Financial services for the agricultural sector in Africa are vital to achieve greater efficiencies through better technology and inputs and towards contributing to the overall goal of enhanced production and food security. The demand for such services varies drastically based on the capacity of the farmer/trader. Successful programs must incorporate a market and demand-led approach.
The challenge to financial institutions concerns scale. Many small loans to traders or farmers result in high costs to lenders, hence higher interest rates. The growth of microfinance institutions (MFI) over the last two decades has helped address this shortfall for certain borrowers, however smallholder farmers have not benefited due to the high risk factor, their location, and the longer term of their loans. Larger traders and producers, on the other hand, have different financial needs, such as financing for forward contracts possibly using warehouse receipts or term finance for machinery and equipment, etc.
Agro Afrique Consulting can advise your organization to make the best decision for your programmatic needs based on the parameters of your objectives in agricultural finance. Development programs seeking to improve smallholder access to seeds, inputs, land or labor will receive a comprehensive analysis of farmer needs as well as the finance and agricultural sectors. For agribusinesses or international institutions hoping to access and improve the effectiveness of the market chain, a tailor-made analysis will be designed to improve profitability and overall export earnings.