Women On Rise

Micro-loans and Finance

Securing financing to procure inputs is a key enabler of growth in the agriculture sector, though limited financial literacy, insufficient collateral and weak credit risk assessment have historically hampered farmers’ access to finance. This particularly affects smallholder farmers who struggle to access essential resources such as seeds, fertilisers

and technology in a context where factors like Russia’s ongoing invasion of Ukraine and rising global temperatures have accentuated the need for robust African food systems. Despite the agriculture sector’s substantial contribution to African economies’ GDP, the traditional reluctance of African banks to lend to farmers has been a long-standing issue. In 2019, 4.3% of total credit was directed towards the agriculture sector, with commercial bank lending to agriculture varying from 3% in Sierra Leone, 4% in both Ghana and Kenya, and 6% in Uganda, to 8% in Mozambique,

and 12% in Tanzania. Consequently, just 25% of the estimated $240bn agricultural financial needsin sub-Saharan Africa are being met. Within this, there is a $65bn gap for agricultural small and medium-sized enterprises (SMEs) out of the overall Based Risk Sharing Agricultural Lending Scheme, backed by the Central Bank of Nigeria, and Ghana’s Incentive-Based Risk Sharing System for Agricultural Lending, which looks to de-risk agri-business

financing by local financial institutions.

In 2021 OCP Africa initiated a partnership with the IFC, aiming not only to enhance the skills of smallholder farmers and expand the Agribooster programme, but also to amplify digital financial services by integrating digital payments into farmers’ and cooperatives’ operations. With the $180bn agriculture financing shortfall. Women, who predominantly lead Africa’s agricultural SMEs as smallholder farmers, face an estimated $42bn gender-based financing deficit in comparison to their male counterparts.

The private sector has a critical role to play in developing more accessible and cost-effective financing solutions tailored to the requirements of rural women. Addressing the hurdles faced by agri-businesses is vital, given that most financial institutions demand collateral, financial records and credit histories. Innovations in this domain include

the One Acre Fund, a Kenya-based social enterprise that has devised financial products aligned withlocal farmers’ cash flows, benefitting approximately 615,000 farmers. Accompanied by training and field engagement, the approach has resulted in a 98% repayment rate. Additionally, global entities like the World Bank and the International Finance Corporation (IFC) play key roles in agri-business financing, extending technical aid for commercial

finance institutions and value chain stakeholders.

Within Africa, initiatives include Nigeria’s Incentive growing prevalence of smartphones and mobile  money accounts among farmers, the landscape for financing has undergone a transformation.

The number of mobile money accounts in Africa surged from 30m in 2012 to 560m in 2021, ushering in a wave of new  digital lenders that offer financial support to small-scale farmers. For instance, financial technology ventures like Uganda’s Emata have formed partnerships with agricultural cooperatives, utilising farmers’ production history within the cooperative as qualifying evidence for loans, which have averaged a 95% repayment rate.


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