What we do

Increase access to finance

Farm Africa supports farmers and agribusinesses across eastern Africa to gain access to the affordable finance they need to thrive.

The problem

Agriculture in eastern Africa remains chronically underserved by the financial industry.

Smallholder farmers and agribusinesses, particularly women, lack the financial products they need to buy seeds or fertilisers, or invest in their enterprises.

Awareness about loans and savings is low.

Photo credit: Farm Africa / Jjumba Martin

37%

of women have a bank account in sub-Saharan Africa.

Extreme weather events, such as droughts, that cause crops to fail and pasture to dry up, often result in vulnerable households selling valuable assets, such as land and livestock, that are essential to their future ability to earn money.

When harvests fail, millions of farming families risk being plunged into extreme poverty, simply because they have no financial buffer to fall back on.

Photo credit: Farm Africa / Jjumba Martin

It is estimated that less than ten per cent of rural poor households have access to the most basic financial services.

Source

The opportunity

Raising awareness amongst farmers and small businesses about savings and loan options enables them to borrow to buy farming inputs or invest in other income-generating activities.

Village saving and loans associations (VSLAs), which offer small loans from pooled savings, can significantly improve rural women’s lives, leading to higher incomes, financial independence and increased confidence.

By diversifying their incomes and insuring their assets against shocks, farmers have more chance of withstanding failed harvests without having to sell their land or let their families or livestock go hungry.

Photo credit: Maheder Haileselassie / Getty Images

After increasing the availability of financial services in rural areas, farmers in Kenya increased their asset ownership by 54% and 56% in Ethiopia. In Kenya, 53% of households reported a 49% increase in agricultural yields, while in Ethiopia increased yields resulted in an eightfold increase in household income.

Source

Seven VSLAs that were established as part of Farm Africa’s urban agriculture project in Addis Ababa, Ethiopia empowered women and developed their skills, with women taking on decision-making roles. Four of the seven VSLAs’ chair positions were women, while women occupied the secretary, cashier and all general management committee positions of all the VSLAs.

Source

The outcome

By improving their financial management skills, farmers and rural business can apply for loans and develop plans for the funds, allowing them to invest in their next harvest, their families and themselves.

Access to quality education is interlinked with women’s economic empowerment – when women are economically empowered, they tend to send their children to school.

What’s more, contractual agreements between buyers and sellers can boost productivity, increase market competitiveness and promote efficient resource use.

Photo credit: Kababah Digital Media

How we increase access to finance

Farm Africa increases rural communities’ access to finance by:

  • Working with smallholder farmers and communities to establish VSLAs to provide savings and loan facilities at village level
  • Connecting smallholder farmers with savings and credit cooperatives and micro-finance institutions so they can access customised financial services and products
  • Working with rural businesses to improve their financial management skills and set them up with funds that graduate them from concessional to formal finance
  • Harnessing the power of technologies such as mobile banking
  • Facilitating mutually beneficial contracts between farmers, buyers, suppliers and financial institutions
  • Leveraging climate adaptation funds to direct resources towards smallholder farmers

Revolving funds

Farm Africa has in-depth experience in helping to set up revolving funds in eastern Africa. A revolving fund is an account where capital is continuously replenished as it is used, allowing for constant lending without reducing the original investment.

Revolving funds are a sustainable way to offer financial support, as loans are repaid, the money is recycled to fund new loans, benefiting communities long-term.

Working capital

Working capital allows rural agribusinesses to pay suppliers, cover operational expenses and ensure they get paid by customers.

We work directly with smallholder farmers to obtain working capital so they can buy produce, expand their businesses, access markets and boost productivity and profitability.

Financial inclusion

A key part of our finance work is providing women with access to finance, including establishing VSLAs and helping women apply for grants and loans from financial institutions so they can grow their businesses.

Farmers are also excluded from access to finance due to cultural and religious beliefs, which prevents them from taking out loans with interest applied such as under Shariah law.

Shariah-compliant financial service provisions were almost non-existent in Amhara in Ethiopia before the start of our Sida-funded Market Systems project. The project developed inclusive financial products including the provision of interest-free loans to support agricultural input and output financing.

"We used to obtain money only from our husbands, it was not common to see females managing their own income. Now it is different."

Beka Gaito

Mother from Lole, Ethiopia, who used a loan from a VSLA set up with support from Farm Africa to set up a goat fattening business.

"Farm Africa introduced us to new types of finance, this has given us access to capital to purchase inputs and it has been a big help. It means we can get the money when we need it to invest in our farm."

Joseph Kaunda

Participant from Farm Africa’s Growing Futures project in Kenya.

"I have taken a loan from the business fund and opened a small restaurant in the town centre. It is doing well, especially on market days. I serve beans, tea, chapatti, posho and greens. This is the first time in my life I have had a business. I am empowered now."

Selina

Member of a VSLA in Nakapiripirit district, Karamoja region, Uganda.

"After we organised into a VSLA, we gained access to loans in our village without long processes and according to our saving amount. This has created favourable conditions to run small businesses."

Member from the all-female Megerisa village VSLA.

Ethiopia

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French beans being harvested as part of Farm Africa's Growing Futures horticulture project in western Kenya.

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