Overview & background

This report examines whether investment funds active in East Africa are structured to support food systems transformation. Commissioned by Transformational Investing in Food Systems (TIFS), it analyses the regional impact investing landscape, identifies gaps and opportunities, and outlines emerging best practices. Food systems currently impose high environmental, health, and economic costs, estimated globally at USD 29 trillion annually, compared with USD 9 trillion in food market value. The study positions agroecological, regenerative, and Indigenous food systems as viable alternatives requiring targeted capital allocation.

Investing in agroecological innovation through impact funds

The report highlights impact funds as critical intermediaries capable of directing capital towards agroecological innovation. Many funds combine financial capital with technical assistance, blended finance, and risk-sharing mechanisms. These approaches aim to address financing barriers faced by smallholder farmers and agroecological enterprises, particularly the “missing middle” finance gap of approximately USD 5,000–200,000. Integrating non-financial support and community engagement is identified as central to achieving systemic outcomes.

Methodology

The analysis is based on Systems Investing Assessment (SIA) results for 23 funds actively financing food and agriculture in East Africa. Fund managers completed detailed questionnaires and provided supporting documentation, which was independently reviewed and validated. The assessment focused on intended impacts rather than measured outcomes and is limited by the small sample size. Funds were evaluated across design quality, governance, impact management, and alignment with agroecology and food systems principles.

Funds overview

The assessed funds deploy debt, equity, or blended instruments, with ticket sizes ranging from USD 5,000 to over USD 8 million. Around 57% manage assets below USD 10 million, and none exceed USD 100 million. Most funds are open-ended and operate evergreen structures aligned with long-term agricultural investment. Approximately 74% maintain a defined technical assistance strategy, recognising that capital alone is insufficient to generate food systems impact.

Investing in agroecological innovations in East Africa

Agroecological enterprises operate across the value chain but are typically small, with 59% reporting revenues below USD 50,000. The study finds strong investment alignment with livelihoods, system sustainability, and environmental objectives, while biodiversity, human health, and human rights are comparatively underinvested. Only 48% of funds systematically assess potential negative impacts, and fewer than half publicly report on them. Return expectations vary, with 52% of funds targeting capital preservation, reflecting reliance on concessional capital.

Conclusions

The SIA tool is shown to support fund self-assessment, peer comparison, and investor engagement. Key gaps remain in evidencing theories of change, strengthening governance, managing negative impacts, and integrating biodiversity and human rights considerations. The report concludes that agroecological investing in East Africa is growing but requires more coherent impact frameworks and collaboration to scale.

Field-building recommendations

The report recommends developing a shared investment thesis for agroecology and regenerative food systems, grounded in scientific and practice-based evidence. It calls for organising a community of food systems–focused fund managers to share best practices and engage policymakers. Collaborative actions among investors, governments, and donors are encouraged to reduce capital costs, redistribute risk, and increase capital flows to agroecological innovations.