Luxembourg-based private equity firm Bamboo Finance has partnered with  Louis Dreyfus Holdings, a major global agricultural conglomerate, to launch a $50 million fund for agribusiness investments in sub-Saharan Africa.

Bamboo, a private equity that invests in business models that benefit low income communities in developing economies raised the first $10 million of the planned agribusiness fund, named NISABA, from Louis Dreyfus.

In a statement, the private equity firm said NISABA will aim to spur development and encourage additional private investment in to Africa’s food sector.

“We are excited to apply an integrated investment approach with a vast network of local expertise for the benefit of smallholder farmers and their communities, while demonstrating the value of impact investing,” said Bamboo Finance CEO, Jean-Philippe de Schrevel.

NISABA’s mandate will stretch across nine East and West African countries, where the fund intends to build distribution channels for smallholder farmers, who operate on less than two hectares of land and make up 80 percent of African farmers.

The 10-year fund aims to help small- and medium-sized businesses reach scale and become commercially investable with long-term equity, quasi-equity and mezzanine debt investments.

NISABA will target deals of $3-3.5 million for five-year terms, with the intent of earning 12-14 percent gross returns on the portfolio.

According to the World Bank Africa’s agricultural market potential could reach $1 trillion by 2030. The continent’s home food markets are currently about one-third that size, but lack of investment capital and capacity constraints are the main reasons why the sector hasn’t fulfilled its potential.

“Agribusiness development is at the crossroads of major challenges for Africa. With an estimated population of 2 billion by 2050, and 330 million young Africans expected to enter the labor market by 2025, global agricultural production is not keeping pace with population growth,” said Margarita Louis-Dreyfus, Chairperson of Louis Dreyfus Holding.

“We believe that through appropriate financing tools like impact investing, the private sector must take an active role in addressing such challenges.”