Article originally published by Business Daily Africa on August 23, 2015.
A rating agency has come up with a formula that ranks agriculture-focused co-operative societies and small-scale businesses in a move that will make it easier for them to access loans and social investor funds.
SCOPEInsight, the company supported by the Embassy of Netherlands and partnering with International Finance Corporation (IFC), has developed a rating system that identifies the strengths and weaknesses of co-operative societies. This will prepare them to get financial support.
Farmer organisations in Kenya face financing challenges because of inadequate rating of their businesses and a poor risk profile.
“The innovative rating system is expected to increase the share of loans that goes to agriculture,” Geoffrey Nyamota, Head of SCOPEInsight Kenya operations
Agriculture, which accounts for a quarter of the GDP and employs majority of Kenyans, accounted for 5.2 per cent of the private sector loans of Sh1.46 trillion ($14 billion) as at December.
The innovative rating system is expected to increase the share of loans that goes to agriculture, said the head of company’s Kenya operations Geoffrey Nyamota.
The rating looks at areas like input logistics, management, financial management, sustainability, external risks, other supporting organisations and financial performance.
Firms are rated on a scale of one to five, which is the best mark. A score of over 3.5 per cent secures lending.
SCOPEinsight is an independent agricultural assessment agency that aims to enable access to finance, markets, inputs and services for professional producer organizations in developing countries. SCOPEinsight has developed a unique assessment methodology (the SCOPE) specifically for the purpose of agricultural assessments on professionalism and business viability. To date, more than 330 Pro assessments have been performed in different sectors and regions.