Root Capital wholesale lending product design for agri-enterprises in Africa

• Nov 3, 2018
• 1 min

MSC assessed the market for wholesale lending and advisory in Kenya, Rwanda, Uganda, Tanzania, and Zambia for Root Capital, a non-profit social investment fund that serves agricultural enterprises. MSC provided key insights into the needs and aspirations of last-mile agricultural businesses. MSC’s recommendations helped Root Capital finance the segment in Kenya and consider replicating the approach in Rwanda, Uganda, Tanzania, and Zambia.

Root Capital contracted MSC to assess the market for wholesale lending and advisory in Kenya, Rwanda, Uganda, Tanzania, and Zambia. Root Capital is a non-profit social investment fund that provides wholesale lending and advisory services to agricultural enterprises. The organization envisions a thriving financial market that serves agricultural businesses—thus generating long-term social, economic, and environmental sustainability for small-scale farmers and their communities around the world.

As part of the assignment, MSC identified the nature and scope of constraints that last-mile agricultural businesses face in terms of access to finance. MSC provided key insights into their needs and aspirations. We also conducted a landscape mapping of financial institutions and other finance distribution channels, such as input suppliers or equipment leasing companies, to assess the state of supply of financial services to the segment. Based on the mapping activity, MSC developed products for either wholesale capitalization or advisory services to entities that can lend to agricultural businesses in the last-mile segment.

MSC created recommendations on the design of the business model based on partnerships with existing financial institutions. We also developed the wholesale lending products for these financial institutions to foray into financing agricultural enterprises. At the time of writing, in line with MSC’s recommendations, Root Capital had started financing the segment through a partnership approach in Kenya. Root Capital had also been implementing the strategy to replicate the approach in Rwanda, Uganda, Tanzania, and Zambia in the period 2018-2020.