The total investment will help expand access to working capital and markets for 300,000 additional benefeciaries over the next four years, via SMEs and farmers’ cooperatives engaged in exporting products like coffee, cocoa, nuts, fresh fruits and vegetables. This is expected to positively impact the "missing middle," which is the gap between microfinance and commercial banking, especially in pronounced rural areas in Africa.
Root Capital will sustainably scale up its core lending arm that provides funds for rural businesses that are too large to access credit from microfinance institutions but considered too risky to secure financing from commercial banks. The bulk of Root Capital’s portfolio supports enterprises that export coffee, cocoa, nuts and fresh fruits and vegetables.
Other development impacts:
Root Capital is not currently a profitable business and depends on grants and philanthropic funding to fill its financing gap. Growth should enable Root Capital to achieve economies of scale and help it become self-sustaining. In addition to financing, IFC will contribute knowledge, experience and commercial discipline that will support the company as it makes the transition from non-profit to financially sustainable financial institution.
The company is headquartered in Cambridge, Massachusetts, with two regional hubs in Costa Rica and Kenya, and five associated locations in Guatemala, Mexico, Nicaragua, Peru, Senegal, and Uganda. GAFSP financing will allow the company to continue to expand operations in: Benin, Burkina Faso, Cameroon, Ghana, Kenya, Liberia, Mali, Rwanda, Senegal, Sierra Leone, Tanzania, Togo, Uganda, Zambia