Maha Agriculture Private Co. Ltd
- Business model
AgriFI’s loan of USD 3 million will contribute to grow Maha Agriculture Private Co. Ltd portfolio and increase the number of farmer borrowers up to 90,000 in the next 3 years
Contracting date: December 2019
Sector: Microfinance – 29 crops covered
Total AgriFI financing: USD 3 Mn (~EUR 2.7 Mn) in local currency (MMK)
Environmental and Social Category: C
(A) high risk, (B+) medium high risk, (B) medium risk or (C) low risk
Maha Agriculture Private Co. Ltd was created in 2013 as a subsidiary of Myanma Awba Group, one of the largest agricultural input distributors in the country, currently serving approximately 3.5 million farming families.
Farmers in Myanmar are a community which has been underserved by formal financial institutions. With 70 percent of the country’s labour force in the agriculture industry, it is essential for these farmer communities to have access to credible FSPs (financial service providers). The current lack of access to formal financing drives them to borrow from informal moneylenders with high-interest rates, significantly reducing profits they make from their harvests. Therefore, Maha Agriculture Private Co. Ltd was created as a microfinance institution with a visionary goal to become the leading rural MFI in Myanmar, leveraging Awba Group strong expertise of Myanmar agriculture sector.
AgriFI aims to support the company strong growth plan and contributes to increase its current loan portfolio, building on their >50 000 active borrowers served in 32 branches across 8 regions.
AgriFI 3Mn USD investment over 3 years will contribute to grow Maha portfolio, enable to increase the number of farmer borrowers up to 90,000 in coming 3 years and hence enable them to invest in higher quality input, improve agricultural yield, therefore obtain higher income, increase their consumption expenditures and improve overall quality of life.
Why AgriFI wants to fund this project
The project is in line with AgriFI investment strategy and its additionality vision due to:
– Strong impact on smallholders: 100% rural portfolio, with >90% of loans issued towards agri smallholders (May 2019)
– Early stage: young MFI with ambitious growth ahead
– Local currency risk: loan in local currency (MMK)
– Catalysing additional private investments: enabling Maha Agriculture Public Co. Ltd to secure its funding on time to reach its growth objectives, and willing to collaborate with additional investors and DFIs interested in the opportunity
Environmental & Social rationale
The overall portfolio risk exposure is limited, specific and easily addressed through mitigation measured developed by the institution.
Maha Agriculture Private Co. Ltd is working towards compliance and certification on client protection principles (as per Smart Campaign framework) as well as integration of tools for E&S awareness, monitoring and reporting.
IFC Performance Standards 1 to 3 can potentially be triggered across the existing exposure and diversification of the invested portfolio.
- Smallholder farmers
- Ha of cultivated area
- Tons of food production
- 2 Mn
- Financing instrument
- Unsecured loan - Senior debt
- USD 3 million