IDH Farmfit Fund invests in LendXS to jointly accelerate smallholder finance

Supporting rural lenders build viable investment portfolios, by combining de-risking capital with digital solutions. 

The IDH Farmfit Fund signed an agreement to acquire a 21% ownership stake in fintech scale-up company LendXS BV. The investment marks the start of a unique collaboration of the IDH Farmfit Fund, the catalyzing smallholder finance facility of IDH, and LendXS, a fin-tech start-up by the Financial Access Group. An estimated 270 million smallholder farmers in the world live in poverty because they lack the financial means to invest in their farms to make them more profitable. Many financial Institutions are reluctant to invest in smallholders because of high onboarding costs and perceived high risks, which drive up interest rates, making loans unaffordable for the majority of smallholder farmers. The investment in LendXS marks the start of a unique and paramount collaboration. Roel Messie, CEO of the IDH Farmfit Fund: ‘We are very pleased with the investment and partnership with LendXS, because it creates a synergy that is expected to unlock access to credit for many farmers. LendXS will enable rural lenders to better assess the risk and lower the costs of providing credit to farmers. The IDH Farmfit Fund will be able to support these lenders with funding and risk mitigation.’

LendXS was founded in 2019 and has operations in Kenya, Ghana, Uganda and Cote d’Ivoire. The company was established by Financial Access Consulting Services BV (FACS), the former ING Bank emerging markets banking advisory subsidiary. ‘Few banks are willing to provide credit in smallholder farmers because of the high costs and credit risks. This is one of the vicious circles that keeps farmers poor’, says Eelko Bronkhorst, CEO of LendXS: ‘Transaction costs of smallholder finance accounts on average for around 60% of the interest rates charged. Our long-time experience with financial transactions, enables us to design fin-tech solutions and advisory services that bring down these costs significantly. This will improve rural lenders bottom line profits and will make loans more affordable for smallholder farmers, creating self-propelling change. The investment by the IDH Farmfit Fund brings LendXS to the scale that is needed to play this transformative role.

Investable Solution
With the objective of contributing to better incomes of farmers in its supply chains, JDE Peet’s is one of the investors in the IDH Farmfit Fund. The investment in LendXS is commodity agnostic, highly scalable and expected to benefit farmers in for instance the coffee supply chain at scale. In the foreseeable future LendXS aims to reach at least 280,000 smallholder farmers.

The IDH Farmfit Fund is part of IDH, funding businesses to catalyze smallholder finance on a financially sustainable basis. Investors in the IDH Farmfit Fund are the Dutch government, JDE Peet’s, FMO, Mondelēz and Unilever.

About LendXS
LendXS BV is a Netherlands-based fintech company. The main objective of LendXS is to improve rural access to finance through affordable digital technology. The LendXS tools include easy-to-use workflow management and digital data collection and loan monitoring technology, as well as crop-specific credit scoring tools. The LendXS tools allow rural and other lenders to improve their credit risk analyses and to make faster, better-informed loan decisions.

The LendXS solutions are tailored to the client acceptance, risk policy, product, IT and process requirements of financial institutions and will reduce new client onboarding costs and risks. This will result in better managed, lower risk rural and agri loan portfolios.

For the development of its digital solutions LendXS has entered a partnership with Incentro Africa Ltd, the Kenya-based affiliate of Dutch technology company Incentro BV.