The Board of Directors of the African Development Bank has approved an equity investment of $10 million in the ARCH Cold Chain Solutions East Africa Fund (CCSEAF) to support the development, construction and operation of greenfield cold storage, temperature-controlled solutions and distribution facilities in East Africa.
The investment will advance the Fund toward its targeted final close of $100 million by the second quarter of 2022. The Fund’s first close of $30 million occurred in November 2019.
In partnership with conglomerates in the region, the Fund will develop and operate as many as eight cold chain operations in Kenya, Tanzania, Ethiopia, Uganda, and Rwanda to reduce post-harvest losses, and the spoilage of processed food and medicines caused by a lack of temperature-controlled solutions.
Atsuko Toda, the Bank’s Director of Agriculture Finance and Rural Development Department, said “ARCH CCSEAF’s vision to become a regional operator of third-party cold chain logistics services is expected to address the critical issue of post-harvest food loss and food safety hazards in East Africa. Its plan to serve pharmaceutical clients for their storage and distribution of medical supplies is also very timely as the continent continues to tackle the Covid-19 pandemic.”
Traders and retailers represent roughly 40% of the total gross value of Sub-Saharan African value chains, as do farmers, and cold chain solutions are the critical interface between the two parts of the chain. According to the United Nations Food and Agriculture Organization, globally, roughly 14% of food losses, excluding the retail stage, occur following harvest and before reaching consumers. This is mainly due to poor cold chain infrastructure.
The impacts of climate change, including supply chain interruptions and higher temperatures, are expected to exacerbate the problem. Additionally, the Covid-19 pandemic has sharpened the need for facilities to store and distribute vaccines and other medicines requiring storage in controlled temperatures.
The Fund is expected to be a strategic contributor to backward integration of local producers into regional as well as global markets.
The investment aligns with other Bank initiatives, such as the Covid-19 Response Facility to mitigate the economic and health impacts of the pandemic. The Fund also advances the Bank’s Eastern Africa Regional Integration Strategy 2018-2022, its Climate Change Action Plan, and the High-5 strategic priorities, including Feed Africa.
The Fund’s manager is ARCH Emerging Markets Partners Limited, a specialist emerging markets investment advisor based in the United Kingdom.