Proximity Finance Raises $14 Million to Reach More Smallholder Farmers
Proximity Finance, Myanmar’s first farmer-focused finance institution, signs a $14 million equity package with Finnfund, Nordic Microfinance Initiative (NMI) and Proparco. Proximity Finance was launched in 2010 as the microfinance arm of Proximity Designs, one of the largest agricultural services platforms in Myanmar, that provides farm technology, agronomy advice and financial services to small farms across the country.
While the deal is pending the Financial Regulatory Department’s approval, the increased equity will support Proximity Finance in tripling its active client base, currently 130,000 households, and dispersing 1,500,000 loans in the next four years. The commitment will also support an increase in loan sizes and the diversification of products, and ultimately will provide critical capital to entrepreneurial-minded small farmers.
While most microfinance institutions require clients to pay back monthly, Proximity Finance’s repayments are made when farmers receive income for their harvest. “Financing agriculture is challenging due to its seasonality, so our customer-centred design approach ensures our products are tailored to farmers’ needs,” says Hedvig Sundberg, Chief Executive Officer of Proximity Finance.
She continues, “Our relentless commitment to improving the incomes and livelihoods of low-income farm families is strengthened by working with impact-driven investors. This milestone partnership underpins our investors’ focus on building an equitable society and signals international support for rural Myanmar and its people.”
In Myanmar, 39 percent of the rural population are living in poverty. Farmers represent a hugely underserved market, but one with tremendous opportunity for those willing to invest in meeting their needs. “With its smallholder farmer focus, Proximity Finance addresses the critical funding gaps in the country’s rural credit sector and aims to reshape the financial landscape for 30+ million underserved rural people. We’re proud to support their commitment to financial inclusion,” says Magali Roux, Proparco’s Regional Director for North and South-East Asia.
“NMI is excited to fund Proximity Finance on the journey to reach even more of Myanmar’s financially excluded smallholder farmers with uniquely adapted products and supported by a team providing deep expertise in agriculture,” shared Arthur Sletteberg, Managing Director, Nordic Microfinance Initiative.
“This investment advances financial inclusion, agriculture and empowering women, thus targeting several sustainable development goals at the same time,” says Ulla Huotari, Investment Manager, Finnfund. “We share Proximity Finance’s mission of increasing incomes across rural Myanmar and look forward to an impactful partnership.”
The investment is classified as a 2X Challenge gender commitment, as over 60 percent of Proximity Finance’s clients are women. Additionally, there is a strong gender balance within the company: 50 percent of senior managers are women, including the CEO and Head of Finance. Proximity Finance has ambitions to uplift women customers and team members through its policies, programs and finance solutions.
What is the 2X Challenge?
The “2X Challenge” calls for the G7 and other DFIs to join together to collectively mobilize $3 billion in commitments that provide women in developing markets with improved access to leadership opportunities, quality employment, finance, enterprise support and products and services that enhance economic participation and access.