One Acre Fund secures $1.4 Million debt funding to support farmers in Africa

One Acre Fund has recently secured a $1.4 million debt fund from Impact Bridge Asset Management. The Spanish fund manager specialises in social impact investing, via its IB Impact Direct Debt, to finance social and environmental impact companies in underdeveloped countries.

Launched in 2006, One Acre Fund has trained farmers in sustainable farming practices, including micro-dosing of fertilisers, advice on planting techniques, soil and crop health and services such as credit and crop insurance to protect farmers against drought and flood due to climate change.

The Kenyan-based company has supplied smallholder farmers with access to naturally-enhanced hybrid seed crops, quality fertilisers and training on better farming practices, to enhance and improve the quality of their farming, increase yield, and increase their incomes and quality of life.

One Acre Fund focuses on working with family farms in rural areas, ensuring that smallholder farmers build resilience for their communities and their environment through climate-smart farming, and programs like the tree-planting initiative, a farmer-led movement to plant a billion trees over 15 years. 

The company says that its farmers can use smartphones to access and repay loans, sign up for products and services, access training and many more features. It has recently rolled out the use of USSD text message-based services for farmers to gain access to services and market information without necessary internet access.

Last year, One Acre Fund received $2.5 million in unrestricted funding as the 2023 recipient of the Conrad N. Hilton Humanitarian Prize and launched One Acre Fund Re. One Acre Fund Re aims to improve the insurance offering for farmers in the face of devastating impacts on crop yield and aims to cover at least 4 million farmers by 2023, with a range of insurance products.

In May, One Acre Fund secured $10 million from Proparco to improve food security in Africa. The funding will provide agricultural resources, financing, and training to boost food production and economic well-being. The organisation supports over one million farmers in nine African countries: Kenya, Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Malawi, Nigeria, and Zambia.

Regarding the fund's investment, Impact Bridges CEO Arturo Benito said, “At the beginning of the season they provide farmers with an in-kind loan of seeds, fertiliser and other farming tools as well as micro crop insurance. Once the crops have been harvested they also help introduce their products to market. They then collect the value of the in-kind loan plus the interest.” 

“One Acre Fund helps farmers plant various plants to reduce reliance on mono-crops and use research to try to understand which plants and which combination of plants are better for each region. They also encourage the use of techniques such as microdosing that are better for the farmers’ pockets as well as the environment,” concluded Benito.

IB Impact Direct Debt fund has raised $19.3 million from various international investors including pension funds, family offices and foundations. Around 80% of the funds would be invested in developing countries, focusing primarily on sub-Saharan Africa and Latin America, improving access to basic services, mitigating climate change and adaptation, women empowerment and decent job creation, and fostering financial inclusion.