How A Social Entrepreneur Launched A Savings Tool For Smallholder Farmers (Forbes)
Originally published on Forbes.com
By Anushka Ratnayake, Founder and CEO of myAgro
In 2008, I was working with One Acre Fund on a repayment process for smallholder farmers in Kenya. I had the privilege of talking to farmers regularly, getting to know them and learning about the challenges they faced in repaying their loans. I noticed that some farmers wanted to pre-pay their loan a few months or even a year in advance.
Though they used the language of credit, these farmers were actually describing the need for a savings option.
And that option was very much needed because while farmers could obtain an influx of cash here and there—from a good day at the market, from selling their labor or livestock—they didn’t have a safe place to save it. As I looked into alternatives to credit for smallholder farmers, I could not find a single organization, company, or government that operated a savings program for farmers to invest in their farms.
Seeds and fertilizer are two of the biggest costs in a smallholder farmer’s life, but they are sold differently than any other product. Whereas a farmer can go to their local store and buy $1 of sugar or 50 cents of oil, seeds are only sold in bulk — $100. I wanted to create a system that allows farmers to pay slowly over time, like they could for these everyday necessities.
While in rural Rwanda, I was purchasing phone credit on a scratch card and one day I wondered: “What if seeds were sold like phone time? Buy a card; pay for a bit of seeds.”
I then moved to Mali to test this savings-based model for seeds, fertilizer and training with 240 farmers. This was the official start of myAgro. During this time, I found that farmers living on less than $2 a day were excited to save little by little to invest in their farms.
Our layaway model allows farmers to put away small amounts of cash, whenever they can, by buying scratch cards for as little as $1 from vendors. The farmer then simply enters a code into their phone, or into the phone of an official myAgro Village Entrepreneur, to register the investment in their ’ account. The seeds and fertilizer are delivered when payment is complete.
One of the first farmers we ever worked with nearly 10 years ago, Amadou Doumbia, said: “Before myAgro, I was ready to give up farming because it was not productive. Now I see what my field can produce with good inputs and the planting technique. myAgro’s payment process, “doni, doni” (little by little), is much easier than paying at once. I really salute the myAgro team.”
Today myAgro operates in Mali, Senegal, and Tanzania, serving over 115,000 farmers. We aim to reach 1 million farmers by 2026. Our vision is to ultimately reach a tipping-point that will encourage private sector partners or governments to replicate the model and speed its adoption further.
And the good news is that the model works. In 2021, the average myAgro farmer grew 177% more food than non-myAgro farmers in the same area. This translates to $194 of additional net income – a 35% increase for those who live on $1.50 per day. With this extra income, farmers can build new homes, send their children to school, or open other businesses.
“Before myAgro I lived with another family,” said Daba Ndiaye, a mother of six and a myAgro peanut farmer in Senegal. “Now I can live independently and run my own household. I am slowly building a wall around the house, and I paid for it myself.”
In addition to growing more food, farmers avoid the stress of building up debt and, by setting aside small amounts over the season, they can skirt around cultural pressures to divert cash to other uses. That is particularly important for women, who grow the lion’s share of food on smallholdings, but who are often excluded from decision-making. The mobile layaway payments provide them with all-important privacy and flexibility.
Mastercard estimates that credit provided by informal and formal financial institutions currently only meets $50 billion of the more than $200 billion required for smallholder finance across sub-Saharan Africa, Latin America, and South and Southeast Asia, but by giving growers a digital tool to invest their own cash, we can help close the widening gap in the finance needed to future-proof smallholdings.
Empowering farmers to invest in their farms can be a pathway out of poverty, a climate-friendly pathway to greater food security, and a tool to support women farmers who are the backbone of farming in Africa.
