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COLEAD A2F approach and Theory of Change
COLEAD is an international non-profit organization that supports the sustainable and inclusive development of the agricultural and horticultural sectors, with a strong focus on capacity building, market access, and investment readiness for agribusinesses. COLEAD stands for Committee Linking Entrepreneurship – Agriculture – Development. COLEAD’s Access to Finance (A2F) approach addresses the “missing middle” financing gap for agricultural SMEs in Sub-Saharan Africa, a segment with needs between USD 25,000 and 1.5 million that remains underserved despite the apparent presence of multiple funding players. This gap stems from both operational expenditure (OPEX) and capital expenditure (CAPEX) needs being unmet, which slows growth, limits access to markets, and creates a “development ceiling.” COLEAD starts by focusing on investment capital rather than working capital, prioritizing high-potential beneficiaries in strong value chains and more finance-accessible regions before expanding to smaller-scale producers. The approach is rooted in tackling capability gaps on both borrower and lender sides, addressing weaknesses in financial literacy, business management, technical knowledge, and agri-specific lending practices, alongside broader challenges in the macroeconomic and policy environment. To bridge these barriers, COLEAD offers a dual pathway of standardized training and tailored interventions aimed at improving investor readiness. Its “Investment Readiness Path” provides scalable self-study courses, webinars, and business model validation tools to help SMEs develop bankable business and financial plans, identify appropriate funding sources, and navigate the application process. This is complemented by targeted pilot projects designed to generate proof-of-concept success stories and build institutional knowledge. Post-training support ensures that participants can apply their learning effectively, while matchmaking opportunities connect them directly with potential financiers. By combining capacity building, practical tools, and strategic partnerships, COLEAD’s A2F approach seeks to systematically unlock financing for agribusinesses and strengthen their integration into competitive value chains.
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COLEAD A2F approach and Theory of Change
- 1. Main goal of thissection 1. Introduce COLEAD approach on the Access to Finance / missing middle problem 2. Present COLEAD’s high-level strategy in terms of investor readiness capacity building
- 2. Review of existing literature whichidentifies a $65B financing missing middle challenge for agri SME in SSA Listing of A2F blocking factors • From the field • Literature review Review of available sources of funding in agri SSA to identify strengths and weaknesses of each model 1. Defining the problem Beneficiaries increasing requests for better A2F indicates that financing is lacking, for both Working Capital and Investment 0. Demand-driven request Capability gap is crucial • On borrower • … and lender ! Investment capital We start by addressing Investment Capital (vs. working cap.) on the assumption that it is more bankable Start with what works → Robust value chain Any player’s success depends on its value chain, need to focus on strong value chains → MSMEs We start with high-potential beneficiaries, in region with easier A2F and will extend to other segments (SHF, etc.) afterwards 2. Assumptions 3. Our initial A2F offer Standardized A2F training/TA offer Off-the-shelf offer to move companies forward on the path of raising funds → LT goal : better financial literacy among beneficiaries Ad hoc pilot Tailor-made intervention where there is high impact potential or where we feel we need to build knowledge → ST goal : POC (create success story) and build knwoledge The process that we followed at COLEAD to develop our initial A2F offer COLEAD Access to Finance (A2F) approach © 2023 COLEAD. All rights reserved. Unauthorized reproduction of this material is prohibited. The views expressed in this presentation are the opinion of COLEAD. They do not necessarily reflect the views of any other organization or entity. 04 2
- 3. OPEX CAPEX Target use offund Input: product/seeds, fertilizer, packaging, energy, transport,… Account payables when not paid cash First time certification (global GAP, Fair trade,…) or related investment (toilets, …) Fixed & temporary labor (harvest, land preparation,…) New activity (e.g. processing unit, packhouse,…) Growth / expansion (e.g. new truck, chemical storage facility, cold room,…) Recurring certification audit cost Inability to secure financing for both OPEX and CAPEX implying : • Slower growth • Limited access to regional/international markets • “Development ceiling” Funding needs fall into 2 main categories, both of which are being underserved Use of funds OBSERVATION : © 2023 COLEAD. All rights reserved. Unauthorized reproduction of this material is prohibited. The views expressed in this presentation are the opinion of COLEAD. They do not necessarily reflect the views of any other organization or entity. 04 3
- 4. The agri sectorreceives much less bank lending than other sectors, while it plays a key economic role in Africa Source: Dalberg (2018) This creates a gap in financing, estimated to • $ 180B for Agri in SSA • $ 65B for SMEs with needs from $25k to $1,5M Source: Aceli Africa (2020) This is why we review the current Sources of Funding for agri in SSA and identify where they fall short in trying to meet the financing needs of (M)SMEs At the same time, there seems to be many funding players targeting the same agri sector, with some even focusing on SMEs DFIs Impact investors Foundations Local Commercial Banks Microfinance Crowdfunding Mobile Money Subsidies Lots of funding seems available for the documented need, but still there is a mismatch Trying to size the “missing middle” problem in agri = 20% of Kenyan GDP © 2023 COLEAD. All rights reserved. Unauthorized reproduction of this material is prohibited. The views expressed in this presentation are the opinion of COLEAD. They do not necessarily reflect the views of any other organization or entity. 4
- 5. Question for you Whatare typical blocking factors you see for the missing middle problem at your level, when facing a customer applications from agri/horticulture sector ? In other words, what is typically preventing you to grant a loan?
- 6. Capability gap Macro business environment A1. Climate/environmentalrisks Agri sector risks S1. Long production cycles of some crops (3-6 years before first harvest) Fruit & veg sub-sector risks Leading to yield volatility and potential default • Uncontrolled diseases, pests/plagues • Contaminants / Pesticides • Price volatility • Lack of effective storage systems and processing facilities • Perishability (of some segments) A4. Lack of collateral A5. Uncertain access to input A3. Fluctuating market conditions A2. Sanitary/phytosanitary risks Leading to yield volatility and potential default • Irrigation • Weather & climate change • New pest pressure • Borrower is not the owner • No formally defined property and land-use rights • Sales contracts not locked • Lack of transaction track record Seeds, fertilizers, pesticides, etc. • Increased risks on profitability • Shortfall of traditional funding S2. Smaller structure and small-scale production vs. rest of agri sector S3. Perishability of fresh produce S4. Increased price volatility vs. baseline agri products S5. Export-oriented market is more challenging • Less steady cash flows • Informal small-scale production • Pressure on time-to-market • Lack of cold chain storage, efficient logistics to prevent post-harvest loss • More fluctuation in F&V demand • Size of production is too small • Limited purchasing power • Imbalance between export production risk & returns • High entry barrier to export market C1. Weak financial mgmt. skills for SHFs & SMEs to make productive investments Including: profitability, budgeting, cash flows, own needs, path to external funding etc. Borrowers’ side C2. Weak business mgmt. skills for SHFs and SMEs to make agriculture more profitable Including: HR, marketing, strategy mgmt., rigor for processes, etc. C3. Weak technical knowledge → Suboptimal harvest performance & unproductive investment decisions C5. Partial agri sector knowledge → Scarce agri-tailored lending product terms → The lack of agri-specific credit assessment process → Lack of public data on the market C6. Low loan profit margin • High operational & transaction cost • Low return on investment C4. Lack of market access information and skills Including: value add opportunities, up-to-date price info for negotiation M1. Adverse national policies • Lack of commitment by local governments • Lack of robust structures to support the sector and boost income • Uncertain access to land • Unpredictable and potentially adverse trade policies M2. Macro-economic challenges • Input price inflation • Currency devaluation • Large vertically integrated companies face the risks of political instability M3. Legal protection and law enforcement • Law enforcement is deficient in some countries M4. Unsound business practice • Cooked books: SMEs sometimes provide various books for different purposes • Child and informal labor Lenders’ side Identified A2F blocking factors upon which COLEAD can act 04 6
- 7. 02 8 COLEAD A2F InvestmentReadiness Path – providing you with essential tools & resources Scalable information & training material + Tailor-made interventions for high-impact potential support + Post-Training Support (PTS) for Standard Support Project (SSP) Collective Training Collective Training COLEAD Investment Readiness Path – Increase your chances of securing funding ! Self-Study Course Introduction to Business Plans in Agricultural Sector Create a Business Plan for your agribusiness Self-Study Course Introduction to Financial Planning in Agricultural Sector Create a Financial Plan for your agribusiness (S2 2025) Webinar Series Search & Identify a relevant Source of Funding 1. Discover funding opportunities for agribusiness by navigating online platforms 2. Explore funding options and their eligibility criteria for your agri-project 3. Select the appropriate funding option for your agri- project 4. Successfully engage with identified Source of Funding Webinar Series Apply for Funding 1. Create a compelling proposal 2. Prepare your DD 3. Negotiate T&C (All to be developed) Business model validation Business plan support Financial plan & strategic decision support Matchmaking 0 1 2 3 Webinar A2F 101: Demystifying Access to Finance for your agri-/horti-project Entry gate essential :
- 8. 04 Example of results- 4 major pieces of training/webinar delivered since 2024, reaching 1K+ PBs Examples of training material Demystifying A2F for your agri-project Identify the right funding option for your agri-project Business Plan for agri- MSMEs 1h to understand the foundations of when and how to access finance for your agri-business 4 webinars to accompany MSMEs in their quest for funding, with concrete tools and steps A 6h course to learn the foundation of Business Plans (understanding its purpose, key elements, and steps) 9 Webinar/webinar series Self-study course Financial Plan for agri- MSMEs A 5.5h course to learn the foundation of financial plan (understanding its purpose, key elements, and steps)