- Business model
Investment Name: Alterfin
Contract signature date: July 2020
Region: Multi countries (38 countries in Africa, Asia and Latin-America)
Sector: MFIs, producer organizations and agri SMEs
Total AgriFI Financing: EUR 3 million
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 of socially and economically disadvantaged communities, predominantly in rural areas in low and middle-income countries.
A cooperative gathering around 6,000 members and being a founder of the Council on Smallholder Agriculture Finance (CSAF), Alterfin is particularly committed to finance the “missing middle”.
AgriFI will co-invest with BIO the equivalent in USD of EUR 3 million in Alterfin. These long-term investments will allow Alterfin to expand its portfolio and shall contribute to:
- the financial inclusion of agricultural cooperatives, small farmers and women;
- the improvement of the economic, social and environmental performance of these actors, including through the strengthening of their institutional capacity and support in obtaining certifications; and
- food security of rural populations through increase of agricultural activity.
Funding objective and impact:
AgriFI’s investment over a 10-year period will allow Alterfin to:
- Provide USD 8.4 million of loans to investees each year (given crop seasonality);
- Fund between 24,000 and 48,000 farmers each year (Alterfin investments have an impact on over 1 million smallholders);
- Increase the scope of its activities mainly in Africa and Asia and contribute to portfolio diversification.
Why AgriFI wants to fund this project:
- Being a cooperative gathering more than 6,000 members (of which more than 80% are individuals) Alterfin demonstrates that credit cooperatives can be a catalyst to support family farming in developing countries;
- Alterfin has a clear development impact for smallholder farmers (more than 1 million farmers benefit from the services of Alterfin) by targeting the missing middle organisations;
- Promotion of environmentally and socially sound practices is inherent to the organization (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 catalytic role by enabling Alterfin to secure its funding over a long-term period, reach its growth perspective and to collaborate with additional investors and DFIs interested in the opportunity.
- Ha of area cultivated
- Smallholder farmers
- Tons of food production
- Financial instrument
- Debt loan
- EUR 3 milliom