Ropes & Gray Advises Aceli Africa in Establishing a Program to Increase Financing for Agricultural Enterprises in East Africa
More than two dozen Ropes & Gray attorneys, working through the firm’s pro bono program, helped guide Aceli Africa, a not-for-profit organization with offices in Washington, D.C. and Nairobi, Kenya, in Aceli’s establishment of an ambitious program to increase the availability of loans to small- and medium-sized agricultural businesses in East Africa.
Aceli’s program, which was launched in September 2020, is a market incentive facility that aims to increase the flow of private capital to agricultural enterprises in East Africa. The program is initially targeting borrowers in Kenya, Rwanda, Tanzania and Uganda, with the goal of expanding to serve other countries across the continent. <>Agricultural businesses in East Africa remain critically underserved, with less than 7% of bank lending in the region going to agricultural business despite the fact that the sector employs a majority of the population. Historically, businesses such as farmer cooperatives or processing plants that need loans of $25,000 to $1 million are considered too large for microfinance but too small for corporate finance. With access to credit, these businesses can purchase more from small-scale farmers, employ more workers, and increase the supply of food to a growing population. Aceli offers lenders higher incentives for loans to first-time borrowers that previously lacked access to finance as well as to businesses that create economic opportunities for women and benefit the environment.
Ropes & Gray’s work with Aceli Africa began in 2019 as firm attorneys helped incorporate the organization, advise on its non-profit status, and develop the terms and agreement templates that it continues to use with regional lending partners. As Aceli’s work has progressed, Ropes & Gray has remained available to counsel Aceli on issues that arise from time to time related to the onboarding of lenders and the general administration of the organization and program.
“Aceli is all about creating a positive cycle by encouraging lenders to make loans specifically to small and medium-sized agricultural enterprises that buy from East African farmers and link them to the end consumers,” said private equity counsel Marc Migliazzo, who has been part of the Aceli representation from its inception. “By doing so, Aceli helps to grow the credit worthiness of borrowers to the point where program incentives are no longer necessary to encourage banks to lend to them in the future.”
To date, 24 lenders – including a mix of commercial banks and non-bank financial institutions – have signed up for Aceli’s incentives program. In its first year of operations, Aceli supported $26 million in lending to 203 agricultural businesses. These borrowers purchase from 240,000 small-scale farmers and employ 3,600 full-time workers.
By 2025, Aceli aims to mobilize $600 million in lending, which will extend the program’s impact to businesses that will improve livelihoods for over one million farmers and workers.
In addition to Marc, the Ropes & Gray team included leveraged finance partner Alyson Gal, tax partner James Brown, business restructuring partner James Wilton, business restructuring counsel Patricia Chen, private capital transactions counsel Patricia Teixeira, private capital transactions associates Timothy Bolte, Brooke Carleen and David Axelson, tax associate Ningzhou Shen, IP Transactions associate Gabriel Gillmeyer.