Swedfund maintains dedication to African microfinance specialist through repeated loan provision.
Swedfund Invests $10 Million in Platcorp Holdings to Boost Small Business Financing in East 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 investment aims to close the financing gap faced by small businesses in Kenya, Uganda, Tanzania, and Zambia, helping them grow and create decent jobs.
The loan is expected to support businesses with a particular emphasis on women-owned enterprises and climate-resilient agriculture. Platcorp's data-driven and client-centric approach effectively supports these micro, small, and medium-sized enterprises (MSMEs) while managing credit risk, demonstrating that MSME financing in East and Southern Africa is a viable and sustainable business model.
Half of Swedfund’s loan is backed by an EU guarantee from the European Fund for Sustainable Development Plus (EFSD+) to accelerate financial inclusion in the region. This support enables Platcorp to offer technical assistance to its borrowers, including agronomists for on-the-ground advice and training programs in financial literacy, sustainable agricultural practices, and silage management.
Platcorp's philosophy is to lend only to people who will be better off after the loan, avoiding over-indebtment and high risks. The company provides credit to MSMEs, with an average loan size of just $320, focusing largely on micro enterprises.
Innovative products designed by Platcorp, such as a loan aimed at smallholder farmers in the potato and dairy value chains in Kenya, demonstrate the company's commitment to sustainable agriculture and financial inclusion. Platcorp financed over 37,000 agricultural clients in 2024, many of whom are smallholder farmers or connected to smallholder farming value chains.
This is Swedfund's fourth investment in Platcorp, following earlier loans of $10 million in 2018, $5 million in 2020, and $15 million in 2022. Swedfund's investment in Platcorp is part of its ongoing efforts to contribute to closing the financing gap in East and Southern African countries where small businesses often lack access to formal credit.
Traditional banks do not collateralize options like those provided by Platcorp, making it an essential player in the region's financial landscape. For farming loans, Platcorp's training programs are mandatory and aim to reduce the high risk associated with borrowers by sharing the risk with them. The majority of dairy production in Kenya 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 businesses and expand into seasonal crops.
In conclusion, Swedfund's investment in Platcorp Holdings Limited is set to have a significant impact on the financial landscape of East and Southern Africa, providing much-needed credit to small businesses and promoting sustainable agricultural practices.
- Swedfund's investment in Platcorp aims to boost small business financing, encouraging energy transition and social impact in East Africa.
- With financial inclusion a key focus, Platcorp's approach supports affordable housing and lifestyle improvements for many by providing access to personal-finance solutions.
- As part of its business model, Platcorp promotes development finance and offers resources like training in financial literacy and sustainable farming practices.
- Technology plays a crucial role in Platcorp's data-driven approach to MSME financing, helping minimize credit risk and strengthen the financial sector.
- The support from the EU guarantee through EFSD+ enables Platcorp to offer technical assistance in areas such as education-and-self-development, helping borrowers innovate and improve their businesses.
- In the arena of sports and weather, many small businesses in East Africa depend on Platcorp's finance offerings to adapt and thrive even when faced with unpredictable climatic conditions.
- While providing essential services, it's important to note that Platcorp does not engage in any casino-and-gambling activities, aligning with Swedfund's mission to foster responsible and sustainable investments.
