Social impact investor Oikocredit and the IDH Farmfit Fund have announced a partnership aimed at reducing the global financing gap for smallholder farmers. The two organisations have signed a collaboration agreement, committing to creating synergies in their sourcing and investment transactions. By aligning their approach and intensifying their collaboration, the Farmfit Fund and Oikocredit will create efficiencies that accelerate impact for smallholder farmers.
Globally, the estimated financing need of smallholders is USD 450 billion, while the total amount available to farmers in developing economies is a mere USD 9 billion. Reducing this finance gap is essential to improving smallholder livelihoods. Both Oikocredit and the IDH Farmfit Fund have focused on closing financing gaps by providing loans to cooperatives and other small and medium enterprises (SMEs) in the smallholder farming sector. Having access to loans, cooperatives are enabled to export directly and sell their products at improved conditions as well as invest in climate smart agriculture practices.
By joining forces, the IDH Farmfit Fund and Oikocredit will streamline their interventions, allowing both to accelerate impact. Concretely, the two organisations will align investment processes and criteria and will make use of each other’s unique and extensive network and knowledge in producing countries to source, structure and monitor deals. Additionally, Oikocredit and the IDH Farmfit Fund will share risks and provide technical assistance where necessary, ensuring the success and sustainability of their interventions. Combining the strengths of a global impact investor like Oikocredit and a specialised smallholder farmer-focused impact fund is expected to create strong synergies that lead to farmer income increases.
Roel Messie CEO of IDH Investment Management and IDH Farmfit Fund said, “The Farmfit Fund and Oikocredit have previously partnered to provide loans to smallholder-focused Agri SMEs in Guatemala and Nicaragua. This experience has revealed how aligned our strategies are and how much we can achieve if we bundle our knowledge and networks. By formalising our collaboration in this broader framework, we can build on our complementarity to further improve the livelihoods of smallholders.”
Hans Perk, Director Specialised Finance and Community Building at Oikocredit said, “Smallholder agriculture is the backbone of many emerging economies. The collaboration with IDH enables Oikocredit to invest more in smallholder farmers who are important in providing safe and affordable food for local communities and play a crucial role in the fight against climate change.”
This article was initially published by Oikocredit.