Investment Name: Alterfin
Region: Multi countries (32 countries in Africa, Asia and Latin-America).
Sector: Finance microfinance institutions, producer organizations and small and medium enterprises aiming at having an impact on smallholder farmers.
Total AgriFI Financing: Equivalent in EUR of USD 3 millions
Environmental and Social Category: FI B (medium)
(A) high risk, (B+) medium high risk, (B) medium risk or (C) low risk
Alterfin is a Belgian social investor created in 1994 raising capital to invest in smallholder farming in developing countries via microfinance institutions, small and medium enterprises (SMEs) and producer’s organisations. Alterfin’s goal is to improve the livelihoods and living conditions of socially and economically disadvantaged people and communities, predominantly in rural areas in low and middle-income countries.
A cooperative gathering around 6,000 members and being a founding organization of the Council on Smallholder Agriculture Finance (CSAF), Alterfin is particularly committed to finance the “missing middle” (representing the gap between microfinance and lending by commercial banks).
AgriFI investment will allow Alterfin to access to long term debt in order to feed its diversification strategy in terms of geography (especially in Asia and Africa) and crops financed.
Funding objective and impact:
AgriFI EUR 3 million investment in USD will allow Alterfin to:
- Attract other senior finance providers;
- Provide USD 8.4 million of loans to investees each year (given crop seasonality);
- Fund between 24,000 and 48,000 farmers each year;
- Secure the fund financial stability to expand in Africa and Asia which are less mature markets than Latin-America.
Why AgriFI wants to fund this project:
- Alterfin has a clear development impact for smallholder farmers by targeting the missing middle;
- The firm has a stable business model and is financially sustainable. The portfolio has been growing steadily for a couple of years and has a decreasing risk portion of loans defaults;
- The organization has growth perspective due to a diversification strategy in terms of geography (32 countries in 2019 with new investments in Asia and Africa) and crops (14 different agriproducts);
- Promotion of environmentally and socially sound practices is inherent to the organization through its environmental and social performance network (80% of SMEs and producer organisations financed by Alterfin are “Organic certified” and 70% “Fair trade certified”);
- The company fosters improvement of smallholder livelihood by targeting areas with limited financial inclusion, partnering with organizations prefinancing farmers, financing value chains in which producers receive a price premium, and selecting organizations that supply producers with inputs;
- AgriFI can play a catalysing role by enabling Alterfin to secure its funding, reach its growth perspective and to collaborate with additional investors and DFIs interested in the opportunity.