Localization of investment practices
In ANGIN’s recent publication on investing in Impact, localizing investment practice plays an important part in amplifying investments in the region. Despite their dominance of the impact investing ecosystem in Indonesia, many foreign investors do not have a full-time presence in Indonesia or lack knowledge of the local context. As the impact investment ecosystem in Indonesia is now maturing, ANGIN foresees more localization happening, where investors involve local stakeholders in deploying the capital, including local talents, investors, and structures.
Rabo Foundation is one of the impact investors that has adopted practices of investment localization practices to enable more effective and efficient financial support to its target group in Indonesia.
Headquartered in Utrecht, having dedicated local consultants allows Rabo Foundation to refine its form of support and magnify reach on target groups located in rural areas who has limited access to financing. Rabo Foundation responds to the needs of smallholder farmers by working with farmer-based organizations such as producer cooperatives, savings and loans cooperatives, as well as small to medium agribusinesses. Local consultants engage with target groups throughout the project lifetime; starting from application process, due diligence, field visits, loan structuring, loan deployment, monitoring, and exit. The application for funding support is conducted in Indonesian language and providing direct loans in local currency widens opportunities for Indonesian companies to access the support they need.
Decentralizing support beyond Java and strengthening presence on ground
Rabo Foundation’s portfolio in Indonesia encompasses a diverse array of commodities, from coconut, cacao, coffee, soybean, dairy, agroforestry products, to aquaculture, and seafood just to name a few. The foundation supports organizations through providing working capital loan to purchase raw materials, farming input loan, investment loan for machineries, as well as trade financing for exporting companies, and bank guarantee. To cultivate good agricultural practices and amplify financial inclusion to rural areas, the foundation also has a dedicated team working with fin-tech and ag-tech companies to make innovative solutions available to smallholder farmers.
In addition, grant-based technical assistance support is also available. The overarching ambition of the foundation is for partners to become a positive economic, social, and ecological driving force in their community, to become resilient in the face of climate change and to subsequently be part of the global economy through enhanced financial inclusion.
Catalyzing investments to Indonesia agriculture business
Rabo Foundation’s impact funding support consists of two funds that follow up on each other as an effort to provide end to end support that equates the investment needs as their business grows.
The Rabo Foundation has a minimum ticket size of USD 100,000 that can go up to USD 1 million with an average ticket size of USD 250,000. As business grows and moves from their seed stage, they are eligible to receive follow up support from the Rabo Rural Fund with a minimum ticket size of USD 250,000 that can go up to USD 3 million with an average ticket size approximately USD 500,000.
Rabo Foundation also collaborated with other impact investors such as Capital 4 Development (C4D Partners),Impact Investment Exchange (IIX) and Alterfin. The foundation does not only invest in technology-enabled businesses such as iGrow, but also companies that are more rooted on ground such as Sinar Agro Solusi, a soy producer in east Java that strives to achieve impact at the farmer’s level.
Their most recent co-investment with C4D Partners and IIX was to Aluan, a sustainable organic coconut oil producer based on Simeulue, Aceh.
Key learnings on investing in Indonesia
In the many years of operating in Indonesia, Rabo Foundation found that the key success factor is to deeply understand the challenges faced by farmers across many different crops and commodities. Understanding the challenges throughout the supply chain through field visits, spending time with farmers, and maintaining an open channel for communication allows Rabo Foundation to develop strong solutions aligned with the needs of farmers; considering crop cycles, available resources, and value chain actors. Having a local presence has also in itself become a risk mitigation strategy for the financial support deployed by the foundation.
Rabo Foundation’s journey in Indonesia
Rabo Foundation was established in 1974 as Rabobank’s social fund and since then, the foundation has grown to become an international provider of impact funding with the mission to improve economic, social and ecological progress in developing countries. In carrying out their mission, Rabo collaborated with multi stakeholders from large corporates such as Danone to smaller businesses that are working with grassroots farmers. To this day, their work has expanded to millions of people across Africa, Latin America and Asia. Their philanthropy work in Indonesia dates back to 1980-1999 initially as part of the Rabobank International Indonesia office to provide funding support to cultivate impact across Indonesia.
How to connect with Rabo Foundation?
Moving forward, Rabo Foundation is seeking to collaborate with other impact investor with interest in the food and agriculture sector in Indonesia to accelerate impact in the region. More information can also be found on Rabo Foundation’s website (here).
Recently, Rabo Foundation along with Mercy Corps AgriFin released a study covering research and analysis into the demand-side, supply-side, and the broader ecosystem of the digital agricultural space in Indonesia. Download the report to gain more insights.
Connect with the team!
Mark Koppejan
Program Manager Asia
Rabo Foundation
Mark.Koppejan@rabobank.nl
Chintara Diva Tanzil
Project Consultant Indonesia
Rabo Foundation
Diva.Tanzil.Consultant@rabobank.com
Retno Jayanti
Project Consultant Indonesia
Rabo Foundation
Retno.Dwi.Jayanti.Consultant@rabobank.com
