Small Foundation supports SME Impact Fund’s expansion in Kenya and Uganda
In 2021, Small Foundation supported Match Maker Fund Management (MMFM) in a feasibility study entitled Financing Missing Middle Agri-businesses in Kenya and Uganda.
Led by Moving Frontiers in collaboration with SME Impact Fund (SIF), Smart Regional Consultants and Eye Opener Works, this research assessed the availability and demand of ‘missing middle’ agri-SME finance in Kenya and Uganda, seeking to determine the potential for SIF’s expansion from Tanzania into these markets.
SIF provides working capital loans between $50,000 and $150,000 in local currency within informal local value chains where the need is often greatest. This is the range where most ‘missing middle’ agri-SMEs operate: SMEs too big for microfinance, but difficult to service and too risky for traditional banks and impact funds. These enterprises form the backbone of a thriving rural economy and play a vital role in creating jobs and lifting income for all players along the value chain, from smallholder farmers to employees and the communities they are part of.
The report found strong demand for SIF’s products in both Kenya and Uganda, although each market has its own unique characteristics which must be considered. Very few financial service providers were seen to provide a similar product to SIF, particularly at SIF’s average loan size.
The study provided a business case for SIF’s expansion, focusing on the Kenyan market in the first instance. SIF plans to expand to both Kenya and Uganda and to triple its reach by launching SME Impact Fund II in 2023. The new fund will capitalize $20M and an accompanying technical assistance facility of $2M to unlock the impact of this crucial segment of agri-SMEs.
Small Foundation believes the needs of agri-SMEs will be greatly supported by SIF’s expansion, but more needs to be done to support these missing middle agri-SMEs at scale. For further detail on our strategy and approach please see our recently published Impact & Insights Report.
About SIF: Launched in Tanzania in 2013, SIF has provided loans to 70+ agri-SMEs, disbursing nearly $15 million in small ticket, local currency loans, and enabling 3,000 jobs in agri-businesses working with over 20,000 smallholder farmers. For further information please visit SIF’s website.