• Human Development

WFP innovation has promoted small-holder farmers’ savings and loan access from micro-finance institutions

One of WFP’s innovative programmes in Rwanda has become a steppingstone for smallholder farmers to adopt savings habits, which are in turn unlocking additional financial services from microfinance institutions.

As part of WFP’s Farm to Market Alliance activities (FtMA), a pilot scheme is currently being implemented with NGO partner ICCO-TERAFINA, aimed at linking small-holder farmers to financial institutions through solidarity savings groups. This innovative group savings scheme is operational within five small-holder farmer organisations in rural Rwanda, aimed at promoting financial savings habits as a way to enable small-holder farmers accessing financial credits from micro finance institutions.

WFP innovations to small-holder farmers

WFP’s innovation allows members of farmer organisations to form solidarity groups of at least 10 members each, with each member saving ten percent of the amount of money needed to reach the minimum threshold at which the micro-financial institution can allocate financial credit ten folds of the individual savings. Calixte Ufitamahoro is the president of Abiyunze-Kinazi farmers’ organisation based in Ruhango district, south of Rwanda. He is happy, as his cooperative managed to acquire 5.9 million RWfrancs from CLECAM-Ejoheza to enable members to purchase farm inputs. “Financial institutions have denied us access to input loans in the past, so I’m happy this innovation has helped us to be trusted by the micro-finance institutions and be able to access an input loan this season” said Calixte.

Claudine Uwimana, a 42 year mother of 4, also received a loan of 100,000 Rwandan francs (approximately USD 120) from CLECAM to pay for all expenses related to farm inputs including maize seeds and fertilizers. “I’m happy and confident that I will be able to pay my loan back, and on time” said Claudine.

Members of Abiyunze-Kinazi farmers’ organisation have been keen to state that this initiative has helped them to adopt good savings habits and to use these savings as collateral to access loans from microfinance institutions.

“Since farmers are very interested in the new scheme, we have already opened a mobile branch in Ruhango, Southern Rwanda, to better serve members of farmers’ organisations accessing loans without difficulties” said Ignace Havugiyaremye, Manager of CLECAM-Ejoheza micro-finance.  “As a result of easy access to input loans, members of Abiyunze farmers’ organisation have been able to buy farm inputs on time and claim they may expect a high output at the end of the season because of it, with at least over 210 metric tons of maize, worth USD 60,000” said Calixte, the president of Abiyunze. “We will be able to repay the loan without any issues after that harvest” Calixte added.

Link to global goals to end hunger

WFP’s innovative practice to link small-holder farmers with micro-finance institutions is in line with global goals with the aim of ensuring that everyone has the opportunity to rise to their full potential, in addition to increasing sustainable agricultural production, where food systems are sustainable and where there is zero loss or waste of food. Last season alone, WFP has been able to link over 22,000 Rwandan small-holder farmers to financial institutions, potential buyers and input providers. WFP’s priority is to contribute towards making Rwanda a food secure country, where people are well nourished, able to develop to their full potential and living in resilient communities.

Farm to Market Alliance was formed by WFP to make crop markets work better for farmers, by linking smallholder farmers to formal markets, both locally and regionally.

By: JohnPaul SESONGA