For years, lending to smallholder farmers in Africa was viewed by institutional investors as too messy, too risky, and too fragmented to touch. But as the continent’s fintech ecosystem matures, founders and investors are increasingly turning to structured finance to solve the liquidity crunch.
The latest development in this trend is a landmark KES 276 million (approximately $2.1 million) securitisation deal closed by fintech platform Kaleidofin, in partnership with Kenyan agritech Apollo Agriculture and the IDH Farmfit Fund.
Marking Kenya’s first private-sector local currency securitisation in the smallholder agriculture space, the deal signals a shift in how asset-heavy startups in emerging markets are choosing to fund their loan books. By converting thousands of micro-loans into a single, investable, and rated asset, Apollo is able to offload risk from its balance sheet, access immediate liquidity, and sidestep the foreign exchange volatility that has historically choked African fintechs.
The Mechanics of the Deal
Securitisation — the process of pooling various types of contractual debt and selling them as consolidated financial instruments to investors — is not new to global finance. However, applying it to African smallholder farming is notoriously difficult due to the lack of formal credit histories and the inherent unpredictability of agriculture.
In this transaction, agricultural credit originally issued by Apollo Agriculture to finance seeds, fertilisers, and farming tools was pooled together. The underlying portfolio is valued at KES 370 million ($2.8m) and covers 23,839 smallholder farmers in Kenya. Notably, 51% of these borrowers are women, and approximately 22% are first-time borrowers.
Against this KES 370 million pool of receivables, KES 276 million in financing was mobilised. Crucially, the issuance secured an investment-grade rating of BBB- from Agusto, an African credit rating agency. Achieving an investment-grade rating on a portfolio made up of unbanked, rural farmers is a significant hurdle cleared, effectively bridging the gap between informal agricultural economies and formal institutional capital.
The “ki” Factor: Structuring the Unstructured
The core infrastructure enabling the transaction was provided by Kaleidofin through its “ki” platform. Kaleidofin operates as a debt capital market and risk infrastructure layer, specifically designed to handle the complexities of informal sectors across Africa and South Asia.
Traditional securitisation relies heavily on rigid, standardised data — like formal credit bureau scores and fixed-income salaries — which rural farmers simply do not have. Kaleidofin circumvents this using its proprietary “ki score.” This AI-driven risk intelligence layer aggregates alternative data, including mobile transaction histories, loan transaction data, and broader socio-economic and geographic metrics.
“We designed the Kaleidofin platform to function as scalable market infrastructure for traditionally excluded customer segments,” Sucharita Mukherjee, Co-founder and CEO of Kaleidofin, noted. “By enabling customised structuring and data-driven risk insights via ki score, we are building the foundations for institutional capital to flow into sectors such as smallholder agriculture in a sustainable way.”
For institutional investors, this platform reduces the severe information asymmetry that usually keeps them out of rural lending. Instead of guessing the default risk of thousands of individual farmers, investors are presented with a clear, data-backed risk profile of the entire portfolio.
Satellites, Machine Learning, and Apollo’s Edge
At the origination level, Apollo Agriculture’s underwriting model is what makes the underlying assets viable in the first place. Apollo does not rely on traditional collateral or formal banking histories. Instead, the company has built a credit-tech stack tailored to the realities of rural farming.
The agritech combines machine learning models trained on historical agricultural yield patterns, satellite imagery to monitor farm plots, and field data collected via mobile devices. This allows Apollo to assess a farmer’s creditworthiness in real-time and bundle agricultural inputs, credit, and insurance into a single package.
For Apollo, the securitisation deal is a matter of capital efficiency. “By converting receivables into working capital, we are able to lower our cost of funds and expand access to affordable, local currency financing for farmers,” said Eli Pollak, CEO of Apollo Agriculture. Rather than taking on heavy corporate debt to fund its expansion, Apollo can continually recycle its capital: issue loans, pool them, sell the receivables, and use the fresh liquidity to issue more loans, all aligned with the seasonal cycles of agriculture.
The Local Currency Imperative
Perhaps the most critical aspect of this deal is its denomination in Kenyan Shillings (KES).
Over the past few years, macroeconomic turbulence and currency depreciation across Sub-Saharan Africa have severely impacted tech startups holding debt in US dollars. When local currencies drop against the dollar, the cost of servicing foreign debt skyrockets. For an agritech company, passing these inflated costs onto smallholder farmers via higher interest rates often leads to mass defaults.
By structuring the financing entirely in local currency, the deal protects both Apollo and its farmers from FX volatility. A stable, lower cost of capital allows Apollo to maintain affordable loan terms, ensuring that farmers can actually repay their debts and reinvest in their crop yields.
Unlocking this level of capital required a coordinated “blended finance” approach — mixing commercial capital with development funds willing to take on higher initial risks to prove the model works.
The IDH Farmfit Fund acted as the anchor investor in the transaction. As a blended finance impact fund, IDH is structured to take the highest risk positions in smallholder-related transactions, absorbing the initial shock to make the investment palatable for more traditional commercial lenders.
“Building investable opportunities in agriculture requires both capital and enabling infrastructure, and this partnership brings those elements together,” said Roel Messie, CEO of IDH Investment Management.
The ecosystem supporting the deal was extensive. FSD Africa, a UK-funded development agency, provided the groundwork for legal structuring and regulatory clarity. MOBILIST contributed tax guidance, while British International Investment (BII) provided technical assistance through BII Plus to strengthen Apollo’s reporting capabilities. The Bill & Melinda Gates Foundation also supported the initiative, viewing it as a mechanism to mobilise domestic capital for women’s economic empowerment.
This KES 276 million close is just the first tranche. The partners have outlined a multi-year securitisation programme expected to mobilise roughly KES 2.37 billion, targeting over 130,000 farmers.
As the African fintech sector pivots from an era of “growth at all costs” toward sustainable, risk-managed expansion, securitisation is emerging as a vital tool. If Apollo and Kaleidofin’s model holds up, it could serve as a repeatable blueprint — proving that with the right mix of alternative data, AI risk modeling, and blended finance, institutional capital can safely reach the continent’s most critical, yet historically underfunded, sectors.