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(Bloomberg) -- PepsiCo Inc.’s South African development fund and local lender Absa Group Ltd. are backing a mobile marketplace for farmers that enables them to sell their products as well as source logistics, technical expertise and financing.
Khula Pty Ltd.’s app has 20,000 users, ranging from emerging to commercial farmers, and targets 200 million rand ($10.7 million) in funding by mid-year, co-founder and Chief Executive Officer Karidas Tshintsholo said in an interview. It has raised 126 million rand to date in a funding round led by E Squared Investments, he said.
Pepsico — whose Kgodiso Development Fund has backed Khula — is the biggest buyer on a closed trading platform that allows pre-approved farmers to sell to buyers from supermarkets and others, said Tshintsholo.
In an effort to redress inequities stemming from apartheid, South Africa’s government requires multinational companies operating in the nation to set up local funds to support local initiatives in lieu of selling shares to Black South Africans in so-called equity-equivalence programs.
All of the company’s shareholders from previous seed-funding rounds — including South African specialty-chemicals company AECI Ltd. and Khula’s founders — participated in its series A program, and it will seek strategic investors to close the round, he said.
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“As part of the series A funding, we will scale the South African operations and look to set up pilots in East Africa, and potentially Latin America,” said Tshintsholo, without giving details on the company’s current size. Its valuation has increased 10 times since its seed-funding round in 2023, he said.
Africa is home to the world’s fastest-growing population and has about 60% of its people working in agriculture. The continent also has about three-fifths of Earth’s uncultivated arable land, yet it still imports much of its food, according to the African Development Bank.
To change this, Africa needs investors and technology firms to assist with expertise and bridging the gap left by an absence of infrastructure in many parts of the continent. The AfDB estimates that the current financing shortfall in Africa’s agriculture industry is as much as $65 billion a year.
Khula has secured buyers willing to spend about 1 billion rand to purchase produce from emerging farmers over the next three seasons in so-called off-take agreements, Tshintsholo said.
The firm has incorporated artificial intelligence into its software models to help food growers identify crop diseases, among other functionalities, he said.