SDG Impact Finance Initiative, with the support of Convergence, awarded an expansion grant of USD 200,000 under its Innovation Window to AdOpes. AdOpes manages a Microleasing platform that offers productive assets to smallholder farmers and micro enterprises. It consists of the Microleases offered in Kenya, Rwanda, Tanzania, and Uganda and offers support in asset selection, capacity building, and finance for the assets. The access to finance is implemented through an innovative investment vehicle called the “Microleasing Fund” which is the first of its kind to offer capital exclusively for asset financing tailored to the needs of smallholder farmers and microenterprises in East Africa.
Globally, a significant portion of the population is involved in agriculture, yet only a small fraction have access to financial solutions tailored to their requirements. Smallholder farmers and micro enterprises remain largely financially excluded. Service providers and traditional banks are often unable to finance this group due to high perceived risks. As a result, smallholder farmers and micro enterprises lack access to productive assets to increase their production capacity and transition from non-commercial subsistence agriculture to small-scale commercial farming.
ApOpes’ microleasing platform offers productive assets tailored to smallholder farmers and micro enterprises. Through the platform, AdOpes hopes to enable the population to mechanize and professionalize their activities and ultimately contribute to larger and better-quality yields and increased income. The expansion grant will be deployed to kickstart capacity building activities for SACCOs/MFIs and smallholder farmers/micro enterprises to ensure the adoption and use of the assets to maximize their potential.
Design question and learning potential for the market: How can a micro leasing fund empower smallholder and micro enterprises?
The Microleasing Fund, set up by adOpes, aims to scale high-performing SACCOs and MFIs across eastern Africa to help facilitate microleasing to smallholder farmers and micro enterprises, otherwise excluded from financial assets. The blended finance structure allows AdOpes to pool capital from various investors, including DFIs, foundations, funds, and private investors. With the pooled capital, AdOpes is able to set up a microlease loan facility for the SACCOs and MFIs (“investees”) at a low interest rate. Subsequently, the investees can pass down the low-interest rates and make micro-leases to the end-borrowers, smallholder farmers, and micro enterprises.
In addition to providing capital, adOpes also offers capacity building and technical assistance to its investees and smallholder farmers. Training for the investees will mainly focus on strengthening the organizational structure, financial management and adopting best practices in lending procedures at SACCOS and MFIs. On the other hand, training for smallholders and micro enterprises focuses on developing entrepreneurial skills, financial literacy, asset management and good agronomic practices necessary to trigger commercialization.
