IDH Farmfit Fund invests in LendXS to accelerate smallholder finance
The IDH Farmfit Fund has signed an agreement to acquire a 21% ownership stake in fintech scale-up company LendXS BV. The investment marks the start of a unique collaboration of the IDH Farmfit Fund, the catalysing smallholder finance facility of IDH, the Sustainable Trade Initiative and LendXS, a fintech startup by the Financial Access Group.
An estimated 270 million smallholder farmers in the world live in poverty because they lack the financial means to invest in their farms to make them more profitable. Many financial institutions are reluctant to invest in smallholders because of the perceived high risks. In return these risks drive up interest rates, making loans unaffordable for the majority of smallholder farmers.
Roel Messie, CEO of the IDH Farmfit Fund said, ”We are very pleased with the investment and partnership with LendXS, because it creates a synergy that is expected to unlock access to credit for many farmers. LendXS will enable rural lenders to better assess the risk and lower the costs of providing credit to farmers. The IDH Farmfit Fund will be able to support these lenders with funding and risk mitigation.”
LendXS was founded in 2019 and has operations in Kenya, Ghana, Uganda and Côte d’Ivoire. The company was established by Financial Access Consulting Services BV (FACS), the former ING Bank emerging markets banking advisory subsidiary.
”Few banks are willing to provide credit in smallholder farmers because of the high costs and credit risks. This is one of the vicious circles that keeps farmers poor,” says Eelko Bronkhorst, CEO of LendXS, ”Transaction costs of smallholder finance account on average for around 60% of the interest rates charged. Our long-time experience with financial transactions enables us to design fintech solutions and advisory services that bring down these costs significantly. This will improve rural micro finance institutions’ bottom line profits and will make loans more affordable for smallholder farmers, creating self-propelling change. The investment by the IDH Farmfit Fund brings LendXS to the scale that is needed to play this transformative role.”
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