Refinances continuous lending to African microfinance specialist by Swedfund repeated
In a strategic move to enhance financial inclusion and promote sustainable development, Swedfund, a Swedish development finance institution, has announced a $10 million debt deal with Platcorp Holdings Limited. This financial services company focuses on microfinance, particularly in East and Southern African countries where small businesses often lack access to formal credit.
Expanding Financial Services
The investment aims to expand financial services to micro, small, and medium-sized enterprises (MSMEs) in Kenya, Uganda, Tanzania, and Zambia. Platcorp Holdings, the parent company of several microfinance lenders operating in the region, will use the loan to increase its lending capacity across these countries.
Focus on Inclusive Growth
The loan is designed to enhance access to finance for MSMEs, particularly women-owned businesses and those involved in climate-resilient agriculture. These sectors are often excluded from traditional credit systems, hindering growth and job creation.
Long-term Collaboration and EU Support
This is not the first investment by Swedfund in Platcorp Holdings. Previous loans were provided in 2018, 2020, and 2022, indicating a long-standing partnership aimed at improving financial inclusion and sustainable practices. The loan is supported by a 50% guarantee from the European Union under the EFSD+ program, aligning with the Global Gateway initiative that prioritizes financial inclusion for sustainable development.
Impact on Economic Growth and Job Creation
By providing more capital to MSMEs, the investment is expected to catalyse economic resilience and job creation across the region. The expansion of financial services will help create decent jobs, particularly in women-owned enterprises and climate-resilient agriculture ventures.
Platcorp's Approach to Agricultural Lending
Platcorp provides credit to MSMEs across the region, with a focus on the agriculture sector. In Kenya, where 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.
Platcorp's philosophy is to only lend to people who will end up better-off after receiving the loan. For farming loans, Platcorp's training is mandatory and is aimed at reducing risk for both the borrower and the lender. The company offers technical assistance to its borrowers, including employing agronomists and developing training programs in financial literacy, sustainable agricultural practices, and silage management.
A Commitment to Sustainable Practices
Over the years, Swedfund has noted improvements in Platcorp's environmental and social governance, including enhanced customer protection and gender equality frameworks. This investment reinforces these efforts.
In conclusion, Swedfund's investment in Platcorp Holdings is a significant step towards financial inclusion and sustainable economic development in East Africa. By focusing on women-owned businesses and climate-resilient agriculture, the partnership aims to create decent jobs and stimulate economic growth while promoting sustainable practices.
- The investment made by Swedfund, a Swedish development finance institution, in Platcorp Holdings Limited is a part of their strategy to promote sustainable development and financial inclusion.
- The $10 million debt deal will primarily be used by Platcorp Holdings to increase its lending capacity for affordable housing and micro, small, and medium-sized enterprises (MSMEs) in Kenya, Uganda, Tanzania, and Zambia.
- Through blended finance, this investment aims to foster a blend of commercial and development finance, fostering business growth and social impact in the region.
- As Platcorp Holdings operates several microfinance lenders, this investment is expected to provide lifestyle improvements for individuals and businesses, enhancing their personal-finance management.
- Additionally, technology plays a crucial role in Platcorp's operations, streamlining lending processes and ensuring financial inclusion, particularly for individuals involved in education-and-self-development and sports sectors.
- The long-term collaboration between Swedfund and Platcorp Holdings is supported by the European Union, under the EFSD+ program, which aligns with the Global Gateway initiative, emphasizing the importance of sustainable development and financial inclusion to foster economic growth and job creation.
