The Gum Arabic Fund

 Gum Arabic is an important cash-crop for thousands of African farmers in the so called ‘Gum-Belt’ in Sub-Sahara Africa, with the main producer being Sudan, followed by Nigeria and Chad. It is an essential ingredient in the food and beverage industry and its production affects the lives of an estimated eight million people in the region.

A.S.D F. (Acacia Social Development Fund) was established by the Dutch Foundation ‘Stichting Acacia Social Development’ in order to manage the Gum Arabic Fund.  

The Dutch State Employees’ Fund APG, the largest European pension fund, has commitment of to invest up to 75 million Euros on a match funded basis.It is also committed to maintaining an active supervisory role in the initiative by maintaining control of the supervisory board for compliance and control purposes.

The initiative is actively supported by Euclid Network, the EU and UN funded network of third sector leaders. A.S.D.F has obtained support from the UN funded Common Fund for Commodities for the development of Fair Trade standards in the production of gum Arabic.  Euclid Network is being engaged to help monitor social effect.

A.S.D.F's social agenda can be accessed here.  

The initiative involved a team of expert commodity bankers, and traders who wish to establish this as the first in a set of funds to trade non timber forest products.

Features in creating the environment for the fund to operate in include:

Major commodity traders consider this market too small and complex to dedicate capital and resources unlike Cocoa and other agricultural commodity markets.

The presence local players have shrunk as a result of the withdrawal of the Sudanese Gum Arabic Company.

The Fund

The fund is a  Fair Trade Commodity Trading Fund, providing capital growth to investors and a more transparent and equitable market for a key ingredient to the global food and beverage industry.

The fund itself will operate an open trading platform which will:

1. Provide trade finance to sellers without taking local risk (i.e. advances paid upon certified delivery)
2. Maintain a proprietary portfolio trading Gum Arabic on its own account

Other areas which are being explored include risk considerations and the returns prospects, which have been further broken down by the A.S.D.F., information about this is available in the publications and articles on the website.The foundation can be contacted at foundation@gumarabic.org.