NEXT176 is investing $400,000 (over R7 million) in Agri-lending startup, Pumpkn. The investment will help Pumpkn scale as it seeks to bridge the financing gap that adversely affects more than 100,000 small- micro-, and medium-sized enterprises in the agricultural sector in sub-Saharan Africa.

As a South African Agri-tech startup, Pumpkn enables local small- and medium-sized agricultural businesses (Agri-SMEs) to access much-needed finance by connecting them with business lenders through its innovative digital platform at a lower cost to lenders than is usually the case.

Pumpkn not only leverages advanced technology to provide financing in the sector but can also connect agricultural and food processing businesses with financial institutions. Its digital solution streamlines the process of applying for essential, tailored, credit facilities to raise working capital for Agri-SMEs’ operations and growth ambitions.

Research from Commercial Agriculture for Smallholders and Agribusiness in conjunction with SAFIN, a global network advancing inclusive access to finance for SMEs in the agriculture sector, notes that there are some 130,000 Agri-SMEs in sub-Saharan Africa that, combined, are seeking financing in the order of $70 billion. SAFIN points to several challenges that these small farmers face in applying for financing, which includes a perception that Agri-SMEs are high risk, leading to them being charged high interest rates.

As Pumpkn uses readily available data, including leveraging its relationship with industry players, to accurately determine investment risk and the financial health of the Agri-SME, it can streamline the lending process. This allows South African farmers and food processors to apply for loans ranging from R5,000 to R5 million and receive funding within 10 business days, a significant improvement when compared with that of traditional lenders.

"We are excited about this equity investment," says Tramayne Monaghan, Chief Ventures Officer at NEXT176. "Our mission is to support disruptive businesses that empower underserved sectors with sustainable solutions. Pumpkn's dedication to transforming the agricultural value chain, enhancing food security, and empowering women, youth, and previously disadvantaged groups in this industry perfectly aligns with our vision of sustainable impact."

More than 90% of the businesses it funds are previously disadvantaged while 61% are women-led.

Monaghan explains that the agriculture sector accounts for anywhere between 20% and 40% of gross domestic product in Africa, yet receives minimal funding from traditional lenders. “Given food insecurity in Africa, with 57 million people facing hunger since the start of the COVID-19 pandemic, it is vital that we help enable Agri-SMEs to reach a scale that will help reduce this crisis,” he says.

NEXT176 is excited to be investing in Pumpkn alongside Moroccan-based FinTech investor, First Circle Capital. Selma Ribica, Managing Partner of First Circle Capital says: “Banks and other lenders have a strong demand for agriculture MSMEs with digital records and verifiable financials, and the Pumpkn founders’ experience working with such lenders is essential for getting them onboard.”  

“This strategic investment represents a powerful collaboration between finance and technology to empower local farmers and food processors, while underscoring our commitment to leveraging technological advancements in building a more sustainable and inclusive society for all,” adds Monaghan.

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