At least 30,000 small-scale farmers in Nakuru county have benefitted from a Sh120 million loan kitty, courtesy of Apollo Agriculture, an agricultural financing company.
Apollo agriculture is partnering with the county government to identify and offer loans to small-scale farmers, including those with as little as half an acre of land.
The County Director of Agriculture Charles Githiri said that Apollo Agriculture had been financing small-scale farmers in the devolved unit, who own a maximum of three acres of land, a category that is often neglected by banks.
While indicating that farmers with an acre of land secured an average of Sh17,500 in funding, Githiri stated that Apollo Agriculture was also supporting the County’s effort to promote agriculture by transforming farming through technology by making high-quality inputs, providing of subsidized fertilizer and making expert agronomic support more accessible to smallholder farmers.
The County official made the remarks during a meeting between County agricultural officers, representatives from the African Development Bank and a delegation from Apollo Agriculture to assess the impact of the financing initiative on smallholder farmers within the devolved unit.
Githiri indicated that many financial institutions prefer to finance large-scale farmers adding that Apollo Agriculture was extending the loans to smallholder farmers in form of farm inputs that include seeds, fertilizer and insurance to help cushion them against bad effects of climate change.
He said that the move has improved production of farm produce and also enabled families to achieve food security.
“The biggest hurdle small-scale farmers face is limited access to affordable credit due to lack of collateral, credit histories and financial literacy,” Githiri explained.
The Director noted that other groups that needed support were persons living with disabilities and youths who are said to have been locked out by many financial institutions for lack of collateral.
He however said that through the partnership, they were looking at empowering smallholder farmers because they form the bulk of producers in the country with research showing that they form 70 percent of all the agricultural producers.
The Director advised farmers to commercialize their ventures and employ good agricultural practices to improve productivity and profitability of the farmers.
“In sub-Saharan Africa, less than 10 percent of funding goes to smallholder farmers which is way less than optimal,” the Director pointed out.
Githiri noted that less than 5 percent of commercial bank financing was flowing to smallholder farmers, yet such financing was critical to increasing resilience in the face of climate change and blamed the situation on the decision by small-scale farmers to operate outside the formal financial systems.
Since most small-scale farmers do not have official financial records, he urged financial institutions to consider utilizing alternative data including acreage, number of livestock, Mpesa transactions, previous and expected yields, locality, and so on, to determine suitability of small-scale farmers for credit.
Often, organizations that work closely with the farmers, for instance cooperatives, he added, are able to provide this alternative data to the financial institutions.
The Director added that climate change had further exacerbated the challenges facing the farmers, keeping millions trapped in poverty and limiting Africa’s agricultural potential.
Apollo Agriculture Managing Director Benjamin Njenga disclosed that the firm had been financing farmers in Nakuru, Kericho, Nandi, Embu and Meru since 2016.
He reiterated that Apollo Agriculture had expanded risk mitigation tools by encouraging agriculture-specific insurance schemes and guaranteeing funds that reduce lending risks for both the firm and farmers, ensuring that adverse climate conditions or price fluctuations did not lead to financial ruin.
He said there was need for practical and inclusive financing solutions for agriculture by modifying agricultural financing to directly address the core farmer challenges, adding that this would drive sustainable agricultural transformation, helping millions of farmers’ transition from subsistence farming to commercial viability.
Technology, he said, could be leveraged to accelerate efficiencies and gave an example of Kenya’s mobile banking, fintech solutions, and blockchain technology which he said, are already entrenched, using digital financial services to reach unbanked rural farmers in need of fertilizers through quick, cost-effective loan disbursement and repayment via mobile platforms.
Njenga stated that mobilizing and scaling sustainable investments in the agriculture sector was imperative, considering 60 percent of the population in sub-Saharan Africa was engaged in agriculture and allied sectors and Africa’s population was set to double by 2050.
“Providing smallholder farmers with access to credit is essential to unlocking long-term gains in farmer productivity and incomes,” he added
The Managing Director blamed low agriculture productivity on putting the small-scale farmers on par with large-scale growers, whom he said benefit from other basic needs in the market.
Smallholder farmers and small and medium enterprises supply 80% of food produced and processed in Africa. At the same time, Africa’s smallholder farmers are often the most vulnerable to the impacts of climate change and market failures.
Africa’s smallholder farmers are the foundation of rural economies, yet they face significant obstacles to accessing finance.
Apollo Agriculture is said to offer a mobile-based loan package for farmers that includes working capital, data analysis for higher crop yields and options to purchase key inputs and equipment.
The company started off by working with maize farmers, but helping them diversify to other high-yielding crops has been its area of focus.
The startup began operating in 2016 to deliver bundled packages of financing tied to crop cycles, agricultural inputs (seeds and fertilizer), crop insurance and digitally delivered information services to smallholder farmers in Kenya.
By Esther Mwangi
