all kinds, as well as geopolitical and economic instability.” (And let’s not start on that other anniversary we had on the 15th Nov - 140 years since the infamous 1884 West African Conference of Berlin that carved up the African map with no consideration of sovereignty, or the legitimacy of laying claim to someone else’s land and resources!)
Sadly the flow of capital continues along ‘safe’ routes. It’s not like we were not warned, BII has published their reasoning behind sticking to the safe but sure ‘Green Dice’ when investing, rather than the riskier ‘Red Dice’, in their Research paper: ‘Risk, Return and Impact. Practical thinking on investing for development.’ (here - P.14). We have often said that no one gets sacked for investing in a project run by a major international company such as Cargills, but go out on a limb and invest alone in an unknown and untested company running one then beware, even if it is locally based, women run, community centric etc etc, even if the impacts so delivered are potentially larger (students of Behavioral Finance will know exactly what is going on)…and so it seems, as one of the latest investments by a number of DFIs, provides (here)“…working capital to enhance…sourcing capacity and fully utilize…CAPEX developments”, across Côte d’Ivoire, Mozambique and Burkina Faso to the tune of $90million for an international agricultural commodity trading company based out of Singapore called Robust International Pte. Ltd. “…a prominent trader of agri commodities specializing in sesame and cashew nuts…the company is evolving from traditional trading and processing to becoming an end-to-end integrated supply chain company” according to the DFI mandated lead arranger (here) who to be fair state that it is only $75mil.
As the Dutch knowledge and research organisation, SOMO write: “[A] characteristic that enables large agricultural commodity traders to profit, is their control over the supply side. Through their large storage capacity, and their ability to take well-informed positions on the unregulated financial markets, [they] are able to influence and profit from unstable food systems…[Another] is their vertical integration…hold[ing] key positions throughout the entire food supply chain, from farm to fork…through a vast network of contracted agricultural suppliers, storage, processing (crushing), and transportation in core strategic food-producing countries or regions.”
Why do we care? Apparently this injection of Cash Flow brings over 1,000 jobs and assists over 600,000 small holder farmers. The fact is that low cost capital (if it was really market related, there would be a larger non DFI element) such as this provided by DFIs skew the market away from those who do not have the ability or connections to borrow either from the DFIs or even from Banks (given aforementioned collateral needs), and that bracket certainly includes women founded businesses. The DFIs are kindly underwriting Robust’s business. As the saying goes “In the land of the blind, the person with one eye is king!” - it doesn’t take much.
We have Lionesses across Africa who have built strong relationships with tens of thousands of smallholder farmers, training them and encouraging them to grow, paying them well under Fairtrade and others, who now overnight have to compete not only with a large international agri trader (sorry, an end-to-end integrated supply chain company), but also one who has built their large warehouses and factories and now has gratefully received the cash flow it wants to purchase all the available stock from 600,000 smallholder farmers, sourcing and processing of cashew nuts in Côte d'Ivoire and sesame seeds in Mozambique and Burkina Faso to fully utilise their brand new production and warehousing facilities. How can anyone compete, let alone Lionesses?
Whilst we recognise over 1,000 jobs created is a decent number (this does not consider the jobs lost at local firms of course, and never a 1-1 swap as local owners and certainly women support so much more), are we really saying that Robust International would have gone ahead with building all this infrastructure and then sat there with no money in the bank wondering what to do next? Are we saying that the World Bank, IFC, UN are all wrong and women led businesses do not build stronger communities and good jobs, and it has to be left up to a large trading group from Singapore to come to save the day? The DFIs lend or take equity stakes in businesses in developing countries and aim to “crowd in” private capital, so perhaps this is where the value lies. The FT write here: “…in practice the ratio of private to public capital has struggled to rise above 1:1.” Here too, out of $75mil broken down by one DFI investor at least $55mil was DFI money, so not close to 1:1.
Of course, there is a trade-off between risk and reward, and when you are ‘playing’ with taxpayers money (as these DFIs all have to consider), they do have to ensure that the risk really is worth it. However, if it is true that the higher the risk, the greater the reward, then why is the Red Dice so ignored? Surely if there is a chance of losing everything, there is an increased chance of hitting a serious unicorn-style home run (albeit in impact and higher rates of return), so the numbers showing ROI on the red dice should go up exponentially, but clearly they are saying safe is good, and if it is with a company that is simply not going to go bust, then even better. How one controls this and ensures that the iniquitous ‘one eye’ does not create a monopsony (a market situation where there is only one buyer) we presume is a question for another day…
However, we are not in any position of power to change these rules, so we have to accept them, but now we know the rules of the game, we know how to play, so how do we get more women’s businesses onto the Green dice? The answer we fear when faced with the reality of who is actually being supported and is already sitting comfy on the Green Dice having their Cash Flow (apologies) ‘working capital to enhance…sourcing capacity and fully utilize…CAPEX developments’ massaged, is sadly that we can't.
Against that tragic backdrop should we all not be asking more of those who control the money?
Stay safe.