PROJECT PORTFOLIO
Adoption of Agricultural Innovations through Non-Traditional Financial Services
Bangladesh: CARE Bangladesh
Engagement of Financial Institutions for Farmers
CARE Bangladesh and Krishi Utsho seek to increase the capacity of last mile farmers and women who are often excluded from formal market systems to improve and sustain their farm productivity while protecting their productive assets (i.e., livestock) through access to timely credit, savings and insurance. In opting for a non-traditional financing mechanism for these most disadvantaged farmers, Krishi Utsho will extend its business model to resolve demand side financing issues to improve the lives of its target customer while bolstering its business viability.
Key Insights:
- Receiving loans from multiple MFIs is a barrier for farmers to overcome the credit cycle.
- While women have extra priority for loans, their male house member utilizes the loan
- Farmers are not willing to share their loan information and there are no check and balance tools to measure their loans
Links and Resources.
- CARE Bangladesh (Partner Website)
- Krishi Utsho (Partner Website)
- INNOVATE Portfolio Update March 2019
Bolivia: CIDRE IFD
Non-Conventional Collateral to Leverage Innovation Capital for Smallholder Farmers in Bolivia
CIDRE in partnership with BDP will pilot an innovative scheme for the registration and management of non-conventional collateral and develop a nation-wide registration system. If successful, this project will enable over $500 million in new capital lending operations become available through new financial services for smallholder farmers in Bolivia.
Key Insights:
- Empirical evidence supports positive effect collateral registration has on nonconventional guarantees and financial inclusion – direct impact on interest rates, loan terms, and access to formal credit
- However, Bolivian legal reforms, implemented through the Law 393, seems to be limited in what respects to some important aspects: registration and collateral recovery for lenders. Moreover, from previous experiences, we can infer that legal reforms must consider a broader set of legal tools and procedures to increase the probability to succeed.
- A multidisciplinary team is needed for the MVP development process; taking into account different team members (loan officers and IT developers) in the development process is challenging but necessary
Links and Resources.
- CIDRE IFD (Partner Website)
- Non-Conventional Collaterals to Leverage Innovation Capital for Smallholder Farmers in Bolivia (Partner Publication)
- INNOVATE Portfolio Update March 2019
Kenya: Bidhaa Sasa
Lessons Learned from Marketing and Selling Household Goods on Credit Through a Tupperware-Style Distribution Model Centred on Women Groups’ Leaders in Rural Kenya
Bidhaa Sasa will test whether its distribution and finance model works for the adoption of agricultural tools and goods, amongst rural women farmers. If successful, this project will assist Bidhaa Sasa to expand its current agricultural offering from canvases to dry grain to other goods such as water pumps, storage bags, wheelbarrows, chicken incubators.
Key Insights:
- Product learning: When commercializing a new product we expect to learn some key client behaviors: if they value quality and services added over price; if there is enough demand so making a group of five is easy or not, if the time or money savings derived from the product usage makes paying the installments easy or not.
- Canvas and grain silo product learning: The female/male split for the grain canvas and silo is slightly higher than for the other products in offer (more than 75% of clients are women).
- Good indication that agricutural innovations are not only for men and that women are also risk takers.
- Both products seem to have a higher proportion of "second" purchases compared to stoves, solar and LPG.
- Farmers generally seem to use agricultural innovations, they are not so sure about knowing about new innovations and do not know where to get them. Most say they don't have the cash to pay for them upfront but half of them seem to have means to access loans.
Links and Resources.
- Bidhaa Sasa (Partner Website)
- Experimentation in smallholder agriculture: A key takeaway from ‘lean impact for Ag’ (Blog Post)
- Measuring what matters in smallholder agriculture: Key takeaways from ‘Lean Impact for Ag’ (Blog Post)
- INNOVATE Portfolio Update March 2019
Kenya: COIN22 and Dodore Kenya Ltd.
Innovation-Wallet Learning Project
COIN22, Dodore Kenya Ltd., and University of Nairobi will test if smallholder farmers in Kenya are interested to open a mobile Innovation-wallet account to save funds and borrow funds specifically restricted and earmarked for the purchase of innovation that will help them increase their agriculture production and income.
Key Insights:
- Financial solutions should be tailored to rural needs and context. One solution/model may work in a certain area and with a certain enterprise which may not work elsewhere. The conditions in Keringet different from those in Kibwezi. Similarly, potato farming differs from tomato farming. Whereas with potato farming, the initial investment amounts have been fairly low, whereas with tomatoes the initial investment proved high.
- Farmers have their diverse and unique needs and credit provision is not adequate to realize impact. Extension services, markets, insurance must be included for a holistic approach to solving rural farmers’ needs
- Gender Equality: Our portfolio comprises about 38% of women. This has been attributed to women tending to seek smaller amounts of finance than men meaning that savings and group lending are particularly important to women. Given their importance in agricultural production and family food security, it is important to improve financial access to rural women.
- Managing Risks: i) Technology and process modifications can be used to reduce risks associated with rural and agricultural finance; and ii) Savings (especially when combined with financial education) is an important risk mitigation tool for rural lending; because as farmers save the level of exposure is also reduced.
Links and Resources.
- COIN22 (Partner Website)
- Dodore Kenya Ltd. (Partner Website)
- INNOVATE Portfolio Update March 2019
Malawi: Agronomy Technology Limited
Innovation-Wallet Learning Project
ATL will field test an existing contract-based farming model called “Chithumba” based on: access to quality inputs (seeds and inoculant), access to quality extension services, and access to fair markets. The case study will capture lessons from past and current seasons to further analyze and understand how to maximize the impacts of the model.
Key Insights:
- Product learning: 89% of respondents from interviews claim improvement in production since participating in the Chithumba model; 99% claim the trainings delivered are useful and necessary. The service seems to fit with farmers’ need but most reported that conditions of financing of inputs are not optimal and repayment volume remains too high.
- Gender learning: in terms of production data, the average input package taken on loan is higher for men than women (32.7 kgs of seed for men vs. 26.1 kgs of seed for women); adoption of recommended GAP practices among women is half (15%) while for men the adoption rate is 30%.
Links and Resources.
- The Chithumba Model: Combining Pre-Harvest Financing, GAP Training, and Access to Markets for Smallholder Farmers in Malawi (Partner Publication)
- The Chithumba Model: Combining Pre-Harvest Financing, GAP Training, and Access to Markets for Smallholder Farmers in Malawi (Summary Brief)
- INNOVATE Portfolio Update March 2019
Nepal: iDE Nepal
Community Managed Access to Finance
iDE Nepal in partnership with Muktinath Bikas Bank, will pilot a new model of finance to reach rural farmers by utilizing an extensive network of community aggregation centres, technical support, and product sales agents who will manage and distribute agricultural loans. In order to appropriately support uptake and security of agricultural loans, this initiative will be partnered with a pilot crop insurance program to protect the farmer’s investments and finance.
Key Insights:
- Linkages and coordination with local government have been a strong support for the smooth implementation of this NTFS program;
- Providing training to farmers on loan utilization has resulted in timely repayment of interest and loan to the bank by the farmers.
Links and Resources.
- iDE Nepal (Partner Website)
- Muktinath Bikas Bank (Partner Website)
- INNOVATE Interview: A Farmer-Centric Bank in Nepal (Blog Post)
- INNOVATE Portfolio Update March 2019
Pakistan: Pakistan Microfinance Network
Warehouse Receipt Financing: Tackling the Financial Needs of Small holder Farmers
PMN will study a Warehouse Receipt Financing (WRF) pilot introduced by the State Bank of Pakistan to address credit issues in agriculture with medium and large farmers. PMN will identify opportunities and challenges to implement the WRF model for women and men smallholder farmers in Pakistan.
Key Insights:
- Informal lenders and advocacy: essential to start advocacy campaigns concerning exploitative roles of aarthis (informal creditors) and to make microfinance more accessible and beneficial for small farmers. Until microfinance providers can compete with the informal lenders in the way the market is attuned, there will be slow uptake of any new product that is introduced in the market
- Regulatory support: a missing link is the lack of regulatory support for warehouse standards and quality assurance measures
- Target customer: smallholders with typical land size of 5-12 acres – expect more learning during interviews and data collection
Links and Resources.
- Pakistan Microfinance Network (Partner Website)
- Warehouse Receipt Financing: Tackling the Financial Needs of Smallholder Farmers in Pakistan (Partner Publication)
- INNOVATE Portfolio Update March 2019
Peru: Global Canopy
Green Agricultural Credit in Peru: Early Stage Lessons
Global Canopy seeks to build capacity and understanding of financial institutions that provide rural credit to smallholders on viable conditions of finance to incentivize the uptake of credit by smallholders for sustainable agriculture. The case study will enable financial institutions to design green credit products that are appropriate and attractive to smallholders.
Key Insights:
- There is a lack of financial products that take in consideration the needs of agricultural smallholders
- There are formal and informal providers of credit in Peru. Formal providers include cooperatives, NGOs, savings and loans banks and financial institutions. Informal providers include supply chain intermediaries that provide inputs and local business. The appearance of the informal service seems to be due to the lack of finance to the agricultural sector, the slow processing of credit products and the lack of flexibility in credit conditions.
- The risks in commodities' production and the lack of guarantees from smallholders if they are not able to payback also contributes to the lack of suitable finance.
Links and Resources.
- Global Canopy (Partner Website)
- Redefining Finance for Agriculture: Green Agricultural Credit for Smallholders in Peru (Summary Brief)
- Redefining finance for agriculture – green agricultural credit for smallholders in Peru (Eng) (Partner Publication)
- Redefiniendo el financiamiento para la agricultura: crédito agrícola verde para pequeños productores del Perú (Es) (Partner Publication)
- INNOVATE Portfolio Update March 2019
Peru: I-DEV International
Mobile Money and PAYG Innovation to Scale AgTech Adoption in Smallholder Value Chains
I-DEV International will execute the project in alliance with the Cooperative of Tara Producers of the North (APT-N) and Peru Digital Payments (PDP) to pilot the proposed solution: to leverage mobile money and pay-as-you-go (PAYG) to scale the adoption of affordable precision irrigation technologies among smallholder tara farmers.
Key Insights:
- Access to precision irrigation is limited, rudimentary and costly – but necessary for cost-effective tara production. Current solutions implemented in plots are inefficient and costly.
- The pilot project has no precedent with few cases of PAYG, mobile money and innovative irrigation systems applied nationwide. PAYG-enabled technology is nascent in Peru.
- Despite broad access and use of mobile phones in area, very little knowledge and use of mobile payments. Farmers showed interest.
- Farmers eager to purchase irrigation systems provided the costs are affordable and in installments until owning (lease-to-own).
Links and Resources.
- I-DEV International (Partner Website)
- Mobile Money and PAYG Innovation to Scale AgTech Adoption in Smallholder Value Chains (Partner Publication)
- Mobile Money and PAYG Innovation to Scale AgTech Adoption in Smallholder Value Chains (Summary Brief)
- INNOVATE Portfolio Update March 2019
Rwanda: World Relief
Agriculture for Life: Village Savings and Loans Associations (VSLAs) and Adoption of Improved Agricultural Innovations
World Relief will develop a case study to investigate the Village Savings and Loans Associations (VSLA) model and linkage to adoption of improved agriculture inputs and agricultural innovation by smallholder farmers (mostly women) engaged in nutrition-sensitive Farmer Field Schools.
Key Insights:
- The process to date has been a learning experience: field testing and conversations with field staff helped sharpen the question sets investigating land size, agricultural production, agricultural innovation adoption, and non-traditional finance usage.
- Farmers estimating land size is a challenge. However, our research design is focused on capturing change of production over time, which means that any inaccuracies in land size, whether overestimated or underestimated, should not hinder the overall results.
- Preliminary findings suggest that increasing agricultural investment is an important factor if farmers are interested in a higher crop production. This then suggests that a Savings for Life program implemented alongside Agriculture for Life could potentially allow individuals to increase their agricultural investment, and thus increase their crop production.
Links and Resources
- World Relief (Partner Website)
- INNOVATE Portfolio Update March 2019
MEDA INNOVATE's portfolio of 10 innovative projects assessing the potential of non-traditional finance to stimulate agricultural innovation adoption among smallholder farmers span across South America, South Asia and East Africa. Learn more about INNOVATE's projects and implementing partners.
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