AfDB invests US$10 million to boost cold storage in East Africa

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African Development Banks (AfDB) one of Africa’s vibrant development funders have levitated the cold storage chain industry in East Africa, by supporting it with a $10 million equity investment.

According to the bank’s statement, AfDB’s board of directors approved the sum which is part of the ARCH Cold Chain Solutions East Africa Fund (CCSEAF), which is targeted at supporting the development, construction and operation of greenfield cold storage, temperature-controlled solutions and distribution facilities in East Africa.

At the moment, several startups and business solutions have been established across East Africa, tackling storage challenges, one of them is Cold Solutions East Africa, which is one of the region’s leading temperature-controlled storage and logistics.

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AfDB is not the only financial institution to throw its resources into the cold storage arena, Rabobank is also dedicated to the same market in East Africa.

Further, the statement noted that “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,”

On another note, in July 2020, ARCH Cold Chain Solutions East Africa Fund company announced a $70 million investment to build modern temperature-controlled cold storage warehouses in Kenya.

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East Africa is faced with plenty of food waste across the farming landscape and the modern means of technology offer a wide range of solutions to offer small-hold farmers.

The statement noted that, in partnership with other conglomerates in the East African 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”.

According to Atsuko Toda, the Bank’s Director of Agriculture Finance and Rural Development Department, “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.”

The interest towards cold storage funding has not been for AfDB alone, in May 2016 a Public-Private Partnership initiative formed by the Alliance for a Green Revolution in Africa (AGRA) and UPL Limited, launched the “million Tonnes of Cold Storage in Africa Initiative,” aiming to mobilize US$2 billion in the next decade, to set up millions of storage capacities across sub-Saharan Africa.

More on the efforts, the statement highlighted the imminent threat to humanity and Africa, climate change, arguing “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”

In a nutshell, the statement noted that the fund is expected to be a strategic contributor to the backward integration of local producers into regional and global markets.

Cold chain solutions will levitate the economies of traders and retailers who nearly make up 40 per cent of the total gross value of sub-Saharan African value chains, with robust cold chain infrastructures, Africa stands to see the 14 per cent food losses problem vanishing and ushering a new wave of benefits.

Read: Is Kenya planning to kill smallholder farming?

Padili Mikomangwa is an environmentalist based in Tanzania. . He is passionate about helping communities be aware of critical issues cutting across, environmental economics and natural resources management. He holds a bachelors degree in Geography and Environmental Studies from University of Dar es Salaam, Tanzania.

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