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Partnering with USAID for Economic Growth

By Mark Castellino

Opportunity International has partnered with the United States Agency for International Development (USAID) for over 30 years, working together to support entrepreneurs and grow businesses. Opportunity recently completed two USAID-funded projects that provided innovative financing models in Africa and Europe.

Financing agriculture in Mozambique

Opportunity joined forces with Feed the Future Partnering for Innovation—a USAID-funded project implemented by Fintrac—to expand our product offerings for smallholder farmers in the Manica and Zambezia provinces of Mozambique. The project focused on sesame and soy, crops that are cultivated by smallholder farmers in those regions and present high potential for profitability. Working through Opportunity Bank Mozambique (BOM), the project developed loan products suitable to the agricultural cycle of the two crops; trained loan officers to understand the products and the business model of smallholder farming; and established an outreach mechanism for prospective clients in remote areas by sending loan officers directly to their farms to conduct the loan application process.

Opportunity also recognized that often smallholder farmers are not well positioned to receive or benefit from formal financial services. They may not keep financial records, develop budgets,  and prepare forecasts. To address this, we engaged business development organizations to help farmers develop financial literacy skills and familiarize them with mobile money services. In important part of that included working with extension services providers who established demonstration plots and trained farmers on good agricultural practices. Opportunity also helped farmers connect with potential buyers, trained them to produce the quantity and quality demanded by the market, and encouraged farmers to consider negotiating sales contracts in advance of planting. The project also piloted a warehouse receipt system, a three-way arrangement between the farmer, a trusted warehouse operator, and the bank. The system allowed the farmer to deposit her crop in a secure warehouse, typically immediately after harvest, when prices are at their lowest. The warehouse operator would verify their crops and issue the farmer a receipt, which BOM would extend credit against. The farmer would still retain ownership of the crop and when she was ready, she could either repay the loan and take back the crop, or sell it when prices were higher, repay the loan, and benefit from the increase in value.

This project, which ended in April, resulted in rural clients opening 9,000 new accounts, offered financial education and business training to 8,200 smallholder farmers, and trained over 5,200 of those farmers in agricultural practices to improve their soy and sesame production. BOM, now operating as MyBucks, continues to extend agriculture finance to smallholder farmers across Mozambique. 

Financing Small & Medium Enterprises in Serbia

In September, Opportunity completed a project funded by USAID’s Office of Transition Initiatives to strengthen financial services in Serbia. USAID funding enabled Opportunity, in partnership with Opportunity Bank Serbia (OBS) and the Small Enterprise Assistance Fund, to establish the Serbia Impact Fund. The Fund provides financing and support services for small and medium enterprises (SME) that demonstrate potential to become sustainable businesses and create jobs. In addition to financial investment, the Fund offers technical assistance to portfolio companies in corporate governance, finance, and management. The Fund’s investment strategy targets growing companies that employ between 10 and 250 people, with annual revenues between €200,000 and €15 million ($233,000 and $17.5 million), and that have the potential to create sustainable businesses, create jobs, and provide a reasonable commercial return to investors. The Fund takes minority equity stakes in portfolio companies and provides complementary assistance to encourage growth.

To date, the Fund has made three investments in Serbian SMEs and is actively vetting a rich pipeline of prospective companies. The Fund’s investments include:

  • Bio Špajz, the leading value-added retailer and wholesaler of premium health foods and organic products in the Serbian market. The investment allowed the company to expand its retail network, acquire a distribution vehicle, and refurbish existing stores.
  • Tetragon, an adhesive company. Tetragon used the investment for production facility improvements, working capital, and new equipment.
  • EMU, a value-added reseller of office furniture based in Belgrade. EMU used the investment funds to increase inventory of existing and new products, acquire delivery vehicles, open two new stores, and expand warehouse capacity.

Mozambique and Serbia have many differences, but one thing they have in common is their citizens’ need for sustainable access to finance. Our partnership with USAID has been catalytic in establishing financial services that entrepreneurs can rely on to support their growing businesses. By helping farmers purchase inputs, and injecting capital into SMEs, we are building businesses, creating jobs, and improving livelihoods for thousands of people around the world.

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