JK aims to increase loans to rural farmers six-fold

A microfinance firm providing rural farmers finance for livestock and farm equipment has reached 11,000 members and now aims to be helping 100,000 farmers by 2016.

 Juhudi Kilimo, an NGO turned for-profit social enterprise, operates exclusively in very rural areas, providing finance, insurance and training to farmers looking to move beyond subsistence.

 Unlike more traditional microfinance groups, which have a limited rural reach and serve only 17.9 per cent of the rural population, the company provides funding for specific agricultural assets, such as cows, chickens, irrigation systems and farming equipment, rather than consumption or emergency spending.

Access to such assets allows rural farmers to move away from subsistence farming towards agribusiness. Officers assess the potential of each application and provide basic financial education and targeted technical assistance to borrowers.

 “Access to these wealth-creating assets allows farmers to reliably and rapidly increase their living standards and repay their loans,” said Rachel Brooks, Marketing and Communications Director at Juhudi Kilomo. “We empower farmers to make the move from subsistence production to the next step in the agribusiness value chain. Juhudi Kilimo’s aim is to give smallholder farmers the tools they need to generate more income and food, for their families and communities.”

 Juhudi Kilimo, launched in 2004, was an initiative within the K-Rep Development Agency, a research and product development NGO, but became independent in 2009. It currently has over 11,000 members in Central, Rift Valley, Western and Nyanza provinces, and expects to reach 100,000 clients by 2016. The average loan size is $566, with the repayment rate standing at 95 per cent. Some 48 per cent of borrowers are women.

With agriculture and related activities employing around 75 per cent of Kenya’s workforce, the company is seeking to give smallholder farmers the finance that would allow them to develop their farming businesses and move away from the “trickle-in” profits that allow poor farmers only to survive.

 “There is a dire need for financial services that allow these farmers to build net worth and leverage larger amounts of capital,” said Brooks. “Through targeted loans, these farmers can make improvements that truly affect agricultural outcomes.”

 Though Kenya has many microfinance institutions, they have proved unable to reach those in more rural areas. The high cost of operating in remote locations makes it undesirable for these companies to operate within reach of more rural dwellers.

Juhudi Kilimo uses mobile technology to bridge this gap, allowing clients to make payments and give feedback using their phones and reducing the travel burden. The company also focuses on becoming an advisor to clients rather than just a source of capital. Technical assistance and business training are provided. The company has received funding from groups such as Acumen Fund, Grameen Foundation, Kiva Microfunds, Soros Fund, Ford Foundation, and Rockefeller Foundation.

One farmer that has benefited from financing provided by Juhudi Kilimo is Anastasa Ngugi Nteere, a 60-year-old grandmother of five who has built up a medium-sized farm near Nkubu. Having retired in 2007, she developed an interest in farming and borrowed Sh25,000to buy a chicken coop. Able to sell each rooster for up to Sh500, as well as the eggs and meat, she earned a source of supplementary income for her family. She then took a second loan of Sh45,000 to invest in a water tank, fertilisers, a chaff cutter and coffee seedlings, allowing her farm to really grow. A third loan was used to start growing bananas.

 “Originally we had thought that we might ask for money to buy pipes to irrigate our land with,” she said. “However, when we spoke to the loan officer, there were so many more options that we could choose. It was so nice to be able to eat meat if we needed to and the chickens and eggs sell for a good price.”

  “I started growing tea, coffee, passion fruit, and corn and soon I had enough to sell. I deliberately wanted to diversify as I knew it would be more secure and provide a year-round income.”

Written by Tom Jackson for African Laughter