Embracing Risk in Supply Chain Finance: A Deep Tier Impact Approach for Agricultural Value Chains

Supply chain financing can be a risky venture under most circumstances. But financing businesses in low-income and emerging markets has its own unique set of risks.

On Nov. 18, CARISCA’s latest Advancing Women in Supply Chain webinar featured fund and investment manager Brenda Pennell. She spoke about her experiences embracing risk while financing agricultural supply chains in Africa. 

Pennell works for Annona Deep Tier Impact Finance. The Netherlands-based firm provides investment capital to smallholder farmers in low-income and emerging-market countries. 

“When we talk about risk management, we could talk about eliminating risk, and we can talk about mitigating risk, and we can talk about managing risks,” said Pennell. “But I can assure you that we don’t need to eliminate risks, because there are plenty of risks that we can’t influence.”

Key risks for investors may include political instability, currency devaluations, moral hazard (i.e., the risk that investees will decide not to repay), and the personal integrity of all parties involved. Pennell said her philosophy toward risk management is to take a pragmatic approach.

“If you are investing in low income and emerging markets, you have to have that pragmatic lens when you look at investments and you look at risks,” she said. “Otherwise there’s a risk that you would never do anything because it would be considered too risky.”

A case studyformer soccer pro turned plastic recycler

Pennell presented a case study of a young entrepreneur who started a plastic recycling business in Mali. He recycles waste plastic into tubing for the construction industry and sells it primarily to his father-in-law’s company. He self-financed his business four years ago with money he had saved while playing professional soccer in Spain.

“On the face of it, if we’re using our risk lens, we can see a lot of risks here,” said Pennell. 

“We can see a youth entrepreneur, which could be interpreted as a lack of experience in life and running a business. His product is for the construction sector, so that’s sector concentration. And he’s only producing one product, which, again, is very concentrated. And that does introduce operational risks.”

“I was really moved by the motivation amongst the entrepreneurs I’ve been working with to deliver solutions that are for the benefit of their country and their fellow countrymen.”

But Pennell said she was struck by the entrepreneur’s passion and commitment. His motivation to start the business was to address plastic pollution in Mali, which is a terrible problem across West Africa. It contributes to flooding and poor health outcomes and has a real economic impact as well.

The entrepreneur also believed his business could help address unemployment among youth and women, which is another problem in the region.

Pennell said she challenged the risk management department at her firm to look at his investment proposal from a different perspective.

Looking at risk from a different perspective

“So we have a youth entrepreneur,” said Pennell. “Is it that he’s inexperienced, and that’s a risk? Or is it an opportunity because he’s young and he has energy and he has a real vision?

“He produces a single product for a single sector. But does that mean that he’s had the opportunity to build the experience in how to process plastics, so that he can then start diversifying his product range and the sectors that he serves?

“And he’s self financed to date. Is he unbankable? Or should we look at it from the other direction? He has invested his life savings, so he’s got real skin in the game and a vested interest in the success of his business.”

Although the risk-management team expressed reservations, they did invest in the company, financing the purchase of new equipment to increase production. Despite COVID and two military coups in Mali that interrupted the business and delayed loan repayments, Pennell said the investment has been a success. 

The new equipment has reduced the amount of plastic pollution in Mali significantly. Pennell said she helped the entrepreneur obtain a grant for a water recycling machine that reduces the company’s environmental impact. And he has diversified his business, adding a new product line that creates a lot of work opportunities for women and youth.”

“He’s become very passionate about training marginalized women and youth to work in the waste sector,” said Pennell. 

The plastics recycler is not unique in his altruistic motivations, said Pennell.

Delivering solutions for social impact

“I was really moved by the motivation amongst the entrepreneurs I’ve been working with to deliver solutions that are for the benefit of their country and their fellow countrymen,” said Pennell. “It seems to be especially pronounced in fragile and emerging markets.”

Social impact is a risk mitigant that Pennell’s firm uses to offset other risks when considering investments. She said Annona takes a broad view when evaluating an investment proposal. 

They look at value chain risk, entity risk and transaction risk, each from a number of different perspectives. These perspectives include financial, governance, farmers, workers, environment and other. 

“By having a more nuanced understanding of the risks,” concluded Pennell, “we can be more pragmatic about doing a risk score and make a more realistic assessment of just how risky the transaction is.”


This lecture was presented as part of CARISCA’s Advancing Women in Supply Chain Webinar Series. The series is an ongoing effort to expand our work in access and inclusion. Promoting women in supply chain is a top priority to achieve CARISCA’s goals and have a positive impact on Ghanaian and African livelihoods. Join CARISCA’s mailing list to learn about upcoming events.

About the speaker:

Brenda Pennell

With more than 20 years of business and investment experience, Brenda Pennell deploys capital to help agricultural SMEs in Sub-Saharan Africa achieve their ambitions. Her impact investment journey began in a U.K. investment bank in the early 2000s. While there, she wondered whether there was a better way to use money than through buying and selling esoteric equity derivative products. There was.

Pennell left banking to explore sustainable agriculture. She established a diversified organic food and farming business. After eight years of learning the ropes of running an SME, she realized that impact is best done at scale. So she “scaled up” by entering the impact investment world, where she has been introduced to some of the most amazing people and places on the planet.

She joined Annona Deep Tier Impact Finance, based in the Netherlands, in March 2022. Pennell holds a doctorate in applied mathematics from the University of Oxford and a master’s degree in development finance from SOAS University of London.