MICROCAPITAL BRIEF: FMO Issues $586k Convertible Grant to Milan InnoVincy to Support Smallholder Farmers in Rwanda, Tanzania, the Netherlands

The Netherlands Development Finance Company, a public-private bank also known by its Dutch acronym FMO, recently provided a convertible grant – meaning FMO can acquire equity in the firm at no further cost, depending on its future success – in the amount of EUR 500,000 (USD 586,000) to Milan InnoVincy (MI), a Netherlands-based consultant to smallholder farmers, primarily in Rwanda , Tanzania and the Netherlands. MI will use the funding to expand its current data analysis in support of farmers seeking to make their plots more attractive to external funders. Patrick McSharry, Chief Analytics Officer at MI, deemed the deal “a worthy opportunity to help agricultural communities in African countries by introducing techniques and solutions which harness sophisticated Big Data Analytics and Machine Learning approaches.” FMO disbursed the funding from the Massif Fund, a financial inclusion vehicle that FMO manages for the Dutch Ministry of Foreign Affairs.

MI was established in 2012 with a mission “to transform agricultural value chains in order to increase crop production by providing affordable and actionable information to a range of actors, most importantly, smallholder farmers.” MI’s data sources include its own drone flights as well as satellite data compiled by the Netherlands Space Office. Its data-analysis processes include spatiotemporal computing, a technique that can model how to optimize the use of fertilizer and other inputs based on climate and other data. MI also provides historical information in support of weather insurance product development and credit scoring based on farmer performance. Since its inception, MI has served 125,000 farmers in Tanzania, 2,000 farmers in Rwanda and an undisclosed number in the Netherlands.

Massif, which was created in 2006, provides debt and equity financing primarily to unbanked small and medium-sized enterprises (SMEs), particularly those specializing in agriculture, owned by women or both. In 2017, Massif disbursed 20 investments and 24 capacity development projects in 17 countries, reaching 92,000 entrepreneurs and 1,330 SMEs. At year-end 2017, the fund reported total assets of EUR 461 million (USD 552 million), including equity investments valued at EUR 241 million (USD 288 million) and a gross loan portfolio of EUR 173 million (USD 203 million).

FMO is a Netherlands-based development bank that was established in 1970. The vision of FMO is to help abolish extreme poverty, increase equality and support measures that reduce climate change. The Dutch government owns 51 percent of FMO’s shares. For 2017, the organization reported total assets of EUR 8.3 billion (USD 10 billion) and pre-tax earnings of EUR 292 million (USD 350 million) from operations in approximately 70 countries. As of year-end 2017, FMO reports EUR 3.3 billion (USD 4 billion) in outstanding investments to financial institutions.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

FMO press release
https://www.fmo.nl/news-detail/5220ce84-4730-4718-81fc-9269986867fd/fmo-signs-eur-500-000-convertible-grant-with-inclusive-business-start-up-milan-innovincy

Milan InnoVincy background
http://www.m-innovincy.com/?page_id=14

MASSIF Fund background
https://www.fmo.nl/partner-with-us/massif

MASSIF Fund annual report
https://www.fmo.nl/l/library/download/urn:uuid:2fdbad65-7e1e-4b85-8361-0110a6d0a808/2017+annual+report+-+massif.pdf

MicroCapital article; May 30, 2018; FMO Considering $10m Loan to Mutual Trust Bank (MTB) of Bangladesh for Trade Finance
https://www.microcapital.org/microcapital-brief-fmo-considering-10m-loan-to-mutual-trust-bank-mtb-of-bangladesh-for-trade-finance/

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