Alterfin

Debt : October 2023

BIO has invested USD 5 M in equity in Alterfin, a Belgian financial cooperative

Amount

$ 5,000,000.00

Type of investment

Debt

Development impacts

Local economic growth
Private sector consolidation/innovation
Financial inclusion
Food security & rural development
Fight against climate change and preservation of natural resources
Gender

Beneficiary locations

Asia:

Latin America and Caribbean:

Middle East & North Africa:

Sub-Saharan Africa:

Investment field

Investment Companies & Funds

Activity

K66.30 Fund management activities

Organisation

Alterfin

Website

https://www.alterfin.be/en

Domicile

Belgium

More investments in

Alterfin

Subsidy € 21,500.00 (2023)
Subsidy € 80,000.00 (2022-2024)
Subsidy € 19,924.00 (2021-2022)
Debt € 3,000,000.00 (2020)
Equity € 250,000.00 (2002)

Alterfin is a social financier created in 1994, which aims to improve the livelihood and overall living conditions of the socially and economically disadvantaged people and communities, mainly in rural areas, in low- and middle-income countries worldwide.

To achieve this, Alterfin provides financial and non-financial services to its partners by:

mobilising funds primarily from individual investors and other socially responsible institutions,
structuring and promoting ethical and sustainable investments, and
developing networks of like-minded organizations (Members of the Council on Smallholder Agricultural Finance “CSAF”, DFIs).

Alterfin supports the activities of its partners (smallholder farmers-based corporation or microfinance institutions) in developing countries by granting them credit facilities and technical assistance.

Development impacts

Local economic growth
Increasing access to financing to more than 140 partner institutions in 9 agricultural value chains - mostly MFIs but also agricultural SMEs and producer's organisations

Strengthening the agricultural sector in more than 30 countries (mostly lower (middle) income countries) where agricultural is often the backbone of the economy and export revenues, a primary source of employment and income for a majority of the population, and vital for rural development
Private sector consolidation/innovation
Funding an established partner of BIO with a unique outreach to un(der)served and vulnerable zones (min 60% rural population). Alterfin offers flexible short-term and long-term financing solutions adapted to their needs (e.g. small ticket size, local currency loans, etc.), including to first-time borrower institutions (16% of MFI clients and 50% of small agribusiness in 2022).
Financial inclusion
Financing MFIs (up to 65% of portfolio) with a strong un(der)served and vulnerable groups outreach i.e. 84 MFIs funded in 2022 and over 4 million end-borrowers (and their families) supported, out of which 53% of microenterprises, 23% of smallholder farmers and more than 60% women.
Food security & rural development
Financing MFIs with a strong rural and agricultural outreach, i.e. 63% of MFIs client are rural and 23% are smallholder farmers. Promoting Fairtrade (73% of agricultural partners are Fairtrade certified) and other international sustainability certifications. Supporting job opportunities in rural areas (7,000 direct jobs in 2022) as well as market opportunities for smallholders farmers (136,000) through investments in sustainable smallholder-based agriculture (USD 63.6m and 37% of GLP).
Fight against climate change and preservation of natural resources
Focusing on sustainable agriculture with a high proportion of partners that are certified (e.g. 76% certified organic) and/or supporting partners to have an environment policy (66%), to offer green loans (28%) and/or to provide training in sustainable agriculture techniques.
Gender
Recent adoption (2022) of a gender strategy with several concrete objectives. 2X eligible on 2 direct criteria (i) leadership with more than 30% female among Board members and upper management (ii) employment with about 50% of women employees. Alterfin should also be eligible on the indirect criteria with 75% of the beneficiaries of their investments that are women and its objective to work with more women-led and women-focused partners in the future.

E&S Impact

Alterfin has agreed to:

-Adopt the full EDFI exclusion list
Include incident reporting in the E&S clauses and monitoring templates for clients
Define E&S must-have and good-to-have items for clients.
Non-compliance with the must-have items, should be mitigated in an ESAP.
For the good-to-have items, the investment manager could decide whether to include them in the ESAP, based on the client size, context, and others.
Review the implementation of the Environmental and Social Management System (ESMS) by an external consultant and adapt the ESMS accordingly
Provide further E&S training for the E&S Impact Manager

Situation at the time of investment

An E&S Policy is in place, which states Alterfin’s commitment to environmental & social risk management and defines the standards it adheres to.
Alterfin applies the (short) EDFI exclusion list.

For its first investment, BIO requested Alterfin to develop an ESMS. The project was finalised end of 2022. The ESMS procedures as such are adequate for the type of investments. Implementation could be strengthened by inserting an ESAP in the contractual agreement with clients when finding an E&S gap, instead of working with voluntarily TA programmes. Full ESMS implementation will be reviewed by a consultant, end of 2023.

Alterfin has appointed a full-time E&S Impact Manager. She reports to the Chief Impact Officer, which oversees TA, impact and E&S.

Implementation of the ESMS is the responsibility of the Investment Team: they are responsible for applying the ES standards to transactions and engage with clients on Alterfin’s E&S requirements. The E&S impact manager is responsible for assisting the Investment Team where needed and is responsible for the maintenance of the ESMS including all policies, procedures, and tools.

Risk Category: B

Read impact and news about this project

News

EDFI AgriFI and BIO contract €6M with Alterfin

17-08-2020

EDFI AgriFI and BIO each commit to finance the equivalent of EUR 3 million in USD to reinforce Alterfin’s sustainable agriculture and microfinance portfolios. The combined investment will provide Alterfin with long-term financing to support its expansion in Africa, Latin-America and Asia. The financing from BIO will likely also be accompanied by technical assistance, a first for Alterfin.