Swedfund renews funding pledge to African microfinance expert through successive loan agreement
In a move aimed at supporting micro, small, and medium-sized enterprises (MSMEs) across Kenya, Uganda, Tanzania, and Zambia, Swedfund, Sweden's development finance institution, has invested $10 million in Platcorp Holdings Limited. This investment focuses on expanding financial services access, promoting gender empowerment, and fostering sustainable economic development in underserved communities.
Platcorp, a financial services company specialising in microfinance, provides credit to MSMEs and offers innovative products designed to address persistent barriers that small businesses face in accessing formal credit. Swedfund's investment is supported up to 50% through an EU guarantee from the European Fund for Sustainable Development Plus (EFSD+), accelerating financial inclusion.
This is Swedfund's fourth investment in Platcorp, following earlier loans of $10m in 2018, $5m in 2020, and $15m in 2022. The partnership between the two organisations demonstrates a long-term, impactful collaboration aiming to catalyze economic resilience, job creation, and inclusive growth in Africa’s emerging markets.
Platcorp's philosophy is to only lend to people who will end up better off after the loan. For farming loans, their training is mandatory and farmers are onboarded during the training process due to the high risk involved. The training programs cover a range of topics, including financial literacy and sustainable agricultural practices.
Platcorp's product allows farmers to use their cattle as collateral to upscale their business and expand into seasonal crops. Traditional banks would not collateralize options like those provided by Platcorp, making their services essential for high-risk farming loans.
In addition to lending, Platcorp provides technical assistance to its borrowers. This includes employing agronomists for on-the-ground advice and developing training programs in financial literacy, sustainable agricultural practices, or silage management. Platcorp's technical assistance aims to reduce the risks associated with lending to farmers.
The majority of dairy production in Kenya comes from individual farmers with five cows or less and is aggregated through cooperative systems. Platcorp's work with Swedfund has resulted in the development of a loan aimed specifically at smallholder farmers in the potato and dairy value chains in Kenya.
Swedfund's investment in Platcorp aligns with its broader objectives in low-income countries, enhancing financial inclusion and sustainable development. The investment also supports climate-smart agricultural financing, encouraging environmentally sustainable business practices. Strengthening environmental and social governance (ESG) at Platcorp is a key focus, with improvements in customer protection and gender equality being prioritised.
This partnership between Swedfund and Platcorp is part of the Global Gateway priority to accelerate financial inclusion. It aims to contribute to closing the financing gap in East and Southern African countries where small businesses often lack access to formal credit, thereby supporting business growth, job creation, and sustainable economic development in these regions.
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