How MAEF support SMEs
Many small-to-medium-sized businesses along the agricultural value chain fall into the ‘missing middle’ of agricultural finance – they are too big to receive services from NGOs and microfinance institutions, but too small to qualify for commercial loans.
MAEF focuses on the first segment of this missing middle, which we call the ‘first-mile’ entrepreneurs. First-mile entrepreneurs provide vital services for smallholders:
Type of funding offered by MAEF
There are three types of funding available for SMEs, depending on their maturity:
Provides grants for innovative ideas at an earlier stage in the cycle, to help businesses refine a proposition and adapt any tested ideas for wider adoption. Successful best practices can also be scaled up.
Competitive Value Chain Fund
Provides two-to-three-year grants to projects that use a value chain approach to agricultural innovation, encouraging improved productivity, market access and agricultural commercialisation at smallholder level
Provides three-to-four-year grants to expand successful technologies and best practices trialled under the Competitive Value Chain Fund.
Grants or loans provided by MAEF
The investment made may be repayable – there are three types:
Non-recoverable grants to deliver training and support directly to farmers to address issues of production, supply, aggregation, standards, storage and other market-accessing constraints.
A recoverable grant (i.e. an interest-free loan or ‘advance’) for product procurement that must be repaid as soon as the sale is completed.
Bank loan guarantees
Connecting the business to a commercial bank or microfinance institution and serving as their guarantor in case of default. Typical investment allocation.
The eligibility criteria
At MAEF this is our eligibility criteria :
- Based in rural areas, already embedded in several value chains with a typical customer base of several hundred smallholder farmers.
- Work on a shoestring budget; do not own a vehicle; and have received no donor funding in the past.
- Have high local knowledge, but no tangible assets that can be used as collateral.
- Have higher income multiplier potential than other value chain actors and can raise their customer base from hundreds to thousands.
- Typically need capital funding of $20,000 to $150,000 to put their business on a strong commercial footing.