Theme 4: Lesson learning from two agribusiness finance pilots

DrumNet Supply Chain Links, Kenya

Objective of this pilot is to increase smallholder farmer incomes by directly linking key players along the supply chain and enabling farmers to access the formal, commercial banking system by building up a credit history and rating. Target clients are unbanked farmers with up to two acres, typically growing a mixture of subsistence and cash crops, with a focus on women farmers. Target outcome is to achieve operational self sufficiency, become a commercially viable business owned, reaching 1m clients throughout Eastern and South Africa and demonstrate that this pilot is a commercially viable proposition that can be widely replicated. The major finding of DrumNet is that it appears to have successfully brought together most key players in the supply chain for the crops concerned, to their mutual benefit. However, commercial viability is still to be determined.

Zyonse All-inclusive Product, Zambia

Objective of the pilot is to refine and pilot an all-inclusive (“Zyonse”) financial product to allow unbanked smallholders access to production credit. Target clients are all farmers, primarily smallholder maize farmers (less than five hectares) with limited or no access to production finance. Within Zyonse product, crop finance was to be made available in two ways: first, from bank using as collateral a warehouse receipts and second way is bank advance production credit to farmers that take crop insurance including drought cover and farmers commit to using certified warehouse to facilitate loan repayment. Major finding of this pilot is that warehouse receipts system provides record of production and clear benefits for small farmer groups by providing opportunity to hold crops on speculation of future seasonal price increase. Although the project from the outset worked to create lasting linkages between the stakeholders, within two months of the end of the project, breakdown in communication between the stakeholders is clearly evident. Once the project was terminated the product lost its “champion” and progress quickly ceased.

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