Press Release: The ABC Fund Scales Agriculture SMEs in Kenya and Uganda With $2 Million Revolving Credit Facility for FACTS
The Agri-Business Capital (‘ABC Fund’) has signed an agreement for a $2 million revolving credit facility to FACTS Advance BV (‘FACTS’) to provide short-term trade finance solutions for SMEs in Kenya and Uganda primarily operating in the agriculture sector.
FACTS has established the Advance Platform as an efficient way to offer short-term supply chain financing to SMEs, agribusinesses and entrepreneurs in Africa. ABC Fund is now one of the most important debt providers to the platform in Kenya and Uganda, allowing a clear focus on the target clients of the ABC Fund.
FACTS targets an underserved segment of the market with limited access to finance. Through the FACTS Advance Platform, the ABC Fund has access to a cost efficient and transparent vehicle to provide loans to a sector that is often considered too large for traditional microfinance institutions and below the radar of commercial banks. FACTS’ long experience of operating in East Africa helped to build a solid pipeline of transactions with strong considerations for risk management.
The core instruments offered through the platform are trade finance and invoice discounting, including factoring and reverse factoring. Supply chain finance is widely used in Western countries but is still in a nascent stage in Africa. Suppliers and buyers of agricultural products in the region do not have sufficient access to adequate financial products, due to the seasonality of their operations and their perceived high-risk profile.
The investment by the ABC Fund will allow FACTS to reach this underserved segment of the market and grow its offering of sophisticated loan products to SMEs along the agriculture value chain. The $2 million revolving credit facility is provided with a long-term perspective and the potential to be increased over time. Over the next years FACTS targets to provide over 300 individual working capital loans to agriculture-focused SMEs.
The transaction provides the ABC Fund with an entry point to build and expand exposure in this sector. FACTS and ABC Fund are interested to reach out to more countries and to develop risk sharing mechanisms as a way to further support the ABC Fund’s target clients.
Photo courtesy of P. Casier.