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Farmers and finance – the missing link

December 18, 2014

For small-scale farmers, having access to cash at the right time can make all the difference between simply surviving, and moving up the next rung on the production ladder. Investment in agricultural inputs for the following season can enable producers to intensify and diversify production, securing higher revenues in the process.



But as many ACP smallholder farmers know to their cost, acquiring a loan is far from easy. Banks and other formal credit institutions are generally reluctant to lend money to producers with little or no collateral.

Determined to find workable solutions for the badly neglected area of agricultural finance, CTA and partners held the Fin4Ag international conference in July 2104. The five-day event, which took place in Nairobi, Kenya, investigated new ways of enabling smallholder farmers to access financial services such as loans and savings. It was the biggest conference ever held on agricultural finance.

Among the 890 people from 81 countries who gathered for the conference were bankers, agriculturalists, policy-makers, ICT innovators and farmers themselves.

There is a massive need for innovative financing mechanisms to help drive agricultural development in Africa. A gap of US$21 billion will need to be filled over the next 10 years, the meeting heard. In Kenya, fewer than 10 per cent of farmers have access to formal credit. For women, the figure is even lower.


“Smallholder farming, including fisheries, provides most of the food and livelihoods for a large majority of the population in Africa, Caribbean and the Pacific,” said CTA Director Michael Hailu. “New and innovative financial models that serve smallholder farmers are needed to open new channels for accessing capital, as well as enable farmers to adapt to severe and changing weather patterns. We cannot address the challenges of poverty and hunger without addressing the key challenges facing smallholder agriculture, one of which is access to finance.”

The conference generated a wealth of dynamic proposals, some of which are already being put into practice. Tools discussed ranged from warehouse receipt finance to mobile money and from market information systems to crowdfunding schemes to connect small-scale agri-enterprises to investors. Both new and existing regulatory and policy frameworks were examined, to identify enabling environments for smallholder finance.

The Plug and Play Day held during Fin4Ag – the second such event to be organised by CTA – showcased a wide variety of ICTs and mobile platforms covering areas such as access to credit, payments, savings, microinsurance and risk management for value chain actors.