Farmers First

Jaconda Chengula, Onorina Kihanga, and Novetha Kivamba, Who We Are

We serve Non profit, but Scaling rapidly— smallholder operate like a directly and farmers business through partnerships

Faines Luvinga, Tanzania 2 The CHALLENGE

70% of the world’s poor depend on farming, using extremely outdated technologies Maria Uwimana, The Hunger Season

Millions of smallholder farmers experience annual hunger seasons when last year’s harvest runs out and this year’s is not yet mature enough to eat. The resulting meal skipping and substitution has devastating impacts on the farmers’ families: • 1 in 3 children are stunted • 1 in 10 children die before age 5 • 1 in 4 complete high school

Elisi Ndanga, Tanzania 4 The CLIENT

Our typical client is working, on average, on an acre of land to feed a family of 6.

One Acre Fund served 809,800 clients directly in 2018.

Novetha Kahemela, Tanzania Where We Work

INDIA

NIGERIA

ETHIOPIA

UGANDA RWANDA TANZANIA

ZAMBIA

Operating Country

Pilot

6 Our Innovation: Complete Service Bundle

FINANCING DISTRIBUTION TRAINING POST HARVEST SUPPORT

• Credit with flexible • On-time delivery • Simple and • Improved drying repayment • Within walking participatory • Safe storage • Insurance distance • Delivered by farmers

For best results, these services must be provided together.

7 Valendino Luhwavi and Alice Sade, Tanzania

WE OFFER LOANS IN THE FORM OF FARM PRODUCTS AND TRAINING SERVICES 8 Kakamega County, Kenya Distribution Population: 2 million Most smallholder farmers live in remote areas.

We deliver products and services in the field, within walking distance from our clients’ homes.

Previous Market Point

One Acre Fund Delivery

9 Festus Fwamba, Kenya

EVERY YEAR WE DELIVER SEVERAL THOUSAND TONS OF FARM INPUTS IN THE FIELD 10 Thomas Khisa, Kenya

WE FOLLOW UP WITH PRACTICAL TRAINING EVERY TWO WEEKS 11 Emelda Nafuna and Davis Mukolwe, Kenya

WE ALSO ADVISE FARMERS HOW TO STORE THEIR HARVEST BETTER TO MAXIMIZE PROFITS 12 Daisy Chisale and Janet Nongaluwa, Malawi

OUR CLIENTS VALUE OUR SOLUTION AND REPAY 97% OF THE TIME 13 after

before

Alice Barasa, Kenya

WE MEASURE OUR SUCCESS ON OUR ABILITY TO MAKE FARMERS MORE PROSPEROUS 14 Farmer Profit

3-Year Average: 2016–2018

$343

$228 $115 / 50% increase

Control One Acre Fund Farmer Farmer

Upendo Malata, Tanzania 15 Where Extra Income Goes

12% additional nutritious food 33% school fees

24% medical expenses, improved housing, etc.

31% new business & farm activities

Selemani Makapula and Family, Tanzania SOURCE: 2011–2012 External Study of Kenya Program 16 Farmers Served 809,800

445,630

203,598

135,000

31,840 40 4,100

2006 2008 2010 2012 2014 2016 2018

Top Dressing, Malawi 17 Scalable Impact

FINANCING

DISTRIBUTION

TRAINING

MARKET FACILITATION

1 field officer provides service bundle to 200 smallholder farmers reaching 1,000 people 18 Financial Sustainability (2018)

For every $1 USD donors contribute…

97% 72%

Farmers contribute nearly $3 USD Farmers Who Repay Loans Financial in Full and On Time Sustainability

Paulo Mgata, Tanzania 19 2030 Vision: we will deliver a full suite of life- improving products for big harvests, healthy families, and rich soils

Financial impact: Asset growth & diversity: Improved seed; behavior Trees; productive livestock; change campaigns; crop solar lighting insurance

Food security & Sustainable farm diversity: management: Poultry; nutritious Soil fertility; lime; seed foods; nutrition trainings choice

20 Our model addresses nine SDGs

21 FINANCIAL INFORMATION

Input delivery, Rwanda 22 Sources of Revenue: Farmer Revenues and Grants

Core Program FARMERS COVER 72% OF THE COSTS OF GOODS AND SERVICES PROVIDED + GRANTS COVER THE REST FINANCING DISTRIBUTION TRAINING POST HARVEST SUPPORT

Partnerships: implementation partnerships with public and private sector actors at a sub or whole-country level

Research & Development: identifying new technologies and process improvements GRANT FUNDED Policy and Communication: Amplifying the voices of farmers globally

Shared Services: admin support to other departments, fundraising, etc.

23 Grants allow us to serve high-need markets, continue growing, and provide more services

Commitment to serve high- Continuous growth into new Comprehensive support need, underserved markets markets

We work with staple crop We are still only serving < 2% of Donor subsidy allows us to farmers largely disconnected the total potential market. That provide in-depth training, sell from markets, who are more means 98% of the addressable low-margin, but high impact, costly to reach. Farmers are market is going hungry! products, and offer additional ultra-poor or extreme poor by services, e.g., crop insurance World Bank definition, which limits our pricing. Opening new sites in existing countries of operation and Donor subsidy allows us to work launching entirely new country in markets where margins are Our loans are 6x smaller than pilots requires more subsidy limited by government rules, average loans of MFIs working early on, as we build up scale but impact is high in East Africa*, making it harder to break even.

*Source: MIX; One Acre Fund internal data. Data is from 2017 or most recent available. Average EA MFI data represents 10 organizations working in agriculture in Kenya, , Rwanda, and . The data excludes One Acre Fund. 24 One Acre Fund borrows to cover the difference in timing between farmer revenues and inventory purchases

Borrowing need #1: Finance purchase of inventory and extension of loans to farmers

• Truly cyclical • Conforms with a growing season • Cash flow increases throughout season but declines near the end as we ramp up for the next growing season • Farmers historically repay 97%+

Gross operating cash flow is farmer repayments less GAAP payments for inventory (goods, transport to warehouse, warehouse insurance, labor to unload trucks , etc.) 25 For example, the Kenya inputs financing cycle is over a year long

May-December January-March September

One Acre Fund Inputs are delivered to Farmers complete purchases inputs farmers repayment

Debt helps us manage the timing gap between when we need to buy agricultural farm inputs and when we get repaid for them by farmers Fredah Ketiba, Kenya 26 One Acre Fund also borrows to cover the difference in timing between grant revenues and operating expenses

Cash flow cycle for one year Borrowing need #2: Finance $15,000,000

consolidated operating costs until $10,000,000 grants arrive $5,000,000 • Grants arrive in varying amounts throughout year but tend to be $0 concentrated in Q3 of the calendar -$5,000,000

year -$10,000,000 • Total Liabilities < Current Assets, -$15,000,000 meaning we only borrow to cover -$20,000,000 short term timing differences Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Consolidated cumulative net operating cash flow after grants

1) Gross operating cash flow is farmer repayments less GAAP payments for inventory (goods, transport to warehouse, warehouse insurance, labor to unload trucks , etc.) 2) Country net operating cash flow is farmer repayments less all costs incurred at the country level. At the consolidated level 27 One Acre Fund’s Existing Debt Overview

• Borrower: One Acre Fund, a US domiciled 501c3 with operating branches and trusts in countries where we serve farmers Kiva

• Debt: All debt USD unsecured, pari passu Bank revolving debt • Total Debt Capacity*: $49.6 million Impact • Total Drawn*: $31.9 million investors and foundations • Number of loans*: 11 $49.6 • Average Loan size*: $4.5 million MILLION

• Average weighted maturity*: 3 years

• Debt/NA ratio*: 0.68 OPIC

• Current ratio*: 2.64

28 * As of 3/31/2019 - Unaudited We are looking to raise $110 million of debt as we grow to serve two million families by 2024

Growth of debt needs and farmers served 120 2.500.000

100 2.000.000

80

1.500.000

60

(millions (millions USD) 1.000.000

Projected needs debt 40 Projected numberclients of served 500.000 20

0 0 2017 2018 2019 2020 2021 2022 2023 2024

Debt Needs (millions) Farmers Served left scale right scale

 One Acre Fund has been working with lenders since 2013 and has a strong track record of structuring loans 29 2 MILLION FARMERS CAMPAIGN

One Acre FundInput farmers delivery, in Nyatieka Rwanda, Kisii30 2 MILLION FARMERS CAMPAIGN Unique Opportunity: A group of existing partners have agreed to help capitalize One Acre Fund for the next 5 years with a layer of subordinated debt.  $11m total interest from five participants  Activated if we can raise at least $22m of new Senior debt (2x size of sub debt) by 2020 – $12 million to be raised by Q4 2019 – $10 million to be raised by Q1 2020 – This funding will support One Acre Fund’s projected growth to serve 1 million farmers in 2020  We will build on this and continue growing both sub-debt and senior debt to capitalize One Acre Fund into the future, enabling us to reach 2 million farmers by 2024

Proposed Capital Structure (2020) Proposed Capital Structure (2024)

Trade Credit and Trade Credit and Senior Unsecured Debt - $54m other Liabilities Senior Unsecured Debt - $85m other Liabilities ($22m new + $32m existing) ($30m) ($50m)

5 yr Subordinated Debt ($11m) Subordinated Debt ($25m)

Net Assets. ($46m) + Refundable Advance ($15m)* = Net Assets ($70m) $61m 31 Why your capital would be catalytic An additional $22m of senior debt by 2020 would:

 Unlock $11m of subordinated debt from existing lenders and donors  Capitalize One Acre Fund for 2020 - a milestone year in which we are on track to reach 1 million smallholder farmers!  Lock in a base of senior and subordinated debt from which we will build on for the next five years and support One Acre Fund’s growth to 2 million farmers by 2024  Help us serve farmers like Florence Amolo Nyakuli in Kenya, pictured here with her children

32 2 MILLION FARMERS CAMPAIGN Indicative Terms for senior debt

One Acre Fund, a US domiciled 501c3 with operating branches and trusts in Borrower countries where we serve farmers Investment $1,000,000+ Size

Currency USD

Interest Rate 2-3%

Term 2-3 years

Debt Type Senior Unsecured Term Loan

Interest and Quarterly Financial and Impact Reporting + Quarterly Interest Payments Reporting 33 One Acre Fund is committed to minimizing risk for lenders

• Current ratio > 1:1 Balance sheet • Crop Insurance and Credit Default Insurance where deemed prudent health • Maintain minimum Net Asset base

• Total liabilities / net assets < 3:1 • Current assets > total liabilities Leverage

• Quarterly Financial and Impact reporting • Annual Audited Financials Other • Follow IFC/World Bank guidelines for environmental and social good

34 oneacrefund.org

@oneacrefund

35 Appendix

• Audited Financial Statements (2018) • One Acre Fund Legal Structure Balance Sheet – 12/31/2018

Cash $26,623,054 Significant liquidity Grants Receivable $19,582,205 Repayment Receivables $19,340,624 Inventory $24,182,452 Other Short Term Assets $6,390,147 Current assets comprise 81% of TOTAL CURRENT ASSETS $96,118,482 total assets Fixed assets, net $12,749,218 Other Long Term Assets $176,215 Long Term Grants Receivable $9,741,479 TOTAL LONG-TERM ASSETS $22,666,912 TOTAL ASSETS $118,785,394

Accounts Payable and Accrued Liabilities $20,655,709 Notes payable and Line of credit, current portion $15,373,633 Deferred Revenue $4,454,194 TOTAL CURRENT LIABILITIES $40,483,536 Long Term Liabilities $17,500,000 Subordinated Liability $15,000,000 TOTAL LONG TERM LIABILITIES $32,500,000 Conservative leverage TOTAL LIABILITIES $72,983,536

NET ASSETS $45,801,857 37 Statement of Activities - 2018 AUDITED Twelve months ended 12/31/2018 Unrestricted Restricted Total Grants and Donations $22,708,554 $46,584,635 $69,293,189 Core Program Revenue $63,407,329 $0 $63,407,329 Two revenue sources Farm Product Sales to 3rd Parties $3,020,117 $0 $3,020,117 Other $184,568 $0 $184,568 Net Assets Released from Restrictions $29,222,137 ($29,222,137) $0 - Satisfaction of program restrictions $28,972,103 ($28,972,103) $0 - Expiration of time restrictions $250,034 ($250,034) $0

TOTAL REVENUES $ 1 18,542,705 $ 1 7,362,498 $ 135,905,203

EXPENSES AND LOSSES Program Services ($117,315,643) $0 ($117,315,643) 94% expenses are Management and General ($3,598,500) $0 ($3,598,500) program-related Fundraising ($4,028,679) $0 ($4,028,679) Total Functional Expenses ($124,942,822) $0 ($124,942,822) FX remeasurement loss ($778,848) $0 ($778,848) Minimal FX exposure

CHANGE IN NET ASSETS $ ( 7,178,965) $ 1 7,362,498 $ 10,183,533

NET ASSETS, BEGINNING OF PERIOD $11,586,269 $24,032,051 $35,618,320 NET ASSETS, END OF PERIOD $4,407,304 $41,394,549 $45,801,853

38 Statement of Cash Flows - 2018 Change in net assets $10,183,532 Depreciation $979,383 Remeasurement (gain) loss $0 Gain on sale of fixed assets $0 Donated investments $0 Change in Inventory $978,385 Change in Farmer and Agrodealer Repayment Receivable ($4,866,603) Change in Vouchers Receivable ($2,928,788) Change in Grants Receivable ($8,914,275) Change in Other Short-term Assets $3,153,350 Change in Accounts Payable $3,967,523 Change in Deferred Revenue ($29,996) Change in Other Liabilities $15,000,000 Solid operating cash Net Cash Used In/ Provided by Operating Activities $17,522,511 Cash flows from investing flow generation Purchases of Property ($3,131,779) Proceeds from sale of fixed assets $1,092 Change in Other long term assets ($305) Low investing and Net Cash Used in/ Provided by Investing activities ($3,130,992) financing cash flows Cash flows from financing activities Change in Loans Outstanding $2,656,532 Net Cash Used in/ Provided by Financing Activities $2,656,532

Effect of Exchange rate changes on cash $0

Change in cash $17,048,052 Starting Cash $9,575,003 Ending Cash $26,623,055

39 One Acre Fund legal entities

One Acre Fund Governing Board

All entities below included in One Acre Fund Consolidated Financial Statements

Separate charities used for fundraising only Branches of One Acre Fund Inc. (501c3) One Acre UK One Acre One Acre One Acre One Acre One Acre One Acre Fund, Inc. (UK Charity) Stichting Fund Fund Fund Fund ($14k (Dutch Charity) (Registered 501c3 in US) Kenya Ethiopia Tanzania Malawi net assets) ($35K NA) One Acre One Acre One Acre Borrowing entity Fund Fund Fund Rwanda Burundi One Acre Fund Uganda

US NGO Branch of US Entity Dashed line = Borrowing Entity Separate Legal Entity; for biz dev and policy reasons One Acre One Acre One Acre Trust and NGO Myanmar- Winding down wholly-owned wholly-owned Operational subsidiary (limited Subsidiary Subsidiary in size of investment)

Notes: KE, UG and RW are for-profit branch / other branches are nonprofit. NL and UK entities have independent boards w/ Matt Forti, Managing Director 1AF ,on both.. 40