Credit: Tech in Africa
Bamboo Capital Partners, the Asset Management arm of Palladium’s Impact Investment business has this week announced a round of investments totalling EUR 6.4 million across four microfinance providers in Mali, Kenya, and Uganda through the Agri-Business Capital Fund (ABC Fund).
The latest in a series of recent investments focused on tackling poverty and improving the lives and livelihoods of smallholder farmers, this brings the ABC Fund to a total of over 20 investments across 9 countries globally.
The Fund has committed EUR 2.4 million and EUR 1 million respectively to the savings and credit cooperatives Nyesigiso in Mali and EBO in Uganda, as well as EUR 2 million and EUR 1 million each to the Kenya-based credit-only microfinance institutions Yehu and Premier Credit Kenya.
“In many developing countries where smallholder farmers and rural small businesses are the backbone of the economy and the main producers of food, providing them with finance to support their business is critical for the entire country’s economy,” notes Jose Maria Ortiz, Palladium Managing Director.
Building Microfinance and Credit for Farmers
Nyesigiso is a network of rural savings and credit cooperatives operating in Mali, which collects savings from members and provides them with loans and microcredits. With over 260,000 members and a presence in six of Mali’s nine regions, Nyesigiso is the country’s second largest microfinance institution with one of the largest rural farmers networks.
Today, over 60 percent of loans are short term, with a tenure of less than 9 months. The ABC Fund’s financing will help provide longer term credit to members and increase the agriculture portfolio size by a third. The financing will also help increase financing for rice, potato, onions, and maize crops, which are currently under-financed across Mali.
EBO, a savings and credit cooperative society, has nearly 48,000 members, and provides sustainable financial services to almost 12,000 borrowers, most of whom are smallholder farmers operating in rural Uganda and half of whom are women. Of EBO’s six branches, five are based in rural towns, providing service to clients engaged primarily in agriculture activities.
The cash injection from the ABC Fund will enable it to provide more than two thousand new loans to smallholder farmers.
Yehu is a credit-only microfinance institution that provides financial services to disadvantaged communities in rural Kenya. The company currently serves more than 30,000 clients, almost a quarter of which are operating in agriculture. Its clients are predominantly women and nearly a third are young people.
By 2025, Yehu plans to increase its agriculture exposure and develop products and partnerships to support the growing number of women and young people interested in working in the agribusiness sector. Upwards of 5,000 women are expected to receive a loan from Yehu over the tenure of the facility. Yehu also plans to create an educational program to help clients with weather and climate related risk mitigation strategies.
Finally, Premier Credit Kenya is a credit-only microfinance institution which provides credit to individuals and SMEs (small and medium-sized enterprises) in Kenya. With over half of its branches in rural areas, the company plans to expand into the agriculture sector and better serve its current clients, 87 percent of which are involved in crops or in food security related value chains such as dairy and poultry.
The ABC Fund’s loan will allow the company to extend an additional 10,000 loans to agriculture clients.
“It gives us great pleasure to enable these financial institutions to further support economic prosperity of its beneficiaries,” notes Jean-Philippe de Schrevel, Founder and Managing Partner of Bamboo Capital Partners. “But the investments are also contributing to the employment, progression, and empowerment of women and young people, impacting their wider communities.”
Where financial constraints are only some of the problems faced by smallholder farmers, providing simplified access to capital can transform a business and its surrounding community, improving its resilience and sustainability for the long term.
About the ABC Fund: Managed by Bamboo Capital Partners in partnership with Injaro Investments, the ABC Fund is a blended-finance impact fund which provides financing to underserved, yet profitable segments of agribusiness value chains in developing countries. The Fund deploys loans and equity investments in farmer organisations, rural SMEs, and financial institutions. While these organisations often have potential for high growth and job creation and can also drive social development for their own communities and countries, they often lack the capital they need to grow their businesses. It was for this reason that the fund was initiated by the International Fund for Agricultural Development (IFAD) in partnership with, and currently funded by investments from, the European Union, the Organization of African, Caribbean and Pacific States (OACPS), the Luxembourg Government and the Alliance for a Green Revolution in Africa (AGRA).