MICROCAPITAL BRIEF: FMO, Rabobank Foundation Invest $500k in Apollo Agriculture, Provider of Loans, Insurance, Training to Smallholder Farmers in Kenya

The Netherlands Development Finance Company, a public-private bank also known by its Dutch acronym FMO, and Rabobank Foundation, the “social fund” of the Dutch Rabobank Group, each recently disbursed USD 250,000 to Apollo Agriculture, a Kenyan startup that provides financial and technical assistance to smallholder farmers in Kenya. Rabobank Foundation’s investment is a loan, and FMO’s investment is a convertible grant, meaning that FMO may acquire equity in the firm in the future at no further cost. FMO disbursed the convertible grant from the Massif Fund, which provides debt and equity primarily to small and medium-sized enterprises (SMEs).

Apollo plans to use the funds to: (1) continue financing farmers’ operations; (2) improve its techniques for gauging borrowers’ creditworthiness; and (3) expand its geographical range within Kenya. Apollo CEO Eli Pollak reportedly said, “funding from FMO and Rabobank Foundation will allow us to expand our lending reach and will greatly accelerate our rate of learning. The more loans we extend and the more data we gather, the more effective our credit model becomes at predicting default.”

Established in 2015 and headquartered in Nairobi, Apollo is a technology-focused firm operating in the agriculture sector. It offers smallholder farmers loans to finance the purchase of farming inputs such as fertilizer and seed; crop insurance; and telephone consultations. These consultations are based on satellite data combined with machine learning techniques to monitor the productivity of clients’ land. Financial data on Apollo is unavailable.

Rabobank Foundation was created in 1973 by Rabobank Group, a cooperative bank based in the Netherlands. In developing countries, the foundation provides loans and other financial services to microfinance institutions (MFIs) and enterprises active in the agricultural sector. In the Netherlands, it focuses on four areas: financial self-reliance; employment and social entrepreneurship; recreation; and education for low-income children. The foundation performs these activities via three funds: (1) the Client Fund, through which individual donors can support farmer cooperatives; (2) the Employee Fund, through which Rabobank employees have supported projects in Kenya, the Netherlands and Peru; and (3) the Rabo Rural Fund, which accepts donations and investments from institutions to assist smallholder producers. During 2017, the foundation allocated EUR 33 million (USD 40 million) to 322 projects in 23 countries.

Massif, which was created in 2006, primarily funds SMEs that specialize in agriculture, are owned by women or both. During 2017, Massif funded 20 investments and 24 capacity development projects in 17 countries, reaching 92,000 entrepreneurs and 1,330 SMEs. At year-end 2017, the fund reported total assets of EUR 461 million (USD 552 million), including equity investments valued at EUR 241 million (USD 288 million) and a gross loan portfolio of EUR 173 million (USD 203 million).

FMO is a Netherlands-based development bank that was established in 1970. The vision of FMO is to help abolish extreme poverty, increase equality and support measures that reduce climate change. The Dutch government owns 51 percent of FMO’s shares. For 2017, the organization reported total assets of EUR 8.3 billion (USD 10 billion) and pre-tax earnings of EUR 292 million (USD 350 million) from operations in approximately 70 countries. As of year-end 2017, FMO reports EUR 3.3 billion (USD 4 billion) in investments outstanding to financial institutions.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

FMO press release
https://www.fmo.nl/news-detail/f7f68b47-1566-4b33-94cb-bf613eb53d8c/dutch-fmo-and-rabobank-foundation-finance-kenyan-start-up-apollo-agriculture-with-usd-500-000

Apollo background
https://apolloagriculture.com/about/

Rabobank Foundation background
https://www.rabobank.com/en/about-rabobank/in-society/rabobank-foundation/index.html

Massif background
https://www.fmo.nl/partner-with-us/massif

MicroCapital Brief; May 12, 2016; World Bank, Rabobank Foundation Seek to Replicate Consolidation of Agricultural Cooperatives in Albania
https://www.microcapital.org/microcapital-brief-world-bank-rabobank-foundation-seek-to-replicate-albanian-cooperative-financial-institutions-consolidation-of-agricultural-cooperatives-in-albania/

MicroCapital Brief; June 5, 2018; FMO Issues $586k Convertible Grant to Milan InnoVincy to Support Smallholder Farmers in Rwanda, Tanzania, the Netherlands
https://www.microcapital.org/microcapital-brief-fmo-issues-586k-convertible-grant-to-milan-innovincy-to-support-smallholder-farmers-in-rwanda-tanzania-the-netherlands/

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