Supporting small businesses to access finance for COVID resilience

Solidaridad’s Cocoa Rehabilitation and Intensification Programme, funded by the Embassy of the Kingdom of the Netherlands in Ghana, has been building the capacity of participating small and medium enterprises to roll out service delivery models, and supporting these enterprises to access finance amid the challenges of the COVID-19 pandemic.

Kwabena Assan Mends secured funding to support his service centre during COVID-19

The COVID-19 pandemic has affected many businesses, including small and medium enterprises (SMEs) in the cocoa sector that provide critical services to smallholder farmers in Ghana. These small businesses, when provided with the needed support, play a vital role in improving the livelihoods of farmers through yield enhancements and market linkages.

Access to timely and affordable finance is, therefore, essential to fuel the growth of these enterprises during this pandemic.

Preparing small and medium enterprises for investment

The Cocoa Rehabilitation and Intensification Programme has been supporting small and medium enterprises to roll out service delivery centres. Through an investment readiness support model, Solidaridad prepares these service centres for commercial funding to grow their businesses.

The support is to give the SMEs the professional outlook needed to attract impact investors. To achieve this, Solidaridad provides technical assistance to the SMEs in the area of business modelling, climate-smart cocoa production and entrepreneurship. In addition, Solidaridad facilitates concessional financing for these enterprises to build service centers in rural communities, pay for labour and to procure needed agro inputs, tools and pieces of equipment.

So far, 20 SMEs have benefitted from the investment readiness support under the programme.

Rural service centres provide cocoa farmers with easier access to inputs

Linking Small and Medium Enterprises with investors

To facilitate access to finance for SMEs that have gone through investment readiness support, Solidaridad engages impact investors to finance the growth phase of these enterprises. One such impact investor is Acumen, a non-profit organization with over 15 years’ experience in investing in social enterprises that serve low-income communities in developing countries across sub-Saharan Africa.

One of the enterprises that has benefited from the partnership with Acumen is Emfed Farms and Trading Company Limited, a rural service centre operator at Assin Fosu in the Central region of Ghana. Currently, Emfed provides agro inputs, labour and full farm management services to poor smallholder cocoa farmers in Assin Fosu and its surrounding communities on credit.

Established in 2012, the company joined the first phase of Solidaridad’s Cocoa Rehabilitation and Intensification Programme (CORIP I) in 2015 as a rural service centre operator to prove the commercial viability of its business model. Having achieved this, the company joined the second phase of the programme to benefit from its investment readiness support to scale up.

Kwabena Assan Mends manages the Emfed Farms and Trading Company Limited

In 2018, Kwabena Assan Mends, managing director of Emfed Farms and Trading Company Limited, was supported by Solidaridad to participate in the Acumen Fellowship, designed to build a pipeline of connected business leaders who challenge the status quo by inspiring their communities to build a future devoid of poverty. Today, he is an Acumen West Africa Fellow.

Over the past five years, Solidaridad has  enhanced our knowledge in good agronomic practices and entrepreneurship through various capacity building training and also provided us with a grant to prove the business case for our service delivery model.  This puts us in a better position to deliver value to our farmers and our shareholders.” – Kwabena Assan Mends

He adds that in December 2017, Solidaridad also supported Emfed Farms to put together the company’s board of directors and registered the business as a limited liability company. This, he says, made the business more attractive to impact investors.

Acumen supports Emfed Farms to build COVID-19 resilience

Emfed Farms recently received US$ 46,810 from the Acumen Global Emergency Facility, a fund designed to assist enterprises serve their communities’ immediate needs during the pandemic and continue their long-term work of serving the poor and vulnerable after the crisis.

The funding was to help the company continue to engage and provide services to poor cocoa farmers, maintain its core staff and farm hands, especially women, provide personal protective equipment for its workers, and disseminate COVID-19 safety messages to farmers and members of their communities.

Prior to receiving the funds, Mends said his company’s revenues had begun to decline because farmers were reluctant to procure services from the company for fear of contracting the virus. In addition, critical labour was in short supply following the government’s announcement of an impending lockdown. The low revenues, coupled with increases in the cost of production, due largely to price gouging, affected the company’s cash flow generation capacity and profitability.

“Emfed Farms is excited to receive this timely intervention from Acumen Global Emergency Facility. This will help us continue to provide farm management services and inputs to our farmers on credit during this period of the COVID-19 pandemic. We are grateful to Solidaridad for providing us with the necessary support to apply for the funding,” says Kwabena Assan Mends.

The funding has helped Kwabena’s enterprise to provide services, maintain staff, and provide personal protective equipment

Improving access to finance is at the heart of Solidaridad’s work

“For us at Solidaridad, we are happy that our collaboration with Emfed Farms and impact investors like Acumen over the last five years is showing the desired results. We believe that with the right partnerships, our collective aim of lifting poor cocoa farmers in West Africa out of poverty will be achieved soon,” says Hammond Mensah, programme manager for CORIP and head of access to finance, Solidaridad West Africa.

Increasing access to finance for small and medium enterprises under the Cocoa Rehabilitation and Intensification Programme is in line with Solidaridad’s impact investment and innovative finance strategy, which seeks to develop inclusive financial models and create a support structure for SMEs and smallholders to thrive.

Read more about our work in Cocoa.