Monitoring data is a source of frustration for many impact-focused organizations. Many see it as another line item in their budgets, a task required for funder compliance, and a backward-looking tool that may help discern the success of a past intervention’s implementation, but that isn’t necessarily relevant to future programming beyond projection or target-setting exercises.
However, this paradigm fails to recognize the power of monitoring data to inform strategy and insights — and in the case of our organization, to enable funders and other ecosystem players to better understand the needs of local enterprises in emerging economies.
For over 25 years, Root Capital has financed and built the capacity of agricultural small- and medium-enterprises (agri-SMEs) to grow smallholder prosperity and climate resilience. In that time, our commitment to data has supported the learning and insights that have established us as a leader in our sector. As we embark on a new strategy with significant impact ambitions, we are leveraging our monitoring data to answer fundamental questions about how to best serve our clients in the coming years.
Below, we’ll discuss how our efforts to unify and standardize our monitoring system across global programs have prepared Root Capital to pursue this strategy, while enhancing our understanding of our agri-SME clients.
An SME Support Model Built on Data
Root Capital has a history of leveraging data to maximize our impact. Eight years ago, we pioneered the model many impact investors use today to optimize their portfolio’s impact while balancing their financial stability. This model directs our financing to where it is most impactful: 90% of Root Capital’s financing in 2025 went beyond what commercial markets offer, meaning 90% of our loans filled a financing need unmet by commercial lenders. Beyond this financial additionality, these resources serve as a catalyst for systemic change, enabling a portfolio where 64% of clients are gender-inclusive businesses and more than 540,000 hectares are maintained under sustainable management. Embedding impact data into our business model allows us to ensure that we continue to meet these targets.
We also co-founded the Council on Smallholder Agricultural Finance (CSAF, a leading peer network of 17 agri-SME financiers), and we continue to support it by co-leading initiatives to expand SME financing, and highlighting the importance of sharing reliable monitoring data to improve our collective market understanding.
These efforts are fed by robust data collection practices, which we apply across the two (often-overlapping) groups of agri-SME clients we work with: both the clients we lend to in our impact investing work, and the ones we support through our free advisory service programs. We integrate data about these enterprises’ environmental, social and governance (ESG) practices, business reach, and organizational capacities into every client touchpoint.
Data is how we uphold our role as an impact investor, bridging the “missing middle” of agricultural finance by providing essential capital and capacity-building services to enterprises that are too small or high-risk for traditional commercial banks, yet too large for microfinance. For example, a loan cannot close until we have collected, reviewed and approved the ESG data needed to verify that the client has a positive impact on their community. Likewise, data informs our efforts to select enterprises to support through our advisory services, and also informs the services we offer them. This tight feedback loop of data drives our decisions — a process that is made possible by setting clear expectations about the data we collect, and explaining to clients from the outset how providing this information helps us effectively support them and their communities.
Our commitment to data ensures that we reach the agri-SMEs that drive smallholder prosperity. It also gives us the platform to be a thought leader within the sector, as we back our impact claims with hard evidence and share learnings from our progress with other investors and ecosystem players. And importantly, by incorporating data generation directly into our core business processes, we produce impact data as a seamless byproduct of our work. This prevents it from becoming an additional burden on our clients or our budget, which is a common issue with the heavy monitoring and evaluation systems typically required by donors and funders.
Why a Unified Approach to Monitoring Data Yields Clear Value
Root Capital is not unique in the scope of our work, which spans across 13 countries in three regions. Yet we stand out for having a single, unified monitoring system that covers all the data we collect. Our monitoring data is standardized globally and embedded into tools that are used by all our client services teams. That means one team member collects the same information for a coffee enterprise in Honduras as another team member collects for a macadamia processor in Kenya. With this “top-down” model, Root Capital doesn’t need to create an ad-hoc monitoring system for each project, grant or loan, helping us to avoid repetitive or misaligned data collection. This approach also allows us to map our global indicators to a donor’s standards, in cases where philanthropic funders or other impact investors are subsidizing our loans through a blended finance model.
However, we didn’t always take this approach. For years, our monitoring system was bifurcated, with each program offering distinct indicators. We opted for this approach because Root Capital’s “capital + capacity” model — which pairs the financing (capital) and the training (capacity) agri-SMEs need to thrive — yields programs with distinct monitoring needs. For instance, our lending programs conduct rigorous financial, social and environmental due diligence, whereas our advisory services programs undertake thorough diagnostics to identify agri-SMEs’ training needs.
The challenge in measuring these different programs was that our principal monitoring data was only collected from lending clients. For these clients, we developed Social and Environmental Metrics (SEMs) that included around 60 key business indicators like: annual revenue, payments to producers, volume of crop purchased, and employees and farmers (disaggregated by gender and age). From the SEMs, we are able to quantify our overall impact, but we can also go further — for example, by identifying agri-SMEs within our portfolio that advance gender equity.
To extend these benefits to our other programs, in 2022 we embarked on a two-year project to build our capacity to collect SEMs from all clients. The time and money we invested in this project yielded a worthy result: 2025 was the first year we had SEMs for all clients reached by Root Capital across our loan portfolios and advisory service programs — a milestone in our history as a data-driven organization. Investing in our unified data system delivers long-term cost efficiencies: Our four-person Monitoring team is able to control data quality via reviews at the country and global levels. It also maximizes the usefulness of monitoring data for robust programmatic insights: For example, we have also used monitoring data to evaluate our Gender Equity Advisory Services, revealing that these services genuinely increased women’s participation in our training. For an organization that serves over 250 agri-SMEs per year with more than 500,000 affiliated farmers, this unification of data collection has unlocked notable economies of scale.
Finding New Opportunities to Leverage Monitoring Data
Starting in 2026, Root Capital is embarking on a three-year strategy that focuses on segmenting our services to more directly address the distinct needs of early- vs. mature-stage agri-SMEs. Our Advisory Services team was already using a proprietary segmentation tool to identify which trainings were best suited to our clients’ needs. However, we determined again that we needed a more systematic tool that worked across both our Lending and Advisory Services programs to segment all clients.
Inspired by the multidimensional indices that are commonplace in development economics, we developed the Enterprise Development Index (EDI) to segment all clients according to their stage of business development. We were eager to capitalize on the fact that we had secured SEMs data for all clients, so we developed the EDI tool to leverage existing monitoring data and administrative sources so that we would not burden staff and clients with additional data collection requirements.
The EDI assesses a client’s performance across six dimensions that Root Capital views as essential to understanding an agri-SME’s level of business development:
- Size and reach
- Financial capacity
- Operational and sector capacity
- ESG strength
- Business resilience
- Local context
Each dimension is composed of three to five indicators for a total of 23 indicators. Each indicator is normalized on a two-decimal scale of zero to one, and averaged to create a composite index. The EDI is not normative, because a higher score does not necessarily imply a “better” enterprise. Instead, it is more descriptive, as scores simply denote different levels of business characteristics. Consequently, Root Capital’s services are not designed to drive an increase in EDI scores. Instead, our goal is to use the EDI to establish a measure of a business’ current capacities and reach, allowing us to understand their short-term needs and fitness for receiving our different services.
Based on the index, a client falls into one of two portfolios:
- Accelerator Portfolio: Early-stage agri-SMEs building their bankability to secure their first-ever loan and enable growth.
- Growth Portfolio: Mature-stage agri-SMEs expanding their capacity to drive rural resilience.
To prepare for our three-year strategy, we developed, validated and implemented the EDI across our entire portfolio in just under a year. We were able to meet this need for deeper strategic insights with such agility by relying on current monitoring data, and by leveraging the confidence and readiness built over years of investing in our global monitoring system. By re-imagining how we use this monitoring data, Root Capital now has a forward-looking tool that delivers the insights needed to boost client outcomes — further fueling smallholder prosperity and resilience.
Conclusion
Monitoring data is a material cost; every dollar spent on collecting this data is a dollar not spent on direct programming. At Root Capital, this natural tension encouraged us to maximize the utility of our monitoring data in order to better inform the design and delivery of our services. With the EDI, we tapped into one of our richest resources (our data) so that we can meet agri-SMEs where they are, with interventions that are right-sized for their capacities and needs.
We hope the EDI will be another sector-leading framework to add to Root Capital’s long history as a learning organization. While we further build upon these efforts, we hope other practitioners will take inspiration from our model by examining their existing monitoring data and envisioning bold ways to leverage it to drive effective decision making.
Juan Taborda Burgos is Director of Impact Monitoring, Evaluation and Learning (MEL); Scott Caple serves as a Senior Analyst in Impact Monitoring; and Jorge Bouchot is the Senior Manager of Research and Impact Evaluation at Root Capital.
Photo credit: LENblR
Publisher: Source link
