Financial support
Select agricultural Small and Medium-size Enterprises (SMEs) in Kenya and Rwanda now stand a chance to access financial capital through an innovative project by Netherlands Development Organization (SNV). Through the Regenerative Agricultural Practices for Improved Livelihoods and Markets (REALMS) project, 19 SMEs in regenerative agriculture are receiving support on how to best tap into investor funding.
The project, funded by the IKEA Foundation and implemented by SNV alongside local partners in Kenya and Rwanda, supports ground breaking SMEs to uncover promising businesses that are reshaping the future of farming and food.
Speaking during an SME- Investor deal room event in Nairobi, REALMS Project Manager Patience Kikoni said the funds would seek to enhance market development and commercialization of regenerative agricultural products and services. Kikoni said the SME- investor match making exercise brought together SMEs from Kenya and Rwanda who showcased their products and business models in a bid to access financing from investors eager to discover the next big opportunity.
“Our combined portfolio sits at 19 businesses. Eight are in Kenya and the rest are from Rwanda. We have faith in the business models and in the way they are operating,” Kikoni said. She divulged that investors are guaranteed that the businesses being presented have already been assessed, screened and vetted.
“The businesses are at different stages of growth and innovation. But the majority of them are dealing with different challenges and access to finances is one of them,” she said. Kikoni said financial access is critical for the growth of SMEs as it allowed entrepreneurs to innovate, improve efficiency, and expand to new markets.
“Continued investment into the agricultural sector is critical to averting threats like food insecurity,” she said adding that they would support local service providers (SMEs) to co-create the necessary enabling environment for the application of regenerative agriculture.
She however noted that the majority of SMEs were unable to acquire the financing they needed to reach their potential to improve their livelihoods. “Access to finances is one of the barriers that hinder growth of SMEs and the wider adoption of regenerative farming at the community level,” she said adding that now they have a shot to access capital injection thanks to the REALMS project.
EcoFix Kenya Limited CEO Cosmas Ochieng said his business, which deals in the production of organic fertilizer from croton seeds, would require a capital injection of Sh66 million to propel the business to new heights of production. “I am looking for a minimum of approximately Sh66 million (USD 500,000) where 50 percent of that capital could be debt and the rest equity,” he said.
Ochieng said the business was a true definition of a circular economy. “The business sources nuts from croton to produce a wide array of eco- friendly products including animal feed, biofuel, organic fertilizer and bio stimulant foliar where we ensure that every part of the nut is utilized,” he said.
SNV Agrifood Sector Lead in Kenya and Burundi Dr. David Ojwang’ said that there is an imperfection on the credit market in both countries. “The private sector SMEs are not able to access credit at the time they want so that they are able to push their products to farmers,” he said.
Ojwang’ said SMEs are perceived to be financially riskier, as reflected in their relatively high debt equity ratio and in their higher failure rates. “Compared to large enterprises, many SMEs face intense competitive disadvantages in accessing the financial information needed to access adequate financing,” he added.
He said the REALMS project took a market system approach where you bring in other partners in a holistic way to work together to solve the problems along the value chain. “The project promotes the adoption of regenerative agricultural practices such as reducing the use of chemical fertilizers, integrated pest management, and setting soil and water conservation to stop erosion,” he said.