SMEs account for approximately two thirds of all new jobs in the formal sector in developing countries, and women own around a third of these enterprises. Lack of capital is the biggest barrier to development for businesses, and women find it even more difficult than men to gain access to finance. One of the companies that Swedfund is financing is Platcorp in East Africa.
Platcorp is a group of companies which finances small and medium enterprises (SMEs) in Kenya, Tanzania and Uganda. The company's fully digitalised business system enables borrowers to be evaluated and approved, and payments to be administered immediately during the meeting with the customer. Platcorp’s local presence and consequent detailed knowledge of its customer base enables strong customer relations and a good understanding of customers' needs to be built up.
Swedfund has made two investments in Platcorp, one in 2018 and another in 2019.
"We saw an opportunity to contribute, in partnership with a company which has a capable management team, to the promotion of financial inclusion in East Africa with the aim of reaching SMEs. Improving access to finance can help facilitate the transition from the informal to the formal sector, with an overall positive development for the region. As Swedfund is the first development finance institution to invest in the group, we also see an opportunity to attract additional capital and actively work on ESG and impact issues,” says Jane Niedra, Senior Investment Manager at Swedfund.
Swedfund also supports Platcorp's work to develop a range of services specifically targeted at farmers in Uganda. This target group can find it difficult to obtain loans, but has strong needs as a result of irregular harvests leading to uneven incomes over the course of the year. By helping to create access to capital in the agricultural sector, we believe that major development effects can be achieved amongst the very poorest people in the country.
Swedfund always strives to create value and be a responsible owner. As a result, when we entered into the partnership with Platcorp, we stipulated far-reaching demands in the agreement and drew up a plan for the measures that we wanted them to implement, in order to make the business even more sustainable, known as a ‘ESGAP’. The ESGAP that Swedfund developed contains ambitions for the company to meet the requirements of our strategic sustainability goals, including requirements within the areas of anti-corruption, gender equality, working conditions and customer protection. Swedfund will provide expertise and work closely with Platcorp's newly appointed ESG managers.
Swedfund has also allocated Technical Assistance funds for four initiatives aimed at supporting the company in its implementation of the ESGAP. This involves developing a social and environmental management system (ESMS), which ensures that risks are identified, assessed and addressed. Swedfund also supports the introduction of what are known as ‘Client Protection Principles’ (CPP). These principles describe the protection that customers can expect in order to minimise the risk of over-leverage and ensure that pricing and conditions are transparent and clear for customers. A complaints system was also to be established for customers. Swedfund is also supporting a digitalisation initiative linked to a new accounting system for better financial reporting.