2015 AGRA Annual Report / Milestones / Financial Inclusion for Smallholder Farmers in Africa Project (FISFAP)

Financial Inclusion for Smallholder Farmers in Africa Project (FISFAP)

In 2015, through a partnership comprising AGRA and the Mastercard Foundation and worth US$15.5m, the Financial Inclusion for Smallholders Farmers in Africa Project (FISFAP) launched to facilitate 700,000 farmers in Ghana, Kenya, and Tanzania to access financial services including insurance, payments, savings and credit.

To transform agriculture, smallholder farmers need to access financial services as a way of growing their businesses, however, most financial service providers consider smallholder farmers, and agriculture in general, a high-risk segment.

The high costs associated with establishing and maintaining branches in the rural areas, and the lack of financial information (cashflow and credit history) relating to this segment of clients creates reluctance by financial service providers to offer services to farmers.

But this is changing. The emerging digital technology and broadband in the target countries allows financial services to reach farmers at lower costs principally via branchless banking solutions. FISFAP supports the development, piloting and roll-out of these digital products and services by providing business cases for partners involved and an end-to-end solution for smallholder farmers.

Mastercard Foundation and AGRA share a common value -client centric focus on rural communities comprised to a large extent by small holder farmers who are underserved and underbanked.

Because of the relationship shared between AGRA and the foundation, we have superimposed the shared ideals into the agriculture value from inputs to markets, ensuring a functioning and holistic environment for farming communities.Our technical support systems ensures that rural communities have the skill suite for inclusive financial access. FISFAP provides technical and structural support to partnerships created between financial institutions, value chain actors and technology providers. This enables them develop appropriate and affordable financial services and products for smallholder farmers. AGRA is extending financial services to rural communities in our target countries.

In Kenya, AGRA has partnered with two commercial financial institutions: Kenya Commercial Bank (KCB) and Umati Capital, to develop financial products based on alternative delivery channels and alternative sources of information.

KCB is using transactional information from its corporate clients dealing with smallholder farmers, to provide access to savings and credit services to farmers through their mobile phones. Umati Capital is using automated sales records to provide farmers with cash advances via their mobile phones.

In Ghana, the focus is on the promotion of mobile payment solutions and agent networks in the rural areas as well as on development of schemes to help farmers pay for inputs, and accessing warehouse receipt financing.

In Tanzania, the focus is on developing cashless and branchless financial and non-financial services to individual staple crop farmers. Presently, most formal financial services are delivered to smallholder farmers through formally organized groups in cash crop value chains like coffee, tobacco, and cotton.