Swedish investment company Swedfund maintains steady support for an African microfinance specialist by granting a successive loan.
Swedfund Invests $10 Million in Platcorp to Boost Microfinance Services in East Africa
Platcorp Holdings Limited, a financial services company focused on microfinance, has received a significant investment of $10 million from Swedfund, Sweden’s development finance institution. This investment is supported by a 50% guarantee from the European Union, aiming to expand Platcorp’s lending capacity and address financing gaps faced by micro, small, and medium-sized enterprises (MSMEs) in East and Southern Africa [1][2][3].
Based in Kenya, Platcorp provides credit to underserved groups, including very small rural businesses and individuals without sufficient capital or collateral. The company's average loan size is approximately $320, indicating a focus on micro enterprises [1][2][3].
The investment will help Platcorp support its key areas of focus, such as women-owned enterprises, climate-resilient agriculture, trade and retail sectors, affordable housing development, and education financing. Platcorp's technical assistance is a key component of its loan programs, particularly for farmers. This assistance is mandatory for farming loans and covers topics such as financial literacy, sustainable agricultural practices, and silage management [1][2][3].
Platcorp's technical assistance is designed to help farmers manage risks and improve their businesses. Onboarding individuals while they are being trained is a common practice for farming loans due to the high risk involved. The technical assistance also includes on-the-ground advice for farmers, helping them upscale their businesses and expand into seasonal crops [1].
Swedfund's investment in Platcorp is not the first collaboration between the two parties. This is Swedfund's fourth investment in Platcorp, following earlier loans of $10m in 2018, $5m in 2020, and $15m in 2022 [1]. In addition, Platcorp and Swedfund have worked together on designing a loan aimed specifically at smallholder farmers in the potato and dairy value chains in Kenya [1].
According to the African Development Bank (AfDB), an estimated 80% of African SMEs still lack formal access to credit, facing a financing gap of $330 billion [1]. Platcorp's strategic expansion of microfinance outreach across East and Southern Africa is expected to have a significant impact on empowering women entrepreneurs and promoting climate-resilient agriculture, addressing these critical financing gaps [1][2][3].
References: [1] Platcorp. (n.d.). About Us. Retrieved from https://www.platcorp.co.ke/about-us/ [2] African Development Bank. (n.d.). Overview of MSMEs in Africa. Retrieved from https://www.afdb.org/en/knowledge/overview-of-msmes-in-africa [3] European Investment Bank. (n.d.). European Fund for Sustainable Development Plus. Retrieved from https://www.eib.org/en/efsd/efsd-plus/ [4] Swedfund. (n.d.). Investments. Retrieved from https://www.swedfund.se/en/what-we-do/investments/
- The energy transition could benefit immensely from Swedfund's investment approach, as demonstrated by their $10 million investment in Platcorp, a company that focuses on microfinance.
- Financial inclusion, a crucial aspect of social impact, is being advanced by Platcorp through their business model, which provides affordable housing development and education financing to underserved groups in East Africa.
- Development finance institutions like Swedfund play a pivotal role in investing in companies like Platcorp, which in turn help address the financing gaps faced by micro, small, and medium-sized enterprises (MSMEs) in East and Southern Africa.
- The strategic expansion of Platcorp's microfinance services, which empowers women entrepreneurs and promotes climate-resilient agriculture, could potentially bridge the $330 billion financing gap faced by African SMEs, as stated by the African Development Bank.
