Guest blog by Emily Riemer, Opportunity International
“Opportunity International’s microloans and savings accounts are enabling a legion of [smallholder] farmers across Africa to obtain the better seeds and fertilizer vital to producing harvests big enough to feed their families and perhaps yield a surplus for added income,” says Roger Thurow, author of Enough: Why the World’s Poor Starve in an Age of Plenty and Senior Fellow on Global Agriculture and Food Policy at the Chicago Council on Global Affairs.
Thurow is highlighting both the opportunity and the challenge: 65% of sub-Saharan Africa works in the agricultural sector, but the industry receives only four percent of official development assistance. Opportunity International is working to bring financial sustainability and self-reliance to the world’s most economically marginalized people, most of whom are smallholder farmers and their families.
Opportunity’s agricultural finance products are crucial to the financial liquidity of smallholder farmers, who may not otherwise be able to pay for expenses during the growing season. Loans, combined with insurance products, help to provide a household safety net: weather-index crop insurance, where available, protects against the risk of excessive or deficit rainfall, and credit life insurance is included in all loans. Opportunity also encourages agricultural clients to take advantage of savings products to protect the security of their capital. Without this support, farmers may turn to other strategies to make ends meet. In some cases, farmers are forced to short-sell their harvest, getting on average only 40% of its value, or they turn to loan sharks for credit.
Opportunity is taking action to help transform farmers from subsistence growers to cash crop producers, which has the potential to move families out of poverty and feed a continent. Through a $16 million joint grant from the Bill & Melinda Gates Foundation and The MasterCard Foundation, Opportunity has launched an agricultural finance program to provide 1.4 million people in Africa, including 90,000 smallholder farmers, with access to financial tools like savings accounts. Already a success story in Malawi, Opportunity is enacting the program in Ghana, and expects to introduce it to clients in Rwanda and Mozambique within the next two years.
Farming in sub-Saharan Africa is a tough business. That’s why Opportunity has developed strategies to mitigate the risks inherent in providing financial products in rural areas with undeveloped markets and farming techniques, poor infrastructure and little credit history. Opportunity staff members visit all clients, administering questionnaires to create profiles of their family size and crop composition. They also use GPS mapping to determine exact land size in order to arrive at accurate and appropriate loan amounts. Opportunity manages the entire value chain, developing strategic partnerships with agribusinesses, farmers groups and associations with other partners. Throughout the process, farmers are equipped with training and market linkages that can help improve crop productivity and household income.
To learn more about how farmers in sub-Saharan Africa can achieve financial independence, attend Opportunity’s Microfinance Conference in Washington, D.C., Oct. 8-9, 2010. Roger Thurow will be speaking, as well as John Magnay, Opportunity’s senior agricultural advisor, who’ll discuss the details of agricultural finance in Africa. You’ll meet a number of financial and global poverty experts and learn more about how the microfinance movement helps alleviate hunger and poverty. For more information on the conference, visit the Microfinance Conference page at opportunity.org.
