YAP proposal #162: Agricultural value chain financing in Kenya (Benard Okeyo Ongudi, Kenya)

IMG_20160229_141652Who are we?

I am Benard Okeyo Ongudi, 29, from Kenya. I hold a Diploma in Business Administration and a Certificate in Credit Management from Rongo University College. I have worked in the rural financial sector for Kenya Women Finance Trust and Speed Capital for more than six years.

Due to my background work in the financial sector, I have since developed a love of smallholder lending. Currently, I am the Director of Francas Machant Ltd., a registered social investment company under the CAP 487 laws of Kenya. The company supports different agricultural value chains (fish, sugarcane, maize, and sweet potatoes) through the provision of affordable loans (USD 100–500) to smallholder farmers in rural areas of Kenya.

Brief background of Kenya’s agricultural sector financing

In Kenya, like other developing countries, agriculture contributes about 35 % of GDP, provides employment to over one million people, directly or indirectly, and is a major foreign exchange earners and market for products.

However, the Kenyan government allocates under 5 % of its budget to the agricultural sector. This means, agricultural sector is constrained in terms of funds necessary in providing services despite it being capital intensive.

Private sector players (e.g. banks and microfinance among others), who should bridge the gap consider the sector too risky and are therefore unwilling to lend. Heavy documentation, long loan-processing times (more than 90 days), and a minimum loan at USD 1,500 further limite farmers’ interest. As most smallholder farmers require urgent loans ranging between USD 100–5,000 to meet their needs, they are considered not worthwhile by banks.

We (Francas Machant Ltd.) provide small affordable loans (USD 100–5,000) to farmers pegged on their produce—whether harvested or not. We use a simple four-step process involving: due diligence, visit and negotiation, disbursement, and follow-up appraising farmer requests.

After disbursement, farmers pay 10 % interest on the loan disbursed and 2 % administration fees to cover our risks. As a result of our intervention, there is general improvement in household food security situation in the region. Also, income levels have increased as a result of cheap food availability in markets for households.

Motivation

First, our motivation comes from the need to fill consumers’ demand for food. This unmet demand costs taxpayers on average USD 300 million annually. Capturing international market requires investment in agricultural machines, which most farmers cannot afford.

Second, we are providing new energy to farmers to improve their income levels thereby improved living standards.

IMG_20160229_141458Finally, we want to encourage youths to invest in agriculture and provide evidence of agricultural potential with fund availability. This we believe will encourage other actors to invest in agriculture in Kenya and around the world. The community will experience lower food prices, improved incomes from sale of surplus products and improved employment opportunity to its members.

Francas Machant Ltd, on the other hand, gains by profiting from loans disbursed to farmers. Also, the company’s reputation improves from the knowledge that it has positively touched the lives of community members.

Status progress and implementation plan

Currently, we are in the initiation phase. We started our operations in 2015. We acquired financial support in form of a loan from a local commercial bank which enable us to initiate our operations.

Our success is measured by the number of farmers taking up loans, rate of loan repayment and the number of farmers requesting second loans per year.

In addition, our success will be measured by the number of number new agricultural technologies adopted by farmers and the number of new market linkages created by the end of the project.

Proposed usage of USD 5,000 (Budget)

No. Activity Cost (USD) % of total budget Time frame (12 months)
1. Farmer awareness creation and capacity building 350 7  

 

Ongoing processes for 12 months

2. New staff capacity development, loan disbursement and recovery 3,900 78
3. Product innovation and development 500 10
4. Office stationary and communication 100 2
5. Website and DBMS development 150 3
  Total 5,000 100 

Blogpost and picture submitted by Benard Okeyo Ongudi (Kenya): benardbills[at]gmail.com

 The content, structure and grammar are at the discretion of the author only.

 

This post is published as proposal #162 of “YAP” – our “Youth Agripreneur Project”.

The first selection of the winners will be based on the number of comments, likes and views each proposal gets.

As a reader, you can support this speaker’s entry:

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“YAP” is part of the #GCARD3 process, the third Global Conference on Agricultural Research for Development.

 


78 thoughts on “YAP proposal #162: Agricultural value chain financing in Kenya (Benard Okeyo Ongudi, Kenya)

  1. Thanks to the Director of the above mentioned company who took me from the ground and shown me how to survive by handling his small busines (cyber cafe), the business that gave me skills and I now own mine. thanks alot Benard Okeyo Ongudi.

  2. Best wishes to the best. Being a community member, i have benefited as a farmer and i recommend him for any award you may deem fit for him. The same will be brought back through him and his organization to benefit us.

  3. Just at the right time when am about to complete my degree in Agriculture from The University of Eldoret and planning to commence Sustainable agriculture in May. Will be Seeking for USD3000 from the lender

  4. Great Job Benard , keep the spirit. This will help in uplifting the life of the rural population and ensuring them persuing their financial solutions that matter most to them.

  5. A great idea , just what we need to transform the small scale farming into agribusiness.This should win.

  6. Great idea. I feel the great need to work with local people in areas of enhancing their livelihoods. having gone through this proposed project, it’s worth investing in. It’s deep in the lives of the local people.

  7. This will enable today’s generation to meet their needs and handover the good practice to the next generation. In love with this creative thinking.

  8. Good idea that is supporting desperate small scale farmers ,they now have hope as a result of this project.

  9. Good idea brother. You are among the people who can see what people can not see.what you can see while srating many can not see when they are on top of the tree

  10. Great initiative! One of the issues that were raised in last year’s Ecosystem-based Adaptation for Food Security in Africa Conference in Nairobi touched heavily on the access to funds by smallholder farmers and innovation to boost food security. With the country now embracing the real estate investments, the future of our country’s very own backbone, agriculture, is bleak.

    With such kind of monetary support for the farmers, they are able to keep the sector alive and keep us on track on food security. There are many organizations that may be ready to fund this kind of initiative, and am glad you actually made it a reality. A worthy cause to invest in.

  11. This is an innitiative from a young man with a great mind whom i have worked with as my Branch Manager .Bernard you’re just but a genius in this field…congrats and may your thoughts be rewarded.

  12. This is an idea who’s time has come,if all our leaders can be this innovative,then citizens will not be desperate in their lives.KUDOS.

  13. Thumbs up! This is a golden idea, worthy to alleviate poverty and its kins in Kenya and Sub-Saharan Africa. Please mobilise for more funds to support this kitty. This couldn’t have come at a better time. The time is now! Brilliant.

  14. This is brilliant and needs to be supported by all means. Improving livelihoods is a noble cause.

  15. This is remarkable idea especially to our agricultural sector to educate young entrepreneurs who want to venture in agribusiness.keep it up.

  16. This is a brilliant idea that a developing nation like Kenya with very high poverty levels needs. Kenya depends largely in agriculture and this is where the opportunities to improve our peoples livelyhood lies. Good work.

  17. Have always known you as a captain.Now this is the direction.The paradgm shift needed in supporting the unbanked.Go Go Go

  18. this is a wonderfull idea, this is what the society needs in the present…..in transforming the lifes of people

  19. The Agribusiness activities are great adventure whose time has come. Bernard your activities are growing our counties and creating jobs to thousands of young youths. Keep it up.

  20. I like your proposal to make fishery available to those inland.Those passioned For Agriculture will be employed hence decline of unemployment.Thank you for this initiative.

      1. The impact of your activities is unfathomable. Small scale farmers are the trending drivers of microlending! Kudos Francas.

  21. Thanks for this enabling project. I will personally put my input. Thanks once again and count on me. I think the local leadership should seriously support this noble initiative just for once. I am a believer of the self reliance of a human being. It make them have their dignity and freedom. May God help Nyando.

  22. This is brilliant. Kenya depends largely in agriculture. Fisheries is especially a great venture. I think the local leadership should seriously support this noble initiative therefore this idea deserves to be invested in

  23. this is indeed marvelous, many will seize scratching their backs. With good intentions, much will be realized, I rally behind you lads, it’s feasible.

  24. This is good project and invention. We hope the project will succeed and make changes in the community.

  25. Brilliant idea for uplifting the livelihood of Kenyans. Its only very necessary to identify viable projects that will give good returns for loan repayments to be guaranteed. This noble idea will spur economic growth in the region but requires extreme commitment and financial discipline. I have a lot of interest in this and we will be sharing more frequently.

  26. wow, this is so good, nice idea on agricultural sector, count on me for any support that is not beyond my reach, i would also wish to share this idea to the rest of my friends and relatives, with your permission of course.

  27. Yes, i agree with the initiative. Surely to access capital for agricultural investement of any kind for the younger generation in the current has become a real obstacle with several complicated processes, these looks real and simple. Keep it up.

  28. Quite an innovative approach for local capital mobilization that shall solve many cascading rural challenges, such us making farmers climate resilient, socio-economic empowerment etc
    .

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