Refocusing the strategic direction of Africa’s largest Enterprise Challenge Fund
The Africa Enterprise Challenge Fund (AECF) was launched in 2008 “to accelerate pro-poor growth in Africa” with the purpose of making “agribusiness, rural finance, and other rural market systems work better for the poor in selected African countries”.

The AECF has proved very attractive to donors mobilising $ 207 million of funding. It is estimated to have benefitted over 600,000 households delivering gains averaging $244 per household, a development rate of return (DRR) 4.5 times the funds it has disbursed. However, the AECF has drifted from its original purpose of catalysing business innovation in markets that will benefit Africa’s rural poor raising the issue of what its strategic focus should be in future.

The Alliance for a Green Revolution in Africa (AGRA) and the AECF Committee commissioned Nathan Associates London to conduct due diligence on the current legal, governance and financial arrangements for the AECF.

The study was strategic in nature, focusing on the ‘high priority, mission critical’ issues. These mission critical issues were be summarised as: i) The cost effectiveness of its impacts (jobs, incomes) in relation to other, similar instruments and the effect on costs of the current structure and contractual arrangements (the costs of the host, AGRA, plus a contracted fund manager); ii) The quality of strategic oversight and the extent of accountability provided by its com plex governance structure; iii) The legal, financial and reputational risks that its donors and AGRA are exposed to as a result of its legal status and contractual agreements; and iv) The future of the AECF as a more self-sustaining instrument to catalyse and finance pro poor private sector innovation.

Nathan staff recommended that the current structure was streamlined so that incentives are better aligned from the sources of funding, the citizens of developed countries, through to the African poor.

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