Kiva Labs - Financing Agriculture

Small farmers face
major uncertainties.
Their livelihoods hang
in the balance.


The challenge

Agriculture is inherently risky. Farmers have to contend with unpredictable yields, weather, pests and market prices. And since most farmers need to borrow money to afford inputs like seeds and fertilizers, there’s no guarantee that they’ll be able to repay regularly or as agreed.

Problem #1: Farmers need credit with flexible terms

  • Many farmers have uneven cash flows. Their incomes spike during the harvest, but they spend most of the year bringing in little or no supplementary money. At the same time, they need to find a way to pay back loans on a weekly or monthly basis.
  • Most banks consider farmers to be too risky to borrow. And when they do lend, loans are too small or come in the form of cash or money transfers, forcing farmers to buy local, pricier inputs rather than in bulk.
  • Inputs are most expensive during planting season when farmers need them most, which also heightens demand for credit.
  • Many live in areas so remote that they have no access to credit outside of informal moneylenders who charge high interest rates.

Proposed solutions

  • Long tenors and/or bullet loans: When loan amounts and terms are tailored to the agricultural sector, farmers have the ability to buy the inputs they need at lower bulk prices, and to repay at harvest time when they have the money.
  • In-kind loans: Loans that are disbursed as inputs like seeds and fertilizers, enabling farmers to tap into bulk and wholesale pricing, and to buy off-season when prices are at their lowest.
Maya Mountain Cacao farmers Maria and Santiago dry their cacao beans at the central processing house.

One partner’s innovative approach

One Acre Fund, in Kenya, provides in-kind loans that allow farmers to access lower bulk and off-season prices and don’t require repayment until after harvest.

Problem #2: Farmers lack the infrastructure to link their businesses to local, regional and global markets

Without some connection to other players in the agricultural value chain, farmers may be stuck with low yields of low quality crops that will fetch low prices in local markets and may only support the farmer’s own subsistence. Access to quality inputs, storage, transport, processing, cooling and more can enable farmers to earn premiums that are not available at the local end of the global value chain.

Proposed solution

Loans that provide transport and storage infrastructure to agribusinesses allow them to build stronger agricultural markets. Contracts that link smallholders to commodity processing firms or exporters lead to higher yields and incomes.

One partner’s innovative approach

Babban Gona, in Nigeria, provides training, access to transport and storage and market linkages to increase farmers’ incomes. They also help small-scale farmers increase yields by financing purchases of higher quality inputs such as seeds and fertilizer.

Problem #3: No access to training services

Even high-quality seed and fertilizer will go to waste if not implemented properly. Scientific research and new knowledge in agricultural practices can save farmers time and money on inputs while leading to greater yields, but farmers often lack knowledge of the latest practices.

Proposed solution

Loans combining training and extension services, ranging from soil testing, to the use of new machinery, to how to market higher value crops, can help farmers increase yields and income.

One partner’s innovative approach

MyAgro, in Mali, provides loans and training that help farmers purchase seeding machines that drop fertilizer and seeds at the same time and at the correct distance and depth, enabling farmers to implement this important money saving technique in a fraction of the time as manual methods.

What is success?

We want farmers to be able to build and sustain strong livelihoods. We define success as:

  • Higher crop yields: Measurable improvements in harvests and income for farmers.
  • Expanded access: More farmers accessing the information and equipment they need to optimize their businesses.
  • Higher repayment rates: More farmers repaying on time without worrying whether they’re one failed crop from financial disaster.