New Digital Solution Supports Smallholder Farmers and Savings Groups to Access Finance

New Digital Solution Supports Smallholder Farmers and Savings Groups to Access Finance

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Access to finance is one of the major barriers to increasing agricultural productivity for smallholder farmers in Rwanda. Bank branches are often located far from farmers’ homes, making it difficult for them to access the financial services needed to support and scale up their businesses.

Mobile financial services and microfinance institutions (MFIs) like Duterimbere MFI and Umurimo Finance Ltd are well-placed to combat this by offering solutions that improve access to finance and address issues like the high cost of transactions, high cost of reaching farmers in rural areas and low rate of farmer transactions, which also impacts the availability of financial data for proper loan distribution and decision-making. Since 82 percent of Duterimbere and Umurimo’s clients are farmers, they partnered with the USAID-funded Feed the Future Rwanda Hinga Weze activity to improve farmers’ access to finance in the districts of Kayonza, Gatsibo and Nyamasheke.

Hinga Weze and its MFI partners teamed up with ADFinance Ltd, a Rwandan company specializing in the design and implementation of digital solutions for the financial sector, and local mobile network operators to develop a SMS-based software called ADMobile. The software enables farmers to conveniently deposit and withdraw funds from their bank accounts and complete mobile money transactions with ease. After its launch, ADFinance Ltd provided training to MFI staff on the service’s usage and MFI staff, in turn, educated their farmer clients on how to use the new mobile tool.

The new push-pull service works by integrating the MFIs’ core banking systems with mobile money services from network operators Mobile Telephone Network (MTN) and Airtel. Through this mobile service, individuals and savings groups can access their mobile money wallets and make payments online, without needing to travel to a physical bank branch. The new mobile financial service therefore makes it easier for farmers to save income since they no longer need to spend time and resources traveling back and forth to the bank.

The service’s simplified withdrawal and deposit transaction processes also facilitate loan repayments quicker and more efficiently than before. During COVID-19 lockdown periods when physical movement in the country was restricted, the mobile platform not only helped farmers continue using financial services, but it also helped them save time, increase transparency, improve the security of group savings and reduce conflicts among groups. Participating MFIs also saw an increase in the volume of client transactions, lowering the cost of their operations and supporting farmers to collect enough data to make improved lending decisions.

To enhance access to ADMobile and increase the number of farmers utilizing the platform’s mobile financial services, the activity and its partners developed campaigns showcasing the platform’s benefits. than 1,300 smallholder farmers have accessed over $328,000 in loans through the digital system. Beyond its support to individual farmers, 674 savings groups have used the digital financial service to connect with MFIs and access new sources of funding.

Recently, ADFinance Ltd also successfully piloted a new mobile-based service called “Mobile Lending,” which enables the automated disbursement of small loans to bank clients utilizing a defined criteria and machine learning technology. Moving forward, ADFinance Ltd aims to scale up their services, allowing them to reach more farmers in remote areas of Rwanda, to expand their technology into other countries and, most importantly, to quickly and efficiently facilitate improved access to loans for farmers.

Youth Engagement in Agriculture Improves Access to Digital Technology and Extension in Rwanda

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In Rwanda, only 3.18 million out of 7.75 million individuals of working-age are employed, and the number has declined by more than 13 percent since August 2020. The agriculture sector also lost upwards of 47,000 jobs while the unemployment rate stayed relatively high at 25.5 percent among the youth population (National Institute of Statistics of Rwanda).

Linking youth to agriculture can significantly contribute to innovation, job creation and agriculture sector development. The USAID-funded Feed the Future Rwanda Hinga Weze activity works to attract youth in agriculture by increasing agricultural productivity, employing youth through internships, improving access to finance and strengthening youth capacity in digital and private sector extension. Since 2017, the Activity has reached 733,000 individuals, of whom over 24 percent were youth.

To support the development of youth entrepreneurs, the Hinga Weze Activity provided internships to over 200 youth and awarded $92,647 in youth-specific grants for companies including Mahwi Tech, Carl Group, Zima Enterprise and KOTIB. Using the grant funds, Mahwi Tech was able to transform its M-LIMA platform, a youth-owned agricultural market information platform, into an online marketplace that can serve the dual purposes of providing market information and facilitating market linkages. Similarly, technology company BK TecHouse was able to expand its online Smart Nkunganire System to support over 200,000 new farmers, including 51,324 youth, by improving their agricultural input and information distribution and digitalizing their agrodealer operations through a Mobile Order Processing Application.

Hinga Weze’s activities also strengthened youth capacity in extension by including youth in digital extension programming, integrating youth in public and private extension services and providing youth-friendly approaches to extension and farming through the New Extensionist Learning Kit (NELK). Hinga Weze trained 133 youth on the use of digital extension, 15 youth on digital extension content creation and 21 youth on extension video dissemination. To date, these youth produced six videos on improved maize cultivation and helped train 4,000 farmers on maize production techniques using the Center for Agriculture and Bioscience International’s (CABI) App—a mobile learning application focused on the production, harvest and post-harvest management of maize.

“Youth in Rwanda have quickly adopted information communication technology (ICT) tools and platforms. By using youth to customize and promote digital technologies, the Activity is supporting the advancement of ICT and transforming the way agricultural technologies are transferred to smallholder farmers,” highlighted Laurence Mukamana, Hinga Weze Chief of Party.

While Hinga Weze continued to utilize traditional extension methodologies to help farmers adopt climate-smart and other good agriculture practices, such as on-site coaching and Farmer Field Schools, the Activity also partnered with master trainers from the Rwanda Agriculture Board and the Ministry of Agriculture and Animal Resources to help youth expand engagement, training and digital tools to extension agents and farmers through the Government of Rwanda’s Twigire Muhinzi national extension program. By leveraging existing government and private sector structures, Hinga Weze was able to create ownership and ensure the sustainability of promoted practices and methodologies beyond the life of the activity.

Improving Production and Livelihoods through the Manufacture and Sale of Poultry Feed

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Poultry farming is an important part of Burkina Faso’s rural economy. Unfortunately, it faces challenges, including the availability of low-cost feed, which is the most important and expensive input in poultry production. According to poultry producers, feed represents 60% to 75% of poultry production cost. Therefore, the availability of quality feed at affordable prices is essential for production to remain competitive on the market.

To remedy this, the Feed the Future-funded USAID Yidgiri activity trained producers in improved poultry production techniques and in the manufacture of poultry feed using local ingredients. As a result, two members of the Béogoboumbou producer organization (PO) in Kaya, Burkina Faso, who benefited from this training are transforming their knowledge into a source of income for themselves and their PO.

During the training, producers learned that in order to have high output, regular productivity and optimal poultry growth, it is necessary to use balanced feed composed, among other things, of proteins, essential amino acids and minerals, which are found in locally available soya, corn, fish powder and calcined bone. Rasmata Sawadogo and Mouazou Kanazoe, both members of the Béogoboumbou PO, have successfully experimented with this feeding technique as a result of the training offered by USAID Yidgiri in 2021. Sawadogo and Kanazoe admitted that their chickens used to be small since they let them roam around looking for food and sometimes threw them handfuls of millet like so many farmers in the village. “I didn’t know that feeding my chickens a special diet could accelerate their growth, optimize their weight and earn a higher selling price,” says Kanazoe.

After the training and feed experiment the two conducted on their poultry, Sawadogo and Kanazoe trained the 17 members of their PO, including 6 men and 9 women, on these improved poultry production techniques. Now, in order to feed their poultry at a lower cost, the members collectively contribute money for feed production and pay for the necessary ingredients at wholesale prices.

Given the positive effect the feed had on their poultry and the frequent shortage of industrial poultry feed available on the market, the PO also decided to produce and sell their feed. Their products are sold to private individuals as well as to other POs, including Basnéré, Pissila and Kaya, who place group orders. A 50kg bag of poultry feed costs $25 (15,000 CFA) and the PO produces about one ton per month, depending on their orders. The PO puts 50% of profits earned in a fund and shares the remaining 50% with its members. The money in the fund can be borrowed by members who need a small loan to boost their activities.

Kanazoe, a 20-year-old youth member of the PO, says he likes this activity because “per month, I can earn between $16-42 (10,000 to 25,000 CFA). So far, I was able to purchase a bicycle and I am building a house of 20 sheets in the family yard. I dream of being a boss and of having a big poultry feed production company.” Sawadogo, a mother of two, adds that she earns an average of $33 (20,000 CFA) per month, which is additional income that she reinvests either in her chicken coop or on her family.

To help the PO increase its competitiveness and reduce dependence on their neighborhood mill for grinding ingredients, Lassané Kanazoé, the PO’s cluster lead, utilized his network of partners to help the PO access a nearby multi-function mill in December 2021 so that they could efficiently respond to orders. The mill has a grinding capacity of one ton per hour. The Songvensé cluster was formed under USAID Yidgiri’s predecessor, the Resilience and Economic Growth in the Sahel – Accelerated Growth (REGIS-AG) program, and continues to have members, including the Béogoboumbou PO, take advantage of the mill to produce quality feed and help sell poultry at the right time and at preferential prices. In addition, the PO intends to offer its services to nongovernmental organizations to help their partners access poultry inputs.

Through its work with the Béogoboumbou PO, USAID Yidgiri is demonstrating that with strengthened capacity building, producers can improve their resilience and generate profitable economic opportunities for themselves and their communities.

Supporting Smallholder Farmers by Increasing Access to Affordable, Appropriate, and Effective Technology

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USAID Pakistan Agriculture Technology Transfer Activity (PATTA) was an Activity implemented by CNFA to assist Pakistani farmers transition from traditional to commercial farming, and increase smallholder farmers’ access to affordable, appropriate, and effective agriculture technologies.

Youth-Led Enterprise Accesses Finance to Scale-Up Soybean Production in Benue State

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Benue State is a major hub for soybean production in Nigeria, producing over 100 metric tons of beans each year– approximately 30% of the country’s total. But due to rising demand for oilseed, processors are turning to imports instead of relying on local production and Nigerian farmers, particularly smallholders, are facing pressure to maintain their market share by increasing their yields.

To support soybean farmers with meeting market demand and expanding their businesses, the USAID-funded Feed the Future Nigeria Agribusiness Investment Activity, implemented by Cultivating New Frontiers in Agriculture (CNFA), facilitated training and connections between producers and financial institutions to enhance agribusiness performance and improve access to finance.

The Activity partnered with youth-owned soybean farm, Agojo Farms Ltd, to strengthen their business development skills, teach soybean production best practices and secure financing for increased production. The Activity trained Agojo Farm representatives on microenterprise fundamentals, group dynamics and leadership while breaking down barriers to accessing finance for youth. In line with the Central Bank of Nigeria’s requirements for their Agribusiness/Small and Medium Enterprise Investment Scheme (AGSMEIS), the Activity also supported Agojo Farms to prepare a business plan, which enabled them to secure a loan in early 2021.

“The AGSMEIS loan supported us to expand our soybean farm from four acres to 11 acres,” said Angbiandoo Agojo, CEO of Agojo Farms Ltd. “After learning to procure improved seed varieties, we also anticipate an increased yield of 15 bags of soybeans for every two acres of land, compared to just 10 bags in previous seasons.”

By building the capacity of micro, small and medium enterprises (MSMEs) to improve their business development and production, particularly for those owned and operated by youth, the Activity supports soybean producers to access finance, provide employment and efficiently scale up their operations, improving livelihoods and fulfilling the country’s growing demand for soybean.

Since December 2018, the Feed the Future Nigeria Agribusiness Investment Activity has facilitated access to agricultural-related credit and investment worth over 35 billion Naira ($96 million) for over 11,000 MSMEs in Nigeria. Over the next two years, the Activity will continue working with a range of market actors and stakeholders, with a specific focus on youth and other marginalized business owners, to improve the enabling environment for agricultural sector growth, broaden access to agribusiness finance, facilitate investment for agribusiness expansion and sustainably enhance the performance of agribusinesses across Nigeria.

Access to Finance Supports Value Seeds Limited to Supply over 500,000 Farmers with Certified Seeds

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Value Seeds Limited, an agricultural seed company, works in northwest Nigeria to strengthen the reliability of the seed sector for staple crops such as cowpea, maize, rice and soybeans and to sustainably supply seeds to its network of more than 500,000 farmers. In addition to producing seeds on their farm in Kaduna State, Value Seeds Limited runs an out-grower scheme of over 4,000 farmers, providing education on good agronomic practices, supplies, inputs and monitoring agricultural productivity and quality for seed production and multiplication.

As they sought to expand their operations during the 2021 season, Value Seeds Limited partnered with the USAID-funded Feed the Future Nigeria Agribusiness Investment Activity, implemented by Cultivating New Frontiers in Agriculture (CNFA), to apply for and secure credit worth 1 billion Naira ($2.63 million) from Sterling Bank Plc under the Central Bank of Nigeria’s Commercial Agriculture Credit Scheme (CACS).

The Activity worked with Value Seeds Limited to ensure that they could meet the risk criteria set by Sterling Bank Plc by conducting an audit and environmental impact assessment of the company’s operations. They then provided recommendations on ways the company could improve its processes and environmental impact in order to qualify for the loan.

“Since 2019, a key condition for securing bank loans has been the ability to present an environmental impact assessment report,” said George Zangir, Managing Director of Value Seeds Limited. “However, we were finding it difficult to get the right experts for the assessment at the cost that was expected.

“To address this challenge, the Activity supported us to conduct this assessment and obtain a positive report, enabling us to receive the loan we applied for in a timely manner and to bolster production while minimizing impact to the environment.”

The financing from the new loan allowed Value Seeds Limited to boost support to their out-grower farmers and increase the production of certified seeds produced, cleaned, processed, packaged and sold to smallholder farmers, large-scale farms, agro-input dealers, development organizations, producer associations, farmer cooperatives and government entities across Kaduna, Niger and Benue states.

With a projected yield of about 1 billion Naira ($2.63 million) in turnover, Value Seeds Limited can further its goal of producing quality seeds and supporting growth in Nigeria’s agricultural sector, ensuring greater food security for communities across the country.

The Activity will also continue its goal to strengthen access to agribusiness finance and investment for micro, small and medium enterprises (MSMEs) like Value Seeds Limited by building the capacity of financial institutions to fund agribusiness MSMEs, catalyzing access to credit and investments and supporting MSMEs across Nigeria’s agricultural sub-sectors to ensure they are investment ready.

Ebonyi State Government Launches Digital Loan Portal Expanding MSME Access to Finance

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In Nigeria, a digital loan/e-wallet portal launched by the Government of Ebonyi State on June 7, 2021, is now strengthening access to finance for micro, small and medium enterprises (MSMEs) including agribusinesses, addressing funding constraints and improving access to financial resources for entrepreneurs across the State.

In continuous discussion with the Ebonyi State Government’s Ministry of Commerce, Industry and Business Development, over the past year the USAID-funded Feed the Future Nigeria Agribusiness Investment Activity, implemented by Cultivating New Frontiers in Agriculture (CNFA), designed and developed a digital loan portal with connected e-wallet system. That portal has now been launched by the Ebonyi State Government’s Ministry of Commerce, Industry and Business Development to serve as the hub for delivery and coordination of their MSME Development Funds.

The MSME Development Funds are a collection of federal government and private-sector-driven loan and grant initiatives targeting eligible MSMEs to cushion the economic impact of the COVID-19 pandemic on businesses. This new user-friendly online portal and its integrated e-wallet, which serves to facilitate loan payments in Ebonyi State, is the first of several initiatives the Activity is engaged with to deploy ICT solutions that seamlessly manage the aggregation, documentation and disbursement of MSME funds at State level. The portal also enables the State Government to oversee loan utilization and recovery in collaboration with key financial institutions including Zenith Bank, First Bank and United Bank for Africa. Aligned with the Activity’s focal value chains, 50 percent of the MSME Development Fund is targeted at agribusiness MSMEs in the aquaculture, cowpea, maize, rice and soybean value chains.

The Ebonyi State Government is now piloting the use of the portal and has so far used it to disburse loans worth $169,427 (69.4 million Naira) to 609 rice farmers. These loans are supported by the World Bank’s FADAMA project through Ebonyi State’s Nigeria COVID-19 Action Recovery and Economic Stimulus (NG CARES) Program for Results. The NG CARES Fund is a World Bank initiative executed by the Nigerian Bank of Industry (BOI) that launched in September 2021 to provide state-level financing through targeted interventions in the form of subsidized loans, business and employment grants to support businesses.

An additional 392 farmers supported by the Activity will receive loans worth $109,086 (44.7 million Naira) upon completing their registration and verification via the portal.

With the loan portal and e-wallet now online, at least 6,000 MSMEs in Ebonyi will have access to NG CARES funds worth at least $14,642,360 (six billion Naira) over the coming months. The portal also presents Ebonyi State with a unique opportunity to leverage BOI’s microcredit platform, which will allow them to deliver more grants and loans to businesses in the state, providing targeted relief, restoring livelihoods and stimulating economic recovery for vulnerable households and MSMEs in the State as a result of COVID-19.

“The loan portal has and is going to open up a lot of opportunities for our state,” said Dr. Stephen Odo, Commissioner for Commerce, Industry and Business Development, Ebonyi state, noting that it will further the state government’s drive to stimulate economic growth and job creation. “We are now looking at integrating all running agribusiness and MSME loans in the state for ease of management and recovery.”

As the Ebonyi State Government drives the growth and development of MSMEs, the Feed the Future Nigeria Agribusiness Investment Activity will continue to support the government to make financial processes less cumbersome and to expand access to financial services for agribusiness MSMEs across its value chains, increasing long-term agriculture sector development and food security in the state.

Feed the Future Nigeria Agribusiness Investment Activity Supports Social Enterprise to Increase Rice and Soybean Production for 500 Smallholder Farmers

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Farm on Wheels is a social enterprise that works with smallholder farmers in hard-to-reach rural communities of Niger State, Nigeria. The enterprise provides agricultural input credits to smallholder farmers in the form of seeds, fertilizers and agrochemicals, while also guaranteeing markets for farmers through a well-coordinated system.

To improve yield for farmers and ensure optimum supply of rice and soybean production, Farm on Wheels planned to disburse input loans worth over 24 million Naira ($58,151) to 500 smallholder farmers, including 100 youth during the 2021 wet and dry seasons, which fall between May 2021 to April 2022. To build staff capacity in preparation for the loan disbursements, the enterprise partnered with the five-year Feed the Future Nigeria Agribusiness Investment Activity, a USAID-funded activity implemented by Cultivating New Frontiers in Agriculture (CNFA) that works to strengthen the enabling environment for agribusiness finance and investment in Nigeria.

In August 2021, the Activity facilitated a master training for ten Farm on Wheels staff and extension agents, strengthening their knowledge and capacity on good agronomic practices for rice and soybean production. The training covered critical topics for supporting smallholder farmers such as communications, ethical work practices, good agronomic practices, group dynamics, leadership strategies, data collection and environmental compliance.

Farm on Wheels’ field officer, Jennifer Ahnole, recalled her key takeaways after the training, noting, “The knowledge and skills I gained from this training will enable me to improve my field activities with farmers. I have resolved to take responsibility for my personal development and to keep improving my work.” She then highlighted how she has increased her environmental consciousness to ensure that possible negative environmental effects from farming activities are mitigated or eliminated.

Her colleague, William Bello, also a field officer, reinforced the group’s commitment to work as a team to achieve the goals and objectives of Farm on Wheels.

“My perception of work has changed,” he said. “I have improved communication with my team and can now engage better with the extension agents and farmers.”

The training enabled the Farm on Wheels staff and extension agents to cascade the information and skills they learned to 60 additional lead farmers in the Farm on Wheels out-grower network. The leads were then supported to deliver the training to the 500 smallholder farmers targeted for the enterprise’s 2021 wet and dry season input loans. The cascaded trainings are expected to introduce soybean and rice production best practices, enabling smallholders to obtain optimum yields and increased profits.

Over the next two years, the Activity will continue to support and improve the enabling environment and groups, such as Farm on Wheels, to deliver wholesome financial and business development support services to smallholder farmers in Nigeria, improving incomes, ensuring food security and tackling hunger.

Increasing Youth Agricultural Entrepreneurship in Nigeria

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Comfort Kumashe is a small-scale rice processor in the Gboko community of Benue State, Nigeria. Kumashe began her rice processing business in December 2020 to improve her livelihood and earn enough income to support her family and fund her undergraduate studies at the state’s university. Although she had a limited background in running a successful agribusiness, she persisted, partnering with the USAID-funded Feed the Future Nigeria Agribusiness Investment Activity at a youth entrepreneurship training in Gboko.

The Agribusiness Investment Activity is working across Nigeria to address the bottlenecks that micro, small and medium enterprises (MSMEs) face when trying to access finance. By targeting youth-owned agribusiness entrepreneurs, the Activity aims to improve the agribusiness enabling environment, particularly for youth MSME owners, and increase opportunities to access funding for their businesses.

Through a recent collaboration with the Nigerian Youth Chambers of Commerce (NYCC), the Activity organized a five-day entrepreneurship development training for 71 Nigerian youth, including 11 members of the Young African Leaders Initiative (YALI), working within the Activity’s seven focus states of Benue, Cross River, Delta, Ebonyi, Kaduna, Kebbi and Niger and five value chains of rice, maize, soybean, cowpea and aquaculture. As a result of the training, youth participants will become eligible to apply to the Nigerian Youth Investment Fund (NYIF) within the Federal Ministry of Youth. The training also qualifies them to become members of the NYCC, and as members, to access NYCC’s network of mentors and business development support providers for further business advice and assistance.

For five days, participants learned from a robust entrepreneurship curriculum ranging from lessons on idea conceptualization and business plan development to business management and leadership.

“The five days I spent at the training brought me out of my comfort zone,” noted Kumashe. She also highlighted how the training enabled her to learn customer relations, branding and digital marketing skills.

“I used to think that since my business is small, I should focus on selling only to the people I know. But now I know that I should think big and target more customers so that I can grow. I have now created a Facebook page for my business, added business cards for customers and am working on creating branded packaging for my rice instead of selling in open basins,” added Kumashe.

Similarly, Joseph Ornguga, another youth entrepreneur who also participated in the training, said he learned to take responsibility for his business failures to strengthen his enterprise’s operations. Ornguga currently owns a two-hectare rice farm in Benue State but is growing rice on only one hectare due to losses incurred the previous season.

“I realized that I was not keeping track of my business finances during the last farming season and I was about to make the same mistake again. I am now prioritizing putting my records in order,” he noted while describing how the training has set his business on the path toward growth and expansion.

Another participant, fish producer Priscilla Doughdough, said, “The training exposed me to design thinking; to understand the needs of my market and to design my products and services to meet those needs.” Priscilla, who has two years of experience running her business, said learning about record keeping, business plan development, asset management, customer relations and other concepts made her realize there was a lot she still needed to know about running a successful enterprise.

In addition to the entrepreneurship training, the Activity’s partner, NYCC, will provide participants with virtual and in-person business plan development support to help them turn their business ideas into viable plans capable of attracting finance or investments through mechanisms such as the Nigerian Youth Investment Fund.

The Activity is also exploring engagement with Sterling Bank’s Women and Youth in Agriculture Finance, code-named SWAY-AgFin fund, and LAPO Microfinance Bank to secure additional and alternate financing for these youth. Through support from the Activity, more youth will become credit and investment-ready, boosting their capacity to access finance and investments for their agribusiness MSMEs and strengthening the dynamism of Nigeria’s agribusiness sector.