Building Prosperous and Inclusive Rural Communities

Emma Kulow
Nov 4, 2019 · 3 min read
Elin Vazques Salas with Alexandra Tuinstra, Vice President of Advisory and Impact at Root Capital

Elin Vazquez Salas grew up in a remote mountain hamlet in Chiapas, Mexico. Until the age of 12, he didn’t own shoes. Like many before him, as a young man he crossed the Rio Grande, working in a Texas jeans factory until he had saved enough money to return home and buy a small coffee farm.

But then, in 2015, tragedy struck: a region-wide outbreak of coffee leaf rust destroyed 80 percent of Elin’s crop. It was a catastrophic event for thousands of farmers throughout Latin America. However, thanks to the support of a farmer cooperative financed by Root Capital, Elin was able to replace the bulk of his dead coffee plants with new, disease-resistant trees. Once, Elin had no shoes; now, with the income he earns from his organic coffee, he’s sending his daughter to college.

More than 2.5 billion people like Elin rely on small-scale farming for their livelihoods. With limited resources and land, and poor access to markets, they operate on razor-thin margins. Compounding this vulnerability are myriad challenges — among them, food insecurity, economic and political instability, and climate change — that make earning a sustainable livelihood even harder.

At Root Capital, we believe that the key to unlocking opportunity for these farming families already exists within their communities. That key is the small and growing agricultural enterprises that connect thousands of smallholder farmers to larger markets. With access to the right capital and resources, they can increase incomes not only for the farmers that supply their crops, but for the workers they employ and the communities they sustain. Unfortunately, far too many of these businesses fall into the “missing middle” — too big for microfinance and too small and risky for commercial banks.

For 20 years, Root Capital has invested in the growth of agricultural enterprises so they can transform rural communities. We foster this growth through a unique model that blends access to credit — driven by capital from impact investors — with fully philanthropic-funded training for enterprise employees. Some organizations provide financing to more mature businesses, others give technical assistance to earlier-stage businesses. Only Root Capital addresses both needs. Since 1999, we’ve provided $1.4 billion in credit to more than 700 enterprises and trained more than 1,400 businesses. In doing so, we have improved incomes and opportunities for six million people, all in the world’s most remote, marginalized communities. Our robust impact studies show that Root Capital lending clients provide an average 18% incremental income boost for supplying farmers or employees. Like Elin, they often use this extra income to invest in education, healthcare, and more nutritious food for their families.

But that’s not all. The unique and critical role that agricultural enterprises play in rural communities enables them to have a truly outsized impact. With support, they not only raise incomes and create jobs — they can also empower women and young people, sustain peace, and preserve vulnerable ecosystems. To facilitate this, Root Capital provides tailored services that aid enterprises in advancing gender inclusion, creating opportunities for youth, and adopting climate-smart agricultural practices.

That’s the vision that drives us: prosperous, inclusive, and resilient rural communities where hardworking farmers like Elin can thrive.

Katie Naeve is Director of Impact and Partnerships at Root Capital, where she also oversees the organization’s Women in Agriculture Initiative. Jean Forrester is Controller at Root Capital and oversees investment opportunities in the organization’s loan fund.


CapShift originally published this article in their email circulation for users and their greater network. To read more articles on the intersection of impact investing and philanthropy, visit CapShift’s Medium page.

CapShift

CapShift is an impact investing platform that empowers philanthropic and financial institutions along with their clients to mobilize capital for social and environmental change.

Emma Kulow

Written by

CapShift

CapShift

CapShift is an impact investing platform that empowers philanthropic and financial institutions along with their clients to mobilize capital for social and environmental change.

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