Maalexi: Empowering SMEs for a Resilient Food Future in the GCC

Agri-trade is crucial in securing the livelihoods for farmers and people employed along the food supply chain, especially in emerging markets where farming accounts for almost 25% ofGDP and 50% of employment.

Yet, the industry faces a host of challenges, from a lack of access to financing for small and medium-sized agribusinesses to the vulnerability of food systems in the face of supply chain disruptions.Within this landscape, Maalexi emerges as a transformative solution, offering an innovative platform that bridges the gaps between buyers and sellers, democratizing access to international markets, empowering small businesses, and bolstering global food security.  

The Food Security Puzzle

The Global Food Security Index consistently ranks the GulfCooperation Council (GCC) countries high in terms of food security. Yet, a closer look reveals a heavy reliance on food imports, with approximately 85%of food supply originating from external sources.[1] This dependence exposes the region to supply chain vulnerabilities, as witnessed during the COVID-19 pandemic and other crises.

GCC governments responded proactively, implementing measures to safeguard short-term food security. These include financial support for farmers and agri-businesses, easing restrictions on agricultural workers' mobility during lockdowns, and supporting packaging and distribution efforts. These have been instrumental in preventing extreme food shortages and mitigating crises.

Within the GCC, the United Arab Emirates (UAE) faces particular food security challenges due to the limited availability of arable land, adverse climatic conditions, and water scarcity.The UAE heavily relies on imports to meet nearly 90% of its food requirements, leading to a significant increase in its agri-food import bill, reaching approximately $151 billion in 2022.[2]

Small Businesses, Big Hurdles

Small and medium-sized enterprises (SMEs) are pivotal in theMiddle East and North Africa (MENA) region, representing around 97%[3]of registered companies and employing over half of the labor force. Smallholders still account for 90% of farmers globally. However, many of these operate in the informal sector, which hinders access to formal credit channels. Compared to global averages, SMEs in MENA encounter difficulties securing financing through the banking system, with an average proportion of SMEs' bank lending relative to total bank lending at just 9%, according to the IMF's Financial Access Survey. Small agri-businesses face a similar predicament, with notable disparities across countries in the region. For instance, in Bahrain, institutional lending accounts for a mere 1.9%, while in Morocco, it reaches a more substantial 18%.

Large farmers control a disproportionate 70% of this industry, while small and medium-sized farmers, representing 90% of the entire agriculture sector, only manage 30% of cross-border trade. Despite this global segment constituting 90%of global business and 41% of credit applications, half are rejected. Similar regional dynamics apply, with 97% of all registered companies being SMEs and credit rejections at 65%.

This disparity stems from various challenges SMEs face, including complex legal frameworks, quality concerns, and limited access to banking capital and lines of credit, hindering their ability to engage in exporting. SME farmers often grapple with the challenges of securing competitive pricing, frequently overshadowed by larger suppliers. Additionally, a fundamental hurdle arises from the insufficient data accessible to financial institutions, resulting in many risks linked to SMEs, rendering them unsuitable for conventional banking services.

In India, Maalexi's leading import market, agriculture, contributes 17% to the GDP.[4] Yet, over 50% of India's 124 million small and marginal farmers can't access credit from any source, with only 36 million using formal channels for borrowing.[5] These farmers, typically owning less than 2 hectares of farmland, comprise 86.2% of the country's total farming population. In addition to the complexity, banks allocated more than half of the $168 billion in agricultural credit in 2019 to medium and large-scale farmers with access to formal financial resources. 

Maalexi: Empowering Agri-SMEs in a Global Marketplace

The multifaceted challenges agri-SMEs face underscore the importance of fortifying supply chains to ensure their resilience and inclusivity in the global marketplace. Maalexi addresses the significant problem of imbalanced distribution of exporting agribusinesses in the global cross-border agriculture trade industry.

Maalexi's disruptive approach directly connects SMEs with wholesalers and exporters through an end-to-end platform, streamlining transactions, ensuring quality control, simplifying document management, and enhancing traceability. The platform also facilitates trade financing, manages risks, and promotes transparency. By eliminating intermediaries and offering a comprehensive solution, Maalexi transforms cross-border trade, empowers SMEs, and creates a more efficient and trustworthy trading environment. What sets Maalexi apart is its proprietary risk model, which generates a credit score for farmers. This credit score enhances transparency regarding product quality and the seller's reputation, instilling confidence in buyers' purchasing decisions. Maalexi aims to level the playing field for small and medium-sized farmers, enabling them to participate effectively in cross-border trade and access global markets.

Maalexi's approach includes smart contracting, inspection, delivery, payment, and settlements, offering services at each step of the transaction journey. This comprehensive strategy aims to make SMEs more bankable in the cross-border trade market.

Driven by Passion and Led by Industry Experts

Growing up in India, Dr. Azam and Rohit have dedicated their lives to their passion for the agriculture industry, recognizing its pivotal role in the Indian economy and its profound impact on the lives of billions of people. Their shared commitment extends beyond addressing the industry's economic challenges; it also encompasses a sustainable global impact, a driving force in their careers and their mission with Maalexi.

With a combined experience of 44 years, these two founders have held leadership positions and devised strategies in diverse domains such as supply chain management, infrastructure, structured trade finance, and financial technologies. Through this journey, they've come to realize the stark disparities in fair trade opportunities for small and medium-sized traders in emerging markets.

Under the guidance of these two visionary founders, Maalexi is at the forefront of delivering cutting-edge technology to a segment that has been largely untouched by digitization. Simultaneously, they are dedicated to enhancing the GCC's standing as an export and re-exporting hub, contributing to a more equitable and prosperous global trade landscape.

Future Growth and Impact

The company's vision extends beyond port-to-port trade to reach second-tier cities and farm gate locations, enabling co-operatives and farmers to export their products directly to international buyers while closing the gap for the 550 million smallholder farmers globally.[6] Maalexi's technology-driven approach and dynamic risk management system aim to democratize access to international markets, empower small businesses, and contribute to global food security.

Maalexi aims to address food security challenges in the GCC by empowering SMEs to play a more significant role in cross-border agriculture trade. As we welcome Maalexi to the Global Ventures portfolio, we look forward to supporting their efforts to close the gap in exporting agribusinesses, ultimately contributing to a more resilient and sustainable food ecosystem in the GCC and beyond.

[1] PWC

[2] European Commission

[3] IMF

[4] World Bank

[5] Rabobank

[6] Bayer