One less barrier to accessing finance

We are creating pipelines of investable agribusinesses for lenders in four African countries with Alliance for a Green Revolution in Africa (AGRA) and four of the SCOPE Local Experts.

The access to finance challenge

For agribusinesses to grow and be successful, it is imperative that they access the funding they need. However, many lenders are wary of providing loans to agribusinesses because of the perceived risk. This leads to unmet demand in agricultural financing. There is an estimated $65 billion annual financing gap for agribusinesses in sub-Saharan Africa alone. Across developing countries worldwide, the gap doubles at approximately $170 billion. This gap must be closed for the agricultural sector to produce enough food for a growing world population.

Closing the funding gap

These key influences for accessing finance are all measured in a SCOPE assessment.

Last year, alongside the Center for Financial Inclusion (CFI) and AGRA, we unveiled our Bankability Metrics. After analyzing agribusiness data and researching nearly 100 lenders, we determined the key drivers that influence the likelihood of an agribusiness receiving a loan. We used this information to create the Bankability Metrics. Relevant data from an agribusiness’s SCOPE assessment is input into the metrics, which can then be shared with lenders to demonstrate key information during the pre-due diligence stage of the loan cycle.

The overall goal of the metrics is to facilitate easier communication between lenders and agribusinesses. At the moment, many agribusinesses do not understand what information lenders want to see, and many lenders are unable to understand information given by agribusinesses. The lack of a common language between these two groups leads to an inability to communicate. The Bankability Metrics work as a common language that can bridge this divide. The metrics will explain what information is most important for agribusinesses to provide, and they will share that information with lenders in a clear, standardized way.

Proof of concept in Ghana, Nigeria, Mali, and Tanzania

Together with AGRA, we are piloting the Bankability Metrics in four African countries: Ghana, Nigeria, Mali, and Tanzania. In each country, one of our Local Experts will assess three or four agribusinesses, for a total of fifteen agribusinesses assessed in all. The assessments will be carried out by MDF (in Ghana), PearlMutual (in Nigeria), AgriVision Sahel (in Mali), and Sundy Merchants (in Tanzania).

All fifteen agribusinesses were previously assessed in a project with AGRA in early 2020. The Local Experts are using the data to provide business development services so that the agribusinesses strengthen their business case. The plan is to reassess these agribusinesses after they receive the targeted technical assistance and then to fill the metrics and give it to the bank. Banks will use this information in their lending decisions. The project will work closely with the banks to validate (and adjust if necessary) the metrics.

Future developments

Our ambition is to fully digitalize the Bankability Metrics (as we have done with our other tools). Once fully digitalized, lenders can login to the system and be automatically linked to eligible agribusinesses. This project can make massive strides towards closing the agricultural funding gap and providing access to finance.

Are you interested in helping to co-develop the digital portal? Let’s talk!

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