MICROCAPITAL BRIEF: IFC, Global Agriculture and Food Security Program Invest $10m in Root Capital for Farmers in Africa, Latin America

The International Finance Corporation (IFC), the private-investment arm of the US-based World Bank Group, and the private-sector office of the Global Agriculture and Food Security Program (GAFSP), a multilateral mechanism established by the G20 group of 20 large economies, have announced that each of the organizations will invest USD 5 million in Root Capital, a US-based nonprofit social investment fund. The aim is to increase market and capital access for 300,000 small-scale farmers in Africa and Latin America over the next four years. According to Willy Foote, CEO and founder of Root Capital, “This financing will help Root Capital scale its business model, and takes us one step closer to achieving our goal of catalyzing a market for smallholder agricultural finance that will unlock opportunity for 500 million farmers living on less than USD 2 a day.” Jin-Jong Cai, IFC’s CEO, was quoted as saying, “By financing agricultural cooperatives and small businesses in low-income countries, Root Capital is helping farmers – many of them women – transition from subsistence to commercial food production. Farmers are gaining access to global supply chains, increasing their incomes, and contributing to global food security.” In 2012, IFC reportedly doubled its investments in agricultural initiatives to a total of USD 4.2 billion.

As of 2012, IFC reported total assets of USD 75.7 billion. As of November 2012, GAFSP was active in 18 developing countries and had received the equivalent of USD 881 million from ten donors, 66.8 percent of the amount pledged. As of December 2011, Root Capital reported total assets of USD 86 million, an outstanding portfolio of USD 54 million and 200,000 small agricultural enterprises reached in Africa and Latin America.

By Lena Phillips, Research Associate

About Root Capital

Root Capital is a US-based nonprofit social investment fund that was founded in 1999. It provides capital, financial education and market connections to small businesses in the developing world. Root Capital has provided services across 26 countries in Latin America and Africa. As of December 31, 2011, Root Capital reported total assets of USD 86 million, an outstanding portfolio balance of USD 54 million and 200,000 small agricultural enterprises reached. Root Capital does not report financial data to the US-based nonprofit Microfinance Information Exchange (MIX).

About IFC

A member of the US-based World Bank Group, the International Finance Corporation (IFC) offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2012, IFC reported total assets of USD 75.7 billion.

About Global Agriculture and Food Security Program (GAFSP)

GAFSP is a multilateral mechanism established to assist in the implementation of the pledges made at the 2009 meeting in Pittsburgh, Pennsylvania, USA of the Group of 20 (G20), an association of financial officials from 19 countries and the EU. The aim of GAFSP is to address the first UN Millennium Development Goal, which is to cut global poverty and hunger in half by 2015, through public-sector and private-sector avenues. The public-sector office of GAFSP mobilizes grant funding for country and regional-led agricultural development efforts. The private-sector office, which is managed by the International Finance Corporation, provides loans, credit guarantees and equity to support agricultural development and improve food security. As of November 2, 2012, GAFSP has received the equivalent of USD 881 million from ten donors: Australia (public sector), Bill & Melinda Gates Foundation (public sector), Canada (public and private sector), Ireland (public sector), Japan (private sector), Korea (public sector), Netherlands (private sector), Spain (public sector), United Kingdom (public and private sectors) and the United States (public and private sectors). This figure accounts for 66.8 percent of the amount pledged. As of 2012, GAFSP is active in the following countries: Bangladesh, Burundi, Cambodia, Ethiopia, The Gambia, Haiti, Kyrgyz Republic, Liberia, Malawi, Mongolia, Nepal, Niger, Rwanda, Senegal, Sierra Leone, Tajikistan, Tanzania and Togo. GAFSP’s office is in Washington, DC, USA.

About G20

Established in 1999, the Group of Twenty (G20) brings together finance ministers and central bank governors of “systematically important” industrialized and developing economies to discuss key issues in the global economy. The G20 is made up of representatives from 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, the UK and the US. The European Union is the twentieth member of the G20.

About the Millennium Development Goals (MDG)

Established at the Millennium Summit in 2000, the deadline for completion of these goals is 2015. They are as follows: (1) halve poverty and hunger, (2) achieve universal primary education, (3) promote gender equality and empower women, (4) reduce the child mortality rate, (5) improve maternal health, (6) combat HIV/AIDS, malaria and other diseases, (7) ensure environmental sustainability and (8) encourage global partnership.

Sources and Additional Resources:

Root Capital Press Release, “IFC, GAFSP Invest $10 million in Root Capital to Support Small Farmers in Africa, Latin America”, http://www.rootcapital.org/about-us/press-releases/ifc-gafsp-invest-10-million-root-capital-support-small-farmers-africa-latin

MicroCapital.org Article, 2 January 2013: “MICROCAPITAL BRIEF: International Finance Corporation (IFC) Loans $5m to La Nacional of the Dominican Republic for Housing, Small and Medium-Sized Enterprise (SME) Lending”, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-loans-5m-to-la-nacional-of-the-dominican-republic-for-housing-small-and-medium-sized-enterprise-sme-lending/#more-21852

MicroCapital.org Article, 25 October 2011: “MICROCAPITAL BRIEF: Inter-American Development Bank (IDB) Group’s Multilateral Investment Fund (MIF) to Loan $7m to Root Capital and Microfinance Institutions FIDERPAC of Costa Rica, ASDIR of Guatamala; Announces $7m in Equity Investment in CoreCo Central America I Fund; Rolls Out Psychometric Risk Assessment Tool”, https://www.microcapital.org/microcapital-brief-inter-american-development-bank-idb-group%E2%80%99s-multilateral-investment-fund-mif-to-loan-7m-to-root-capital-and-microfinance-institutions-fiderpac-of-costa-rica-asdir-of/#more-15349

MicroCapital Universe Profile: Root Capital, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Root+Capital

MicroCapital Universe Profile: International Finance Corporation, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

MicroCapital Universe Profile: Global Agriculture and Food Security Program (GAFSP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Global+Agriculture+and+Food+Security+Program+%28GAFSP%29

MicroCapital Universe Profile: G20, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=G20

MicroCapital Universe Profile: Millennium Development Goals (MDGs), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Millennium+Development+Goals+%28MDGs%29

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