Image credit: United Nations 2016
The UN’s Sustainable Development Goals include ending poverty and ending world hunger as the first and second goals. Financial services that impact the small farmer in sub-Saharan Africa can work toward both of those goals.
80% of the food consumed in the developing world is produced by farmers who themselves live in poverty. They live for the most part in rural areas lacking infrastructure. Like all farmers, their income is cyclical, changing between planting and harvest seasons. They are not insulated against natural disaster, climate change, or war.
Financial services that include microcredit, insurance, savings, and access to branchless banking can directly impact the small farmer’s financial health and food security.
Microcredit programs such as the Mali program of the Innovations for Poverty Action showed a lending program that matched the seasonal needs of a farmer’s year could impact agricultural production. Farmers invested their money in their farms, and saw higher productivity. Designed specifically to address the needs of women farmers, the Mali program may provide a starting point for microcredit programs that are based on a seasonal model.
A small study in Zambia also addressed the issue of the seasonal nature of farmer’s money. A cash loan program during the time before the harvest, the ‘hungry season’, suggested credit or access to cash during these seasons could directly impact the wellbeing of the families, with increased food for themselves, increased food production, increased local wages.
A Malawi program looked at the ability of a small local savings program to impact agricultural investment. With a lack of traditional infrastructure, the bankless models such as mobile money and savings programs are very effective. And a study in Ghana suggests that risk, rather than a lack of capital, impacted farmer’s investment in their farms. When provided with small bad weather insurance programs, they invested more in their farms- labor, fertilizer, and land preparation.
How can the most food-insecure people in Africa be the people growing the food? The suggestion is that small farmers aren’t investing in their farms. They look for work off the farm during the hungry season. They can’t afford fertilizer or seed. They can’t take a risk and try new crops. A small effort at financial inclusion, access to insurance, savings, and microcredit, may be what is needed to keep farmers building their farms. And when farmers build their farms, they can change the face of hunger in Africa.