34th Midi de la microfinance et de l'inclusion financière
"Yes, it is possible to finance sustainable agriculture while having a return on investment." Matthew Sparkes, Root Capital
Luxembourg, March 9, 2016 | The 34th Midi de la microfinance welcomed two leading experts on agricultural finance: Massimo Pera of the Food and Agricultural Organization of the United Nations (FAO) and Matthew Sparkes, representing one of the largest investment funds specialized in sustainable agriculture, Root Capital. Gilles Franck, member of ADA's Board of directors, moderated this meeting in front of an audience at the Auditorium of the Banque de Luxembourg.
Three quarters of the poor live in rural areas of developing countries. This finding implies that the development of agriculture is essential to generate profitable and fair business for these people while thinking of the future of the planet.
But investors are reluctant to finance the agricultural sector because of the many specific risks associated with this activity, such as natural disasters or climate. "The problem is not the funding, but rather the orientation of these funds to the rural sector." said Marc Bichler, Ambassador-at-Large for Climate Change at Ministry of Foreign Affairs.
Matthew Sparkes, representing an investment fund specialized in the financing of sustainable agriculture, Root Capital, based in the United States, says it is "possible to invest in it while having a return on investment." He states that Root Capital is a fund with an NGO status. The loan portfolio now reaches 100 million dollars. The money is borrowed on the markets while the donations are used to fund operating costs.
In contrast, Massimo Pera of the Food and Agriculture Organization of the United Nations (FAO) described the work of this public organization which also fights for the development of sustainable agriculture in emerging countries. Regarding their work and its evolution in a given country, he stressed the importance of government support and technical assistance provided by experts. He mentioned the cooperation between ADA and FAO in the development of training programs for microfinance institutions operating in rural area. In fact, the development of sustainable agriculture therefore requires funding, public intervention and technical support. The latter being one of the main missions ADA.
Regarding climate risks and natural disasters, Root Capital has acknowledged it does not use insurance to protect themselves against these risks. Root Capital has a partial guarantee from USAID, US development agency. The role of the public sector still appears once again essential for development and rural financing.
In summary, the issue of sustainable agriculture is very important both for FAO and for Root Capital. Both organizations are particularly sensitive to environmental issues when choosing their partners.
The conclusion of the 34th Midi was assumed by Marc Bichler: the investment vehicles in sustainable agriculture can be profitable indeed, but the question of funding remains key.
The Food and Agriculture Organization of the United Nations has set the goal to fight the hunger worldwide. Their action aims to develop regular access to enough high-quality food to lead active, healthy lives for all the populations.
Their three main goals are: the eradication of hunger, food insecurity and malnutrition; the elimination of poverty and the economic and social progress for all; the sustainable management and utilization of natural resources, including land, water, air, climate and genetic resources for the benefit of present and future generations. FAO is also an important source of knowledge and information, helping emerging and developing countries to improve agriculture, forestry and fisheries practices.
Root Capital is a non-profit investment fund established in 1999, headquartered in Cambridge MA. They’re specialized in working with small-holder farmers at the base of agricultural supply chains of Latin America and sud-Saharan Africa. Root Capital lends to businesses that are too large to microfinance but too small to have a credit from commercial banks. The organization has years of experience working with rural businesses and is generating financial, social, and environmental returns. Root Capital believes that agricultural entrepreneurs can play a key role in the transformation of rural development and on the economical scale of the countries. They just need the right financial tools. Nowadays they count more than 1 million of producers reached by their loans which amounted to $903 million.
The 34th edition of the Midi de la microfinance et de l’inclusion financière was organized with the support of the Directorate for Development Cooperation and Humanitarian Affairs, the InFiNe.lu network, and in collaboration with the Banque de Luxembourg.
Massimo Pera works as an Agribusiness Economist at the FAO (Food and Agriculture Organization of the United Nations), managing a programme aimed at facilitating sustainable and inclusive investments in the agribusiness sector of selected ACP countries. For the past 9 years, he has gained experience in the design and implementation of agricultural and rural financial programmes in developing countries mainly in Africa (Sierra Leone, Guinea, Niger, Ethiopia, Rwanda, Cape Verde) and Latin America (Brazil, Argentina, Colombia). His assignment with FAO started in the Viet Nam office, where he worked for two years managing projects on agricultural value chains development, and access to financial services for smallholder farmers. Prior to joining FAO, he worked as a rural finance consultant at the International Fund for Agricultural Development (IFAD). Massimo holds a M.A. in Development Economics and International Cooperation from the Tor Vergata University of Rome.
Matthew Sparkes is Corporate Counsel and the principal attorney for Root Capital, a leading impact finance and rural development organization. He provides legal advice to all global departments on financing transactions, corporate initiatives, securities offerings and new market entry among other issues. Matthew has previously served as Special Counsel to the U.S. Securities and Exchange Commission, as adviser to a senior Member of the U.S. Congress, and has worked in private practice. He holds a B.A. from the College of the Holy Cross and a Juris Doctorate from Northeastern University School of Law. He is also presently appointed as a Visiting Fellow within the Center for Trade and Economic Integration at the Graduate Institute, Geneva.
Gilles Franck is an independent consultant and investor with a long experience in investment banking and capital markets in Europe and in emerging markets. He has been a member of the Board of ADA since 2014 and LMDF since 2015.
Gilles started his long career in finance in London, then moved to Luxembourg and Frankfurt before returning to London where, for over 10 years, he was Head of Debt Capital Markets for Central/ Eastern Europe and Middle East/ Africa (EEMEA) at BNP Paribas. He was also a member of the Board of BNP Paribas Hungarian Bank Rt. and BNP Paribas Bulgaria EAD.
He subsequently worked in Dubai as Managing Director at Standard Chartered Bank and CEO of Saad Financial Advisory Services, a regulated entity of Saad Group from Saudi Arabia.
From 2011 Gilles completed part-time assignments for ADA, focusing in particular on capacity strengthening of the investment advisory team, prior to joining the Board of the NGO.
Since 2014 Marc Bichler represents the Ministry of Foreign Affairs of Luxembourg as Ambassador-at-Large for Climate Change.
Prior to that mission, he worked as Executive Secretary at the United Nations Capital Development Fund (UNCDF) in New York: the United Nations agency that promotes economic development in the least developed countries through local development finance and inclusive finance.
Marc Bichler served for more than 7 years as Director for Development Cooperation and Humanitarian Affairs in the Ministry of Foreign Affairs of Luxembourg and had accreditation as Ambassador to Burkina Faso, Mali and Senegal, with residence in Luxembourg. Under his leadership, Luxembourg Development Cooperation implemented roughly 85% of the bilateral and multilateral aid programmes financed by the Luxembourg government, managing a portfolio exceeding 240 million Euros.
He began his diplomatic career as Chargé de mission and Secrétaire de Légation for the European Affairs and has served in a variety of capacities dealing with microfinance issues including functions as Chair of the Luxembourg Round Table on Microfinance; Chair of the UN Advisors Group on Inclusive Financial Sectors; and Chair of the European Microfinance Platform. He holds a Master degree in Business Law from the University of Paris – Sorbonne.