EDFI AgriFI steps up Microfinance Solidaire’s agri portfolio with EUR 2 million
- EDFI AgriFI, the Agriculture Financing Initiative funded by the European Union, committed EUR 2 million to support the fund Microfinance Solidaire and double the number of microloans for farmers by 2025.
- Microfinance Solidaire finances social microfinance institutions (MFIs) and social business in the energy access sector. EDFI AgriFI financing aims to support MFIs in growing their agricultural portfolio, in Africa and Asia.
EDFI AgriFI invested EUR 2 million in Microfinance Solidaire, a French fund targeting social businesses and microfinance institutions dedicated to boost financial inclusion of households in developing countries and emerging markets.
Microfinance Solidaire works in close collaboration with the NGO ‘Entrepreneurs du Monde’ to support sustainable agriculture though entrepreneurship in the countries in greatest needs. More than half of its portfolio is allocated to fragile regions while women represent 85% of the fund’s final beneficiaries. In practice, Microfinance Solidaire is able to offer credit and working capital at more favourable rates than those generally offered by local financial institutions, not interested in those segments.
EDFI AgriFI funding is expected to support the fund’s portfolio growth for smallholders. To date, the fund has already developed a series of dedicated instruments, including a set of impact indicators with its historical and key partner Entrepreneurs du Monde.
“This new investment is an opportunity for EDFI AgriFI to support smallholder farmers accessing micro-loans to grow their agricultural productive activities in a sustainable manner and improve their livelihoods. Microfinance Solidaire together with Entrepreneurs du Monde developed a solid expertise in scaling up social microfinance institutions in fragile regions. By providing long-term financing, AgriFI will also help the fund pave the way for other investors to join,” explained Aude Sauvaget, AgriFI Investment Officer at EDFI Management Company.
EDFI AgriFI financing in Microfinance Solidaire is part of a long-term investment scheme, with French DFI PROPARCO also having invested EUR 2 million. EDFI AgriFI’s investment already enabled Microfinance Solidaire to catalyse EUR 1,5 m additional funding from other investors.
“This funding is a great opportunity for us to increase our support to our partner microfinance institutions developing their agricultural portfolio. Agricultural loans are often offered at lower interest rates with bullet repayments, mobilising more cash flow. We plan to support the agricultural developments in Burkina Faso, Guinea, Togo and Senegal this year. Each organisation offers visits on site, farm field school and regular training. They also started measuring their impact on farmer’s production and living conditions. We plan to support more organisations next year!” said Camille Richer, Microfinance Solidaire’s President.
The fund qualifies as a 2x Challenge investment, as the microloans will be expected to reach at least 30% of women and increase their participation in the economy.
“Sustainable agrifood systems as part of rollout of EU Green Deal are central in our development cooperation agenda with our partner countries. We focus our work in this sector on investing in small-scale farms since providing access to appropriate credit services among resource-poor people has been proven to be one of the most impactful means to tackle poverty. Indeed, providing adequate financial resources plays a critical role in catalysing the development of the agricultural sector, in particular, as regards to transforming smallholder agriculture from its subsistence nature to commercial and market-oriented farming. However, financing for investments in agriculture is still scarce as financial institutions are reluctant to accept the risks prevalent in the complex agrivalue chains. There continues to be a “missing middle” in the financial markets between microfinance and commercial banks. AgriFI’s EUR 2m investment in Microfinance Solidaire will allow bridging that financing gap and indirectly supporting around 30.000 families,” concluded Leonard Mizzi, Head of Unit Sustainable Agri-food Systems and Fisheries, DG INTPA at the European Commission.