Challenges in financing

@hedwig, given your expertise in the financial inclusion of smallholder farmers in Africa, I wonder if you could tell us a bit about the challenges farmers face when it comes to financing? Does this affect only smallholder farmers or all types? Has the problem got any better or worse in recent years?

Thanks for starting this conversation, @NickOttens. We are also interested in the role of middlmen along the value chain, which in a way could be related to that question on financing. Would love some insight from @hedwig and others on the platform who are involved with farmers in the field.

Large scale produce/food purchasers should be making long term commitments to growers to enable the farmers to finance improvements, technologies and continue to improve their operations. These types of deals have happened but they don’t trickle down to the small & mid scale farmers.

@hakiman, @mnishaq and @PradeepMahapatra, you might have insight into this topic.

We know that financial institutions are reluctant to lend money to smallholder farmers because of:

  • Real and perceived risks
  • Unstable smallholder farmer earnings
  • High transaction costs of dispersed smallholders
  • Few assets in the possession of smallholder farmers

When they do lend, interest rates are often high and repayment unfeasible.

Are there are factors that are relevant here? And what are possible solutions?

@iliopoulosC, you may be able to tell us more on this topic.