Madaba / Mavenga, Tanzania, March 31 (IPS) – Small agricultural loans, disbursed via mobile phones and targeting specific agricultural activities at different stages of production, have more than doubled food productivity among thousands of smallholder farmers in the southern and central parts From Tanzania over the past three years, improving their livelihood.
IPS traveled the area this month and spoke to many farmers who witnessed how the new form of controlled village private lending made their harvest successful.
Peter Lowlandala, a smallholder farmer from Eringa County in central Tanzania, is one such farmer.
Lulandala serves a loan of 1 million Tanzanian shillings ($ 312) that he borrowed from a local bank. The problem was that once the money was paid to him in one lump sum, he was unable to keep the funds for the various stages of cultivation.
“We can borrow money, which is usually given out in one lump sum during the planting season mostly. For most of us, it was very difficult to keep a portion of the money in our homes or in personal bank accounts just to wait for the weeding or harvest season.
“As smallholder village farmers, we have many urgent things that always require cash. For example, it will be very difficult to see my children sleeping for the second day in a row without food, and yet I have cash under my pillow or in my personal account.
It was three years ago when an innovative new money-lending product became available in his village. Through the new model, small farmers belonging to specific groups (such as farmer groups or residents of certain villages) are expected to save some money with a target financial institution before borrowing three times their savings.
“This is an innovative product presented to us by the Alliance as a green revolution in Africa in cooperation with the Small Entrepreneur Loan Facility (SELF) project to help smallholder farmers access agricultural financing, and help them use the funds for the intended purpose,” said Khasim Masengo, Director of the Mahanje Savings and Credit Association. SACCOS in Madaba District, Rovuma County, Southern Tanzania.
Farmers guarantee two signatures from fellow group members. What makes SACCOS Lending different is that once the loan is approved, a farmer can only access it in stages.
“We disburse them in three phases so that farmers can only reach what they need during the planting season. Then the second batch can only be disbursed in time for weeding and feeding, and finally the last batch is for harvesting and post-harvest handling.”
Lowlandala said the new lending structure has worked for him.
“But since the bank holds this particular money, and with an agreement on how to disburse it, I will always look for an alternative way to feed my children because the money is waiting for the intended purpose,” said the farmer who hails from the village of Itengulinyi, 15 kilometers from the main highway connecting my city, Makambako. And Iringa.
Farmers are expected to repay the loans after harvest.
“Once they are harvested, we encourage them to keep their products in certain warehouses, and based on the warehouse receipts, we can give them personal loans worth half of their production for immediate local use or more investment while they wait for better prices,” he said. Masengo.
According to Hedwig Siewertsen, Head of Inclusive Finance at AGRA, many African small farmers fail to reach their full potential because they do not have access to agricultural finance.
Unless farmers had collateral to prove they could pay off the loans, she said, the banks would not lend to them. Siewertsen noted that there is a need to find innovative ways in which smallholder farmers can access agricultural finance without necessarily providing guarantees.
“Our main goal is to improve the quality, cost-effectiveness, accessibility and impact of agricultural financial and commercial products and services for smallholder farmers in Africa,” said Seurtsen.
According to th Food Sustainability Index (FSI), Created before Barilla Center for Food and Nutrition (BCFN) As a unit of economic information, increasing food productivity is vital, given population growth and increasing climate change. And this, according to the report, can only be achieved through new innovations.
It also notes that sustainable agriculture needs financing and this is particularly difficult in developing countries.
It can be difficult to transfer money from investors, especially from developing countries. At FSI, the ten countries most likely to attract investment in sustainable agriculture are all European, with the exception of the United States and Israel. While most of the countries on the index offer some form of public financing for agricultural innovation, 12 countries – nine of which are in sub-Saharan Africa – do not. Report notes.
Unlike MUCOBA Bank, which works with farmers in small groups of 10 to 15 members, Mahanje SACCOS works with villages. This means that SACCOS offers are for members of these villages and allow easy traceability and provision of services.
It also provides security to SACCOS because it is able to engage borrowers personally and from their homes.
“In order for an individual to qualify for an agricultural loan from SACCOS, the first condition is that he must be descendants of one of the eight target villages, and this must be confirmed by the village chief in that particular village,” Masengo said.
“The main reason is that we need to work with farmers who are well known by the villagers, and we can reach them for extension services,” he said.
So far, 2,847 have become Mahanje SACCOS members, of whom 892 are farmers belonging to neighboring villages of Mahanje, Madaba, Lituta, Mtepa, Magingo, Mkongotema, Lukira and Kipingo in Madaba County, Rovuma Province, Tanzania, net producers of corn and beans over the years The last three. They are now able to export their products to the neighboring regions.
SACCOS has since been transformed into a full-fledged bank registered by the Central Bank of Tanzania, which provides credit and savings services, but specifically to farmers from the eight target villages.
However, MUCOBA Bank, a community bank headquartered in Mafinga city in central Tanzania, covers a larger area and targets smallholder farmers in remote areas that do not have good infrastructure to reach urban centers. It currently has around 50 member farmers groups.
“Our bank has agents who are also our agricultural extension staff on the ground, we use them to register farmers through farmer groups, then send the information to us online,” Filippo Raymond, general manager of MUCOBA, told IPS.
Through MUCOBA Bank, eligible farmers are given their money via cell phones, and once harvested, they can service their loans through the same digital channel.
With both institutions, farmers were able to borrow as little as 200,000 Tanzanian shillings ($ 87) or as much as 15 million Tanzanian shillings ($ 6,520).
“Besides receiving money in installments for specific needs, using M-Pesa made it easier for us because we don’t have to travel all the way to town, and we have also reduced the risk of carrying hard cash in our pockets,” Imanek Muguiranga, Ngofu Kazi Group President Eitingolene to farmers from the village of Itengolene, 44 kilometers from the nearest town, Mavenga, he told IPS.
The main crops cultivated are corn, beans, and rice, but some farmers also include Irish potatoes.
In addition, Mahanje SACCOS has introduced indigenous poultry farming to protect farmers when planting seasons fail or when market prices for their products remain low.
© Inter Press Service (2021) – All rights reservedOriginal source: Inter Press Service