Report on Swedfund’s Debt Financing to Platcorp for MSME Development and SDG Advancement in Africa

Introduction and Investment Overview

Swedfund, the development finance institution of Sweden, has executed a $10 million debt agreement with Platcorp Holdings Limited. Platcorp is an impact investment management firm that provides credit to Micro, Small, and Medium-sized Enterprises (MSMEs) across Kenya, Uganda, Tanzania, and Zambia. This investment is the fourth loan provided by Swedfund to Platcorp, continuing a partnership aimed at closing the significant financing gap for small businesses in East and Southern Africa. The initiative is strategically designed to advance several United Nations Sustainable Development Goals (SDGs).

The history of the financial partnership includes:

1. A $10 million loan in 2018 (repaid in 2022).
2. A $5 million loan in 2020.
3. A $15 million loan in 2022.
4. The current $10 million loan.

This latest loan is supported by a 50% guarantee from the European Union’s European Fund for Sustainable Development Plus (EFSD+), underscoring a collaborative effort to accelerate financial inclusion and sustainable economic growth.

Addressing Systemic Financial Exclusion to Promote Economic Growth (SDG 8)

The MSME Financing Gap

A substantial barrier to economic development in Africa is the lack of formal credit access for SMEs. According to the African Development Bank (AfDB), approximately 80% of African SMEs face this challenge, contributing to a financing gap estimated at $330 billion. Platcorp’s model directly confronts this issue by targeting underbanked and underserved populations, particularly rural and micro-enterprises that lack the capital, collateral, or educational levels required by the traditional financial system. This focus is critical for fostering inclusive economic development, a core tenet of SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities).

Target Beneficiaries and Impact

Platcorp operates at the base of the economic pyramid, with an average loan size of just $320. This micro-level financing empowers a wide range of entrepreneurs, from roadside vegetable vendors to traders in agricultural inputs. By providing capital to these foundational economic actors, the initiative directly supports job creation and strengthens local economies.

Strategic Alignment with Sustainable Development Goals (SDGs)

The Swedfund-Platcorp partnership demonstrates a targeted approach to achieving measurable progress across multiple SDGs:

• SDG 5 (Gender Equality): A significant component of Platcorp’s portfolio is dedicated to women-owned enterprises, empowering female entrepreneurs and promoting their economic participation.
• SDG 2 (Zero Hunger) & SDG 13 (Climate Action): The initiative has a growing focus on climate-resilient agriculture. In 2024, over 37,000 agricultural clients, many of whom are smallholder farmers, were financed. This supports sustainable food production and helps communities adapt to climate change.
• SDG 4 (Quality Education): Platcorp extends credit to both educational institutions for infrastructure development and to individuals to fund their schooling, thereby improving access to quality education.
• SDG 1 (No Poverty): By providing capital to the most economically vulnerable, the program is a direct intervention aimed at poverty alleviation.
• SDG 11 (Sustainable Cities and Communities): The provision of affordable housing development loans enables borrowers to improve their living conditions, contributing to safer and more resilient communities.

Innovative Financial Products and Technical Assistance

Specialised Lending for High-Impact Sectors

In collaboration with Swedfund, Platcorp has developed innovative financial products tailored to the needs of its clients. A notable example is a loan designed for smallholder farmers in Kenya’s potato and dairy value chains. This product allows farmers to use their cattle as collateral—an asset not typically accepted by traditional banks—to upscale their operations. This innovative approach unlocks capital for farmers with five or fewer cows, who constitute the majority of dairy producers in Kenya, thereby enhancing productivity and food security in line with SDG 2.

Capacity Building and Risk Mitigation

A key component of the partnership is the provision of technical assistance to borrowers, which enhances the sustainability of the investments. This support includes:

• On-the-ground advice from agronomists for farmers.
• Mandatory training programs in financial literacy, sustainable agricultural practices, and silage management for high-risk borrowers, such as those in agriculture.

This integrated model of financing and training ensures that borrowers are better equipped to manage their businesses and improve their livelihoods, reflecting a philosophy of responsible lending that aims for the long-term betterment of clients. This strategy effectively manages credit losses and demonstrates that financing MSMEs in the region is a viable and sustainable business model for achieving development impact.

SDGs Addressed in the Article

1. SDG 1: No Poverty

   • The article highlights that Platcorp provides loans to individuals and companies at the “bottom of the pyramid,” including those who are “underbanked or underserved.” This directly addresses the goal of eradicating poverty by providing access to economic resources and financial services for the poor and vulnerable.

2. SDG 2: Zero Hunger

   • The initiative specifically supports smallholder farmers. The article mentions financing “over 37,000 agricultural clients in 2024,” providing loans for potato and dairy value chains, and offering technical assistance like training in sustainable agricultural practices. This contributes to improving food production and supporting small-scale farmers.

3. SDG 4: Quality Education

   • Platcorp’s work includes extending credit “to both schools and individuals who want to attend school.” Additionally, they provide mandatory training in financial literacy for their borrowers, enhancing their skills.

4. SDG 5: Gender Equality

   • The loan from Swedfund has a “particular focus on women-owned enterprises.” The article states that “Women-owned enterprises are a bigger component of what we do,” indicating a direct effort to empower women economically.

5. SDG 8: Decent Work and Economic Growth

   • The core purpose of the $10m loan is to provide credit to Micro, Small, and Medium-sized Enterprises (MSMEs). The article explicitly states this aims to foster “employment opportunities and strengthen local economies,” which is central to promoting sustained, inclusive, and sustainable economic growth.

6. SDG 11: Sustainable Cities and Communities

   • The article mentions that Platcorp provides “affordable housing development loans to borrowers who want to upgrade their homes,” contributing to access to adequate and affordable housing.

7. SDG 13: Climate Action

   • The loan is intended to support “climate-resilient agriculture.” Platcorp also offers training in “sustainable agricultural practices,” which helps farmers adapt to and mitigate the effects of climate change.

8. SDG 17: Partnerships for the Goals

   • The entire initiative is a partnership between Swedfund (Sweden’s development finance institution), Platcorp (an impact investment company), and is supported by an EU guarantee from the European Fund for Sustainable Development Plus (EFSD+). This collaboration mobilizes financial resources for developing countries.

Specific Targets Identified

1. SDG 1: No Poverty

   • Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance.
     • The article details how Platcorp lends to “people who historically have not had sufficient capital, collateral or the necessary levels of education to access capital through the traditional financial system,” directly aligning with providing access to financial services and microfinance.

2. SDG 2: Zero Hunger

   • Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment.
     • Platcorp provides loans to smallholder farmers, offers technical assistance through agronomists, and provides training on sustainable practices, all of which are aimed at increasing productivity and income for small-scale producers. The article mentions helping “113 potato and dairy farmers” and financing “over 37,000 agricultural clients.”

3. SDG 4: Quality Education

   • Target 4.4: By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship.
     • Platcorp’s provision of “training programmes, such as in financial literacy” equips borrowers with relevant skills for managing their businesses and finances, contributing to entrepreneurship.

4. SDG 5: Gender Equality

   • Target 5.a: Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws.
     • The loan’s “particular focus on women-owned enterprises” directly supports giving women access to financial services to build their businesses.

5. SDG 8: Decent Work and Economic Growth

   • Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.
     • The entire program is centered on this target by providing loans to MSMEs to “contribute to closing the financing gap” and help businesses “grow and create decent jobs.”
   • Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.
     • Swedfund’s loan to Platcorp, a financial services company, strengthens its capacity to provide credit to MSMEs, thereby expanding financial inclusion for those “typically underbanked or underserved.”

6. SDG 11: Sustainable Cities and Communities

   • Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums.
     • The article explicitly mentions that Platcorp provides “affordable housing development loans to borrowers who want to upgrade their homes.”

7. SDG 13: Climate Action

   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
     • The focus on “climate-resilient agriculture” and training in “sustainable agricultural practices” directly contributes to strengthening the resilience and adaptive capacity of smallholder farmers to climate-related risks.

8. SDG 17: Partnerships for the Goals

   • Target 17.3: Mobilize additional financial resources for developing countries from multiple sources.
     • The article describes a multi-source financial mobilization: a “$10m debt deal” from Swedfund (a Swedish DFI) to Platcorp, which is “supported up to 50% through an EU guarantee.”

Indicators for Measuring Progress

1. For SDG 1 & 8 (Poverty, Economic Growth)

   • Total value of loans provided: The article mentions a “$10m debt deal” from Swedfund to Platcorp.
   • Average loan size to micro-enterprises: The article specifies an “average loan size of just $320,” indicating a focus on the micro-level.
   • Financing gap for SMEs: The article cites the African Development Bank’s estimate of a “$330bn” financing gap, which can be used as a baseline to measure the contribution of such initiatives.
   • Proportion of SMEs without access to credit: The article mentions that “80% of African SMEs still lack formal access to credit,” a metric against which progress can be measured.

2. For SDG 2 (Zero Hunger)

   • Number of agricultural clients financed: The article states Platcorp “financed over 37,000 agricultural clients in 2024.”
   • Number of farmers receiving targeted assistance: The article mentions a specific project that “helped 113 potato and dairy farmers in Keringet.”
   • Proportion of portfolio dedicated to agriculture: The article notes that “agricultural loans only make up about 10% of Platcorp’s portfolio.”

3. For SDG 4 & 8 (Education, Skills)

   • Number of individuals/institutions receiving educational loans: While no specific number is given, the article implies this is a measurable activity by stating Platcorp extends credit “to both schools and individuals who want to attend school.”
   • Number of borrowers receiving training: The article mentions that for farming loans, “the training is mandatory,” implying that the number of people trained in financial literacy and sustainable agriculture is a key performance indicator.

4. For SDG 5 (Gender Equality)

   • Proportion of financing directed to women-owned enterprises: The article implies this is a key metric by stating there is a “particular focus on women-owned enterprises” and that they are a “bigger component” of the portfolio. The specific percentage would be the indicator.

5. For SDG 17 (Partnerships)

   • Amount of mobilized international finance: The “$10m” loan from a Swedish DFI is a direct indicator.
   • Value of financial guarantees: The “EU guarantee from the European Fund for Sustainable Development Plus (EFSD+)” covering “up to 50%” of the loan is a specific indicator of partnership and risk-sharing.

Table of SDGs, Targets, and Indicators

Source: impact-investor.com