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International Conference on Innovative Agricultural Financing
28-29 April 2015
Discussion theme: Farmers Financial Literacy Programmes – pathway to streamline lending process
By Saleh Usman
AFRACA’S MAIN DOMAIN OF INTERVENTION
Why AFRACA cares for Rural and Agricultural Finance Agriculture accounts for 70% labour force and between 25% -
70% GDP in most of the Sub-Saharan countries. But is only financed by 3% of countries budgets. High input prices, inadequate credit financing options leads to
low investment in agriculture. Africa’s food supply continues to depend on smallholder
farmers but lack of financial services confines their efforts to productivity enhanced investments.
Access to finance is key to unlocking agricultural potential and funding growth in this sector.
Low levels of financial literacy and capacity by smallholder farmers, agribusinesses banks, has been key to lack of access to finance.
Financial Literacy in the Value Chain
Rationale for Financial Literacy
Farmers Financial Institutions
Sources and uses of farming income
How agri-value chains develop
Why and how to save Understand financial needs of farmers
Record keeping and budgeting Develop suitable products / services to fit needs
Types of financial services, how to use, how to access
Agri –loans portfolio management
Other technical sevices – production, markets, PHL,
Understanding contractual agreements i.e farmer-buyer-FI agreements
Financial Literacy Initiatives – KMP Received funding of USD 500,000 from AGRA to train and link
8,000 farmers, 180 SMEs, 400 FO Representatives, 100 women entrepreneurs to formal financial institutions and 160 FI staff trained on lending to farmers.
Pilot initiative is in Kenya and Tanzania for two years (2013 – 2015).
Topics covered include:• Savings – importance, options/products, matching savings goal
vs products offered.• Budgeting – steps, ways to improve money management,• Loan Management – reasons for borrowing, steps, risks, equity
vs debt, factors to consider, interest calculation.• Use of ICT to access financial services from FIs.
Key Lessons Learnt
• Choose a sustainable methodology (one-on-one, TOTs, study guides etc)
• Develop/adapt a relevant curriculum• Financial literacy is a life changing initiative for
farmers in planning for farm income.• Women beneficiaries of the training have new
drive and stronger demand for further training; they have become enthusiastic to discuss and promote gender equity.
Key Lessons Learnt Cont…
• Improved gender relations• Initiatives creates a platform
where FIs are able to share experience and innovative ideas on lending to smallholders
• Contextual differences in countries of implementation
• Engage government to enhancing impact (e.g. Central banks championing FL and Consumer Protection)
Way Forward??
• Explore partnerships with web-based platforms like MaishaEdu – for material targeting staff FIs & youth.
• Balance innovations for both farmers and FIs.• Continuous review of curricula for financial
education targeting farmers and FIs.• Gender targeted initiatives – having women
trained guarantees improved livelihoods of community.
• Increase lending and support services to agriculture sector .
Other Initiatives….. A lot has been done in this field by other partners such as
Equity Bank Ltd, MicroSave, FSD, SCC, Opportunity Bank, At the global level players can borrow ideas or adapt
approaches that are being used elsewhere such as by the:
a) International Network on Financial Education www.financial-education.org
b) Yearly conference: www.FinancialEducationSummit.org
c) Global Training Program: www.GlobalFinancialEd.org
d) Financial Education Fund (FEF) - FEF is a new fund which will support innovative projects in Africa that improve financial capability: www.genesis-analytics.com
Thank you
Our contact detailsAFRACA Secretariat, Kenya School of Monetary
Studies (KSMS)
Noordin Road, Off Thika Super Highway,
P O Box 41378, 00100
Nairobi, Kenya
Tel: +254 20 2717911/ 2715991; +254 717 698394
Fax: +254 20 2710082
Email: [email protected]
Website: www.afraca.org
