Grooming Smallholders for Social Business Finance

Aidenvironment foresees the further migration of funds for official development assistance to trade related finance. In anticipation of this, it is advising its clients on business case development and financial mechanisms that target emerging commodity chain actors.

Transparent business practices
Aidenvironment predicts increasing pressure on commodity supply chain players to source the volumes needed to feed the growing world population. Asian and African countries will see further growth of their middle classes, bringing dietary changes and increased purchasing power. At the same time, business practices in value chains will become increasingly transparent, compelling organizations to comply with national and international standards on labor and environmental impact.

Low hanging fruit
As countries develop economically, Aidenvironment expects a potentially highly beneficial shift from funding for Official Development Assistance (ODA) towards trade-related finance. To ensure that emerging actors in the value chain get a look in on these social business funds, their business cases must be strengthened. If they fail to do so, there is a real risk they will miss out and these funds will be funneled down exclusively to the handful of existing professional organizations – the so-called ‘low hanging fruit’.

Upscaling domestic certification scheme
Aidenvironment provides consultancy services on business case development and financial mechanisms that target the less professional players in commodity chains. For the International Finance Corporation, for instance, Aidenvironment is advising on the development of mechanisms to finance the certification of oil palm farmer groups and on upscaling domestic certification schemes embodying social, environmental and economical benefits.

Aidenvironment’s work for the Micro Water Facility has enabled its consultants to build an impressive track record in the field of business case development and financial modeling in the water sector. Over the past six months, they have ploughed this expertise into support of the Roundtable on Sustainable Palm Oil in setting up a fund financing the certification of smallholders and into helping a group of social lenders agree on a shared vision and mission how to choose the right growth pathways and increase their positive social impact. Currently, Aidenvironment is investigating the business case of the Lestari Tea Program on behalf of IDH Sustainable Trade Initiative.

For more information contact Frederik Claasen.