Customer and portfolio development

CSAF members convene to share learning, develop industry standards and best practices, and engage other stakeholders to address barriers to market growth and impact.  

As reported in the CSAF State of the Sector 2022 (Appendix 6), many organisations suffered delays in the export process caused by the global logistical crisis and the limited availability of sea freight containers. This mostly resulted in longer contract delivery periods, increased operational cost and delayed payment from buyers. Unfortunately, this led to a number of our customers defaulting on repayment schedules or requesting to extend their short-term lending, as they could not meet their earlier cash flow forecasts.

In most recent months, and in addition to the supply chain delays, a shortage of fertilisers and other agricultural inputs have resulted in surging and often unattainable prices. The CSAF report highlighted that this has been compounded by the conflict in Ukraine as many of the fertilisers are produced in Eastern Europe. 

These complex challenges have put significant pressure on the working capital and cash flow of many organisations. In order to mitigate the risk, we undertook a more thorough analysis of our portfolio during 2022, and closed accounts that were seen as too high risk. Other accounts were closed mostly because of low utilisation because of declining orders. After many years of portfolio growth, we have seen a reduction in customer numbers this year. According to the State of Sector report, other social lenders have also experienced this decline.

Looking ahead, Shared Interest will continue to support existing customers to build resilience, especially due to challenges linked to the aforementioned supply chain volatility. In fact, all CSAF members saw a low-level of new lending last year. We identified in our recent Strategic Review that we must look for innovative ways to support producers introduce climate adaption, continue to reach new customers, in new markets and diversify our portfolio further. 

Shared Interest is committed to lending to smallholder farmers and artisans despite the below-market financial returns and we are hoping to continue to deepen our impact. To be able to successfully achieve lending in these markets we will need partners to work alongside Shared Interest, providing technical assistance to develop stronger and more inclusive value chains to mitigate risk.

You can read the full Social Accounts document here.

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