Nyandarua County is synonymous with potato farming, but for many farmers in the county, massive losses from problems such as frost and undercutting by middle-men are just some of the problems that drive them to near-desperation.

Sad stories are told about farmers whose property has been auctioned off to pay for loans they could not service due to poor harvests occasioned by inclement weather and exploitation by middle-men.

Unfortunately, such are common tales especially among small-scale farmers.  In a sector that employs close to 7 out of every 10 people in Africa, the occupation can often be a hit-or-miss proposition.  Crops may fail, or prices may fall, meaning disaster for those who may have taken loans to prepare their crops.

According to the World Bank, less than 5% of total bank lending in Africa goes to the agricultural sector.  Some of the challenges associated with lending to small farmers include; high costs of providing small loans such as costs of loan appraisal, monitoring and follow up, lack of credit history information and lack of farm records.

With support from a partnership between the government of Kenya and AGRA known as Programme for Rural Outreach of Financial Innovations and Technologies Program (PROFIT), one financial institution has made significant steps towards changing the narrative, de-risking the agricultural sector and bringing a range of financial services to smallholder farmers in Nyandarua County.

Started 43 years, Tower SACCO (formerly known as Nyandarua Teachers Savings and Credit Cooperative Society) has made great strides in offering financial services not only to the Teaching fraternity but have widened the common bond to allow membership from different occupations and business activities across the country.

“We have come a long way from the days when our main business was just selling and recovering money, without really caring about the needs or challenges of our clients,” says Tower SACCO Chief Executive Gabriel Njihia.

He says that 2017 was the beginning of a turn-around in their relationship with members.

“That year, we were introduced to a programme where our staff from the credit and marketing departments were taken through a course that exposed them to insights on how agriculture value chains work, the different players in the value chain and their roles at different levels of production,” he says.

He says that the major outcomes from engagement with the PROFIT programme by staff, management and Board of TOWER included the development of farmer-friendly financial products.

“One other insight that we are grateful about was the advice we were given about hiring an agronomist who would work with our members to improve their farms.  It seemed like a strange move at the time, but today we see the benefits,” says Gabriel.

Tower SACCO has so far trained over 30 groups, reaching over 600 farmers with information such as good agronomic practices, book keeping and budgeting.  Farmers growing potatoes have been linked with processors such as Sereni Fries and Tropical Heat, ensuring better prices and cutting out middle-men.

The trainings sessions have given TOWER a forum for recruiting new farmers into the SACCO and to give more members the confidence to apply for loans as they build a relationship of trust.

“In the last two years, we have managed to disburse over 2000 short term loans to our small- scale farmers in groups amounting to 200,000,000 in shillings. We also disbursed loans to individual farmers applying for amounts over Ksh.300,000,” says Gabriel.

He says that TOWER currently has a loan book of about Sh 80 million, which is being serviced by borrowers who include small-scale farmer groups and value chain players like the small agrovet shops, while premium customers including SME members and dairy marketing cooperatives are servicing a combined loan book of about Sh. 3 billion.

Mwendi Kurima a Farmers Cooperative Society who are also beneficiaries of the PROFIT program through capacity building of smallholder farmers and linkage to market and financial services (Tower SACCO). Mwendi Kurima started with 13 farmers and has seen sporadic growth to the current registered membership of 350 farmers.

“Some of the problems we had included accessing loans, certified seeds, farming implements and access to organized markets, but working with Tower SACCO is now a preferred partner to our members, as our members start paying back loans after delivery of their produce to the market,” David Mureithi, Chairman Mwendi Kurima says.

“As part of the financial package we have also received an insurance package against drought, frost and heavy rains, and we can get inputs like seeds, fertilizer.  We have an agronomist from the SACCO working closely with us”, he adds.

Capacity building that includes Training in Agricultural Value Chain Financing, Development of tailor-made products suitable to agriculture such as loans with repayments aligned to farmers cashflow, prudent risk management framework and strategies is slowly making SACCOs attractive to big lenders such as the Agricultural Finance Corporation.

Things are looking up for groups associated with Tower SACCO.  The Nyandarua County Government has signed an agreement with the SACCO to help women, youth, and persons living with disability to access affordable loans to help them execute county government tenders.

Legal documents showing such tenders is all that is required as collateral for up to 60 per cent financing from Tower.  The funding comes with training them on fiscal discipline and management skills.

Gabriel is optimistic about Tower’s expansion trajectory.  Already, the SACCO has spread to other agricultural counties like Laikipia, Nakuru, Nyeri and Narok.  They are now targeting urban farmers in Nairobi and Kiambu.

“Mainly because of our association with PROFIT, we have changed the way we appraise the aagriculture value chain loans as we now understand the specific needs of each player in the value chain, and this will enable us to continue developing more niche products for various value chains,” he says.

PROFIT is supported by the International Fund for Agricultural Development (IFAD), Government of Kenya and the Alliance for a Green Revolution in Africa.  The programme contributes to the reduction of poverty in rural Kenya by helping smallholder farmers, artisanal fishermen, pastoralists, women, landless labourers and youth to access suitable financial services.