The fund manager who believes in "transforming Africa by investing, not giving" was in Scotland yesterday to promote the £30m fund that could pull 9% of the population of Malawi out of poverty.

Jon Maguire, who founded Cru Investment Management in 2005 after working for Legal & General and the Pru, hopes to raise the cash from pension schemes and wealthier investors for a project that demonstrates a new model for tackling poverty in sub-Saharan Africa.

He was accompanied by Justin Malewezi, an MP and former vice-president of Malawi, who believes Scotland's longstanding links with the country may help to catch the attention of churches, charities and philanthropists looking for investments.

Maguire invested £2m of Cru's own money into a pilot scheme after visiting the country three years ago, and seeing that investment into village agriculture was the only way to inject money and employment into a subsistence economy where the average annual income is £57.

Africa Invest now leases 2000 hectares of arable land in Malawi in nine farms, controls twice that through an "outgrower" scheme, and is forecasting returns on capital of 30% to 40% from growing new cash crops such as herbs and spices. It already employs 2000 labourers, 8000 outgrowers, and is impacting positively on more than 100,000 people.

Maguire said: "We have ambitions to raise £30m, which will impact on the lives of 1.3 million Malawi people, that's 9% of the population of the country. That shows you the power of investment, because you would never get there with donations."

Malewezi commented: "We have had efforts to lift people from poverty with limited success - sometimes it starts quite well and then it falters. Africa Invest is a partnership with the farmers themselves."

He added: " Malawi can grow anything, but they have failed to have a proper market."

Maguire said Cru had taken specialist advice and trained the farmers to grow new crops beginning with chillis, and was now setting up a paprika processing plant to capture more of the value chain. The first season saw a crop of 460 tonnes of chillis, worth £460,000 at the factory gate - but worth an astonishing £69m as packaged paprika on the shelves of UK supermarkets.

"Somewhere between £460,000 and £69m is the answer to rural poverty in Africa," Maguire said. Africa Invest could go on to capture 60% of the value chain, rather than the 1% otherwise available to the farmers, making its returns highly geared to any improvement, he said.

By establishing, a UK marketing unit and selling over the internet, it could capture 100%.

Key to the venture is the leasing of large farms, such as former tobacco estates, from the government. "For tens and tens of years in crops such as tobacco there has been a pyramid structure of abuse against the farmer on the ground," Maguire said. "We want to maximise the price for ourselves and share it with them, whilst they may end up growing things they have never heard of before."

John Carter, who once ran Malawi's biggest corporation, and is now Africa Invest's chief executive, said: "The problem with donations is people become dependent on the flow and don't feel they have to do anything.

"We have got to perform and sell the product - as long as we provide an outlet they can pump into and make good money, I believe they will not only continue to do it but develop themselves."

Already some labourers were being trained up as quality inspectors. "That creates a value chain of people who are raising their own abilities and knowledge."

Maguire said Malawi had no stock market or buyable companies. "If we are not careful people will address Africa in terms of stock markets, and focus on pushing a price-earnings ratio from 15 to 25 but make no impact on the ground in Africa."

The company's investment plan for private investors protects 70% of capital over seven years, risking only 30% in the fund, which is open to 100% investment by institutions.