Conventional investors see uncompensated risk. Investors of ‘catalytic capital’ see an opportunity for outsized impact.
One Acre Fund has spent the last decade and a half demonstrating that small African farmers are not only lendable but, with additional support, are safe bets to reduce hunger and grow family incomes. In the last five years, the social enterprise led by Andrew Youn has doubled to more than a million the number of farmers it serves in Kenya, Rwanda, Burundi, Tanzania, Malawi, Uganda and Zambia.
One Acre has done the hard work in assembling the bundle of farm services needed to help some of the world’s poorest farmers help themselves. But the organization has not had access to working capital at the scale required to put a dent in rates of farmer poverty across the continent.
Now, a coalition of philanthropic investors is stepping up to lend $20 million in subordinated debt to the social enterprise with the aim of helping One Acre attract as much as five times that amount in senior debt and lines of credit. By taking the riskier position in the capital stack, the MacArthur Foundation and five other lenders aim to help One Acre secure financing from development and commercial banks and other institutional lenders.
“One Acre Fund has proven its impact,” says MacArthur’s Charles Coustan. “This extra capital can fuel the next stage of growth.”
Source: Impact Alpha (Published on August 20, 2020)