28 May 2021
IDH Farmfit Fund invests in LendXS to jointly unlock more smallholder finance opportunities.
Supporting rural financial institutions to build viable investment portfolios by reducing risks and costs
of smallholder finance
Utrecht, May 18, 2021 – Today the IDH Farmfit Fund 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 that brings together the de-risked capital offered by IDH Farmfit Fund with the extensive smallholder finance expertise and digital technology for rural lenders provided by LendXS, a fintech scale-up 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. The investment in LendXS marks the start of a unique and paramount collaboration. Roel Messie, CEO of the IDH Farmfit Fund: ‘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 Micro Finance Institutions and other 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.’
‘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: ‘Transactions costs of smallholder finance accounts on average for around 60% of the interest rates charged. Our long-time experience with financial transactions, enables us to design fin-tech solutions and advisory services that bring down these costs significantly. This will improve MFI’s 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.’
JDE is one of the investors in the Farmfit Fund, primarily with the objective of improving the livelihoods of farmers its supply chains. The investment in LendXS is commodity agnostic, highly scalable and is expected to improve access to affordable finance for farmers in for instance the coffee supply chain at scale. In the foreseeable future LendXS aims to reach at least 280,000 smallholder farmers.IDH, The Sustainable Trade Initiative collaborates with fintech companies like LendXS to create systemic change for better income and will kick off with an exploration. The LendXS technology services include farmer risk analytics, digital data collection, workflow management, credit scoring and loan management solutions. Combining in-depth smallholder risk analytics with digital technology will reduce costs and risks for rural lenders and will IDH Farmfit Fund – making investments in smallholder farming attractive, creating real SDG impact allow IDH Farmfit Fund to to accelerate financial inclusion for smallholder farmers. Roel Messie, CEO of the IDH Farmfit Fund: ‘This cooperation will take away some of the key hurdles that refrain financial institutions from investing in smallholder farmers and to improve their incomes and livelihoods.’
About IDH, The Sustainable Trade Initiative
IDH, The Sustainable Trade Initiative is an international organization that convenes, finances and manages large programs to accelerate transitions toward sustainability together with multinational and smaller companies, governments and civil society. Headquartered in the Netherlands and funded by different governments and foundations, IDH delivers scalable, economically viable impact on the Sustainable Development Goals. IDH operates globally in 12 different industry sectors ranging from coffee and tea to cotton and soy, and encourages joint investment in innovative models to realize long-term solutions for environmentally and socially sustainable production and trade. The IDH Farmfit Fund is part of IDH, funding businesses to increase impact on smallholder livelihoods on a financially sustainable basis.
LendXS BV is a Netherlands-based fintech company that provides financial institutions in developing markets with low-cost, high-impact digital process and risk solutions. LendXS was established in 2019 and has operations in Kenya, Ghana, Uganda and Cote d’Ivoire. The company was established by Financial Access Consulting Services BV (FACS), the former ING Bank emerging markets banking advisory business. For the development of its digital solutions LendXS has entered into a partnership.
Read the full press release: here