Absa, led by Sello Moloko, strikes deal to expand South Africa’s mobile marketplace for farmers

Key Points

• Absa and PepsiCo’s Kgodiso Fund invest in Khula, a platform linking South African farmers with buyers, logistics, and financial services.
• The startup, with 20,000 users, raised R126 million ($6.7 million) in its R200 million funding round, led by E Squared Investments.
• Khula integrates AI to detect crop diseases and develop agri-financing tools, addressing Africa’s $65 billion annual agricultural financing gap.

Absa Group, a Johannesburg-based financial services provider led by South African businessman Sello Moloko, and PepsiCo’s Kgodiso Development Fund are backing Khula Pty Ltd., a mobile platform that connects South African farmers with buyers, logistics providers, and financial services. The investment aims to improve agricultural efficiency and expand market access in one of Africa’s most crucial sectors.

Khula, which has 20,000 registered users, is looking to raise R200 million ($10.7 million) by mid-year, according to co-founder and CEO Karidas Tshintsholo. So far, it has secured R126 million ($6.7 million), with E Squared Investments leading the latest funding round.

PepsiCo, through its Kgodiso Development Fund, is already the largest buyer on Khula’s closed trading platform, which allows pre-approved farmers to sell directly to major retailers and food suppliers, Tshintsholo said.

Foreign investment and South Africa’s equity-equivalence rules

Multinational companies operating in South Africa are required to invest in Black-owned businesses or establish local development funds under the country’s equity-equivalence programs. These policies serve as an alternative to direct Black ownership stakes and have driven investments in firms like Khula.

Khula’s previous backers, including South African specialty-chemicals group AECI, joined its Series A funding round. The company is now seeking additional strategic investors to close the round. “With this funding, we’re expanding our South African operations and testing pilot programs in East Africa and Latin America,” Tshintsholo said. He added that Khula’s valuation has grown tenfold since its 2023 seed round.

Bridging Africa’s agricultural financing gap

Despite having 60 percent of the world’s uncultivated arable land, Africa remains a net food importer due to infrastructure challenges and limited access to capital. The African Development Bank (AfDB) estimates that the continent’s agriculture sector faces an annual financing shortfall of up to $65 billion.

Khula is integrating artificial intelligence (AI) to help farmers boost productivity, including using AI-powered tools to detect crop diseases. “A farmer can take a picture of a rotten tomato, and our AI will diagnose the issue instantly,” Tshintsholo said. The company is also working on agri-financing solutions to help small-scale farmers access credit and expand their businesses.

Absa’s growth under Sello Moloko

Absa, which serves more than 12 million customers across 10 African countries, has expanded steadily under Chairman Sello Moloko since 2021. In March 2021, it became South Africa’s first bank to commit R100 billion ($5.6 billion) to sustainable finance by 2025, reinforcing its role in Africa’s green finance sector.

Last year, it secured a $300 million syndicated green loan, a major milestone for the country’s banking industry. The bank also partnered with the International Finance Corporation (IFC) on a $50 million trade finance deal to support agricultural exports in West and East Africa.