Swedish investment company Swedfund renews lending pledge to African microfinance organization.
Swedfund Invests $10 Million in Platcorp to Boost Financial Inclusion in Africa
Swedfund, Sweden's development finance institution, has signed a $10 million debt deal with Platcorp Holdings Limited, a financial services company focused on microfinance. This latest investment marks the fourth consecutive funding for Platcorp, aiming to bridge the persistent financing gap that small businesses in East and Southern African countries face.
The loan is supported up to 50% through an EU guarantee from the European Fund for Sustainable Development Plus (EFSD+), with the aim of accelerating financial inclusion. Swedfund's Senior Investment Manager, Jakob Larsson, stated that Platcorp's approach effectively identifies and supports small businesses, particularly women-owned enterprises and those involved in climate-resilient agriculture.
Platcorp offers more than just credit to its borrowers. They provide technical assistance, including employing agronomists for on-the-ground advice and offering training programs in financial literacy, sustainable agricultural practices, and silage management. The company also designs innovative products, such as a loan aimed specifically at smallholder farmers in the potato and dairy value chains in Kenya.
For farming loans, the training provided by Platcorp is mandatory. This approach not only reduces the risks associated with lending to farmers but also ensures that borrowers are better equipped to manage their businesses effectively. Platcorp's philosophy is to only lend to people who will be better-off after the loan.
In Kenya, the majority of dairy production comes from individual farmers with five cows or less and is aggregated through cooperative systems. Platcorp's product allows farmers to use their cattle as collateral to upscale their business and expand into seasonal crops. Traditional banks often do not collateralize such options, making Platcorp a vital source of credit for these small-scale farmers.
The investment aims to contribute to closing the financing gap in these regions where small businesses often lack access to formal credit. According to the African Development Bank (AfDB), an estimated 80% of African SMEs still lack formal access to credit and face a financing gap of $330 billion.
Swedfund expects the loan to help businesses grow and create decent jobs, with a particular focus on women-owned enterprises and climate-resilient agriculture. This partnership is not only beneficial for the businesses receiving the funding but also for the local economies in which they operate, fostering employment opportunities and strengthening the communities.
This partnership is backed by a 50% guarantee from the European Union’s European Fund for Sustainable Development Plus (EFSD+), accelerating financial inclusion efforts and supporting Sweden’s broader objectives for inclusive and sustainable economic development in low-income countries. As Swedfund continues to invest in Platcorp, the impact of these investments will undoubtedly be felt across Kenya, Uganda, Tanzania, and Zambia, contributing to job creation, gender empowerment, responsible finance, and expanding access to formal credit in underserved communities.
[1] Swedfund Press Release
[2] African Development Bank Report
[3] Swedfund Annual Report 2024
[4] Platcorp Annual Report 2024
[5] Swedfund's Investment in Platcorp
[1] The investment of $10 million by Swedfund into Platcorp will have social impact, particularly in women-owned enterprises and climate-resilient agriculture, fostering both job creation and financial inclusion.
[2] Platcorp's innovative approach to lending, combined with technical assistance and training programs, makes them an essential source of credit for small-scale farmers facing a financing gap of approximately $330 billion in Africa, as indicated by the African Development Bank Report.
[3] Swedfund's investment in Platcorp aligns with their objectives for inclusive and sustainable economic development, as outlined in their Annual Report 2024.
[4] Platcorp's development finance activities, focusing on affordable housing, renewables, and innovative products such as loans for smallholder farmers, are detailed in their Annual Report 2024.
[5] By investing in Platcorp, Swedfund hopes not only to accelerate financial inclusion but also to contribute to the energy transition in underdeveloped regions by supporting businesses that rely on renewables.
