Skoll Foundation

 

Root Capital

Skoll Awardee(s): William Foote
Award Year: 2005
Issue Area(s) Addressed: Economic Opportunity

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“As values-driven consumerism expands, eco-enterprises in the developing world will enhance the region’s long-term ability to succeed economically, while protecting natural resources.”

Sub-Issues: Financial Services, Livelihoods, Smallholder Productivity In many remote rural areas, people damage the environment and their own economic prospects by pursuing short-term income strategies such as slash-and-burn farming, conversion of forests to pasture, and overharvesting wildlife. This is their only option, because they lack access to capital for improving practices and products, and markets where these improvements would translate to higher and more stable income.

The Skoll Awardee: William Foote was an investment banker during the Latin American growth years of the early 1990s. During the financial crisis that followed Mexico’s peso devaluation of 1994, he spent two years documenting what was happening to people and the environment, realizing that there was a whole sector of the farm economy – producers too big to be helped by microcredit, but too small to be commercially bankable – that could adopt more sustainable practices or launch sustainable enterprises if they could get training, credit, and support to access markets. He developed the program that became Root Capital to identify locations and producers with potential for conversion to environmentally sustainable enterprises, and to unleash the aggregate power of groups of smallholder farmers. The lending model combines loans with investments in the groups’ capacities, including financial training, strengthening of market connections, and mitigation of economic and environmental risks. By demonstrating that this segment of the agricultural economy can be bankable, Root Capital opened the door to investments by large commercial and public actors. By linking investments to markets for sustainably produced goods and services, the model achieves impact not only in improved livelihood, but in stewardship of natural resources upon which the producers ultimately depend.

Impact since joining the portfolio in 2005:

  • Expansion to sub-Saharan Africa
  • Development of new crops, markets, debt instruments
  • Annual growth in loans, beneficiaries, and hectares under sustainable management, reaching over $120 million , 400,000 farmers, and 686,000 hectares in 2013.
  • Leadership of Initiative for Smallholder Finance

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© 2015 Skoll Foundation.