Investment firm Swedfund reiterates dedication to African microfinance expert via back-to-back loan provision
In a move to support economic growth and job creation in East and Southern Africa, Swedfund, a Swedish development finance institution, has made its fourth investment in Platcorp Holdings Limited. This investment, worth USD 10 million, aims to provide loans to micro, small, and medium-sized enterprises (MSMEs) in Kenya, Uganda, Tanzania, and Zambia.
The investment targets the persistent financing gaps that MSMEs face in accessing formal credit in these countries. By addressing these barriers, the investment seeks to promote business growth and create decent jobs, with a particular focus on women-owned enterprises and climate-resilient agriculture.
Platcorp, a financial services company specialising in microfinance, will use the funds to expand financial services to underserved communities, channel more capital to women entrepreneurs, and support climate-smart agricultural finance. The loan is partially guaranteed (up to 50%) by the European Union under EFSD+, as part of the Global Gateway investment priority to enhance financial inclusion.
Platcorp's philosophy is to only lend to people if they end up better-off after the loan. The company focuses on lending to underbanked or underserved individuals and companies, with an average loan size of $320. For farming loans, the training provided by Platcorp is mandatory.
The company's agriculture portfolio financed over 37,000 agricultural clients in 2024, although agricultural loans only make up about 10% of its portfolio due to the high-risk nature of smallholder farming and small loan sizes. Platcorp allows farmers to use their cattle as collateral to upscale their business and expand into seasonal crops.
Platcorp's technical assistance is designed to help farmers improve their businesses and create decent jobs. This assistance does not expose farmers to high risk or over-indebt them. The company has collaborated with Swedfund on designing a loan aimed specifically at smallholder farmers in the potato and dairy value chains in Kenya.
Platcorp's training programs, such as those in financial literacy, sustainable agricultural practices, and silage management, are designed to account for the high risk associated with smallholder farming and small loan sizes. Traditional banks do not offer collateralization options like those provided by Platcorp.
This is Swedfund's fourth investment in Platcorp, following loans in 2018, 2020, and two loans in 2022. The investment reflects Swedfund’s broader goals of inclusive and sustainable economic development in low-income countries. By focusing on women-owned enterprises and climate-resilient agriculture, the investment aims to contribute to environmental sustainability and gender empowerment.
In summary, Swedfund's investment in Platcorp underscores the critical role of targeted financing in filling gaps in MSME access to credit. The investment aims to advance job creation and sustainable economic growth in East and Southern Africa, with an emphasis on gender equality and climate resilience.
- Swedfund's fourth investment in Platcorp, worth USD 10 million, seeks to promote business growth and create decent jobs, specifically targeting women-owned enterprises and climate-resilient agriculture in East and Southern Africa.
- The European Union provides a partial guarantee for the Platcorp loan, as part of its Global Gateway investment priority, to enhance financial inclusion and bridge financing gaps for micro, small, and medium-sized enterprises (MSMEs).
- Platcorp's financial services are designed to expand into underserved communities, offering financing for climate-smart agricultural projects, and channelling more capital to women entrepreneurs.
- Platcorp's lending philosophy focuses on improving the lifestyle of borrowers, only offering loans to people who will be better off financially after repayment, and providing training for farmers to reduce the risk associated with smallholder farming and small loan sizes.
- Platcorp's training programs cover financial literacy, sustainable agricultural practices, and silage management, while allowing farmers to use their cattle as collateral to upscale their businesses and invest in seasonal crops.
- By investing in Platcorp, Swedfund contributes to the goals of inclusive and sustainable economic development in low-income countries, addressing challenges in personal-finance, education-and-self-development, and general-news relating to financial inclusion, job creation, and sustainable agriculture.
