Using Innovative Methods to De-Risk the
African Farmer and Give Them Access to Finance
AGRA’s vision is to double yields and incomes of at least 30 million farming households by 2020 through a series of integrated, country-based programs in partnership with a wide range of partners. In order for this goal to be achieved, AGRA will need to work with many different partners to ensure adequate financing is available to key actors in the various value chains targeted by its new strategy, as well as work towards improved access to finance for smallholder farmers seeking to intensify and improve their farms.
The emerging digital highways have allowed farmers to interact with input suppliers and commodity markets more efficiently and more intelligently than ever before. Growth in mobile money usage in Ghana, Kenya and Tanzania make financial services delivery to farmers much cheaper and less risky. Less physical infrastructure is needed to reach farmers and as more data on smallholder farmers become available for analysis, certification and rating purposes the risks of transacting with farmers reduce. FISFAP is a MasterCard Foundation funded program through which AGRA accelerates the probing, piloting and scaling of (digital) financial and non-financial solutions that present a business case for all partners and an end-to-end solution for smallholder farmers.
AGRA in partnership with IFAD entered into an agreement in 2008 with Equity Bank to set up a loan scheme to primarily benefit small-scale farmers in Kenya. This agribusiness loan scheme named Kilimo Biashara was made possible by the provision of risk sharing facilities by AGRA and IFAD in the amount of US$ 5 million to enable the Bank to lend US$ 50 million to agro-dealers over a three-year period.
AGRA in partnership with the Financial Sector Deepening Trust (FSDT) entered into an agreement in 2008 with National Microfinance Bank (NMB) to set up a loan scheme to primarily benefit agro-dealers in Tanzania. This loan scheme was made possible by the provision of risk sharing facilities by AGRA and FSDT amounting to US$ 2.1 million to enable the Bank to lend US$ 10 million to agro-dealers over a three-year period.
Since inception to February 2015, 218 projects valued 53.617 billion ($306.4 million) were guaranteed by NIRSAL. Similarly, the sum of 593.58 million ($3.4 million) was paid out as interest rebate to borrowers. The cumulative number of projects guaranteed from 2012- Dec 2014 is Sixty (60) Credit Risk Guarantees (CRGs) with total loan amount of 20,627,073,015.50 ($117.9 million) Eight (8) loans valued 2,925,203,049.00 ($16.7 million) have been liquidated from inception to date leaving 52 live projects with outstanding face value of 17,691,869,996.50 ($101.2 million). No guarantee default has crystalized successfully for payment since inception till February 2015.