Smallholder farmers to reap from 52bn/- project

The six-year project which is worth US$25 million (about 52.5bn/-), seeks to help close the gap in accessing financial and information services and is expected to benefit at least one million smallholder farmers in Kenya, Tanzania and Zambia

Speaking at the initiative’s launch in Tanzania recently, Mercy Corps AgriFin Accelerate Programme Director Leesa Shrader said that its main target will be women and the youth.

She said in Tanzania, more than 78 percent of the population is engaged in or derives its livelihood from agriculture-related activities noting that in many developing countries, the demand for agricultural financing largely remains unmet.

“Financial service providers, such as mobile money operators and banks, face many challenges in improving farmer’s access to finance in order to raise agricultural productivity, yield and profitability,” Shrader added.

According to her, the AgriFin Accelerate programme will collaborate with smallholder farmers and diverse actors, working with them to understand barriers to access and use of digital financial and information services.

AgriFin Accelerate will then develop appropriate solutions and work to implement them with relevant stakeholders.

“New technologies and advances in mobile banking as well as the increasing integration of smallholder farmers into better organised value chains, can promote solutions and affordable delivery channels that help close the inclusion gap for smallholder farmers who lack access to basic financial products and services,” said Shrader.

Highlighting on the importance of digital technology, she said research and experience shows that digital technology can be a powerful tool to reach smallholder farmers with information, market linkages and financial services with extremely low costs and at sufficient scale.

Further it can greatly drive up agricultural productivity gains especially when the entire ecosystem around farmers is also taken into consideration, she added.

Shrader identified limited financial inclusion for smallholder farmers as one of the challenges that AgriFin Accelerate seeks to address noting that farmers lack accessible demand-driven financial products and services that could drive higher productivity and income to their activities.

Despite the potential for smallholder farming to improve the economy and livelihood of people, the global demand for smallholder agriculture finance is huge and remains largely unmet and as a result, a majority of smallholder farmers are living on less than US$2 day.

Mercy Corps is a leading global humanitarian agency saving and improving lives in the world’s toughest places. With a network of experienced professionals in more than 40 countries, the agency partners with local communities to put ideas into action to help people recover, overcome hardship and build better lives.

Mark Wensley, Senior Programme Manager for Financial Inclusion at The MasterCard Foundation said they are committed to support the partnership because it represents a major step forward in Tanzania to leveraging technology in order to increase smallholder farmer incomes.

“This is possible by enabling smallholder farmers to access digital financial services and markets more easily, while strengthening their capacity and skills to utilize digital information,” he said.

On the rise of the ‘digital farmer’, he said access to digital financial and information services is critical in enabling African smallholder farmers to bridge productivity gaps for increased food security and incomes.

According to the Tanzania Agriculture Census (2010), 98 per cent of farmers in the country are smallholders who work on two hectares or less of crop land. The survey also has it that only 10 per cent of Tanzanian smallholder households have a bank account registered in their name.

Nearly half of smallholder farmers report that they do not have or use accounts at full-service banking institutions because the institutions do not offer them loans.

Experts contend that access to basic financial services, mobile money, mobile banking and other innovative tools may help these farmers to transition out of poverty.

Meanwhile, 75 per cent of smallholders say they have heard of mobile money and 97 per cent of them understand the benefits of mobile money. The survey findings showed that advanced use of mobile money is still at a lower rate, but 32 per cent of those who are aware of mobile money are saving money for a long-term purpose and only 10 per cent make business transactions with mobile money.

The AgriFin Accelerate Programme seeks to support and increase the number of these emerging ‘digital farmers’ to chart a new path and show that engaging in agriculture as a business can be as profitable as any other business venture by using low-cost digital financial and information services.

Wensley said The MasterCard Foundation works with visionary organisations to provide greater access to education, skills training and financial services for people living in poverty, primarily in Africa.

“As one of the largest, private foundations, our work is guided by the mission to advance learning and promote financial inclusion to create an inclusive and equitable world”, he added.