Who 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.
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.
Finally, 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|
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.
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