kilimo biashara pours in water and funds for small-holders

A small village in Bura-Tana is home to Samuel Mwangi, who has lived amid a vast expanse of aggressively rambling mesquite bushes, known locally as mathenge, for 20 years. He lived here even before the collapse of a government-run irrigated cotton project that was a source of income for his family and many other landless farmers in the area.

Most of those who remained survived by selling charcoal made from the mesquite.

When the cotton project failed, Mwangi ventured into farming, and until today cultivates a plot of maize. His livelihood is directly influenced by Mount Kenya, whose towering presence rules the rains.

Like three-quarters of his fellow Kenyans, Mwangi is a small-scale farmer with a primary school education. He has eked a living from the soil, trying to meet his family’s food needs, raise a little cash and assure that at least some of his children make it to secondary school. Mwangi would be surprised to be thought of as a businessman.

But to Alliance for a Green Revolution in Africa, AGRA, an international organization that works to assist small-scale farmers market their produce, and its partner, Kenya’s Equity Bank, smallholder farmers like Mwangi have become the backbone of Kilimo Biashara, a Sh3bn loan project made possible by AGRA’s Innovative Financing Programme, which is designed to turn farmers’ agricultural subsistence into viable businesses.

AGRA catalysed the project by setting up a Sh400m “cash guarantee fund” that buffers the bank’s risk of lending money to farmers and small agricultural businesses with little or no collateral. The $5 million was posted jointly by AGRA and the International Fund for Agricultural Development (IFAD).

Nationwide, Kilimo Biashara is set to finance 2.5 million farmers and 15,000 agricultural input retail businesses in rural areas. So far, the programme, launched in May 2008, has disbursed Sh240m ($3.1m) in loans with a 12 per cent interest rate applied when the loans fall due – a rate well below the bank’s standard lending rate of 18 percent.

Some of the maize in Bura-Tana is already as high as the proverbial elephant’s eye, and nearly 500 acres extend in every direction. Mwangi’s field and those of his neighbours, also benefit from another partner: the Kenyan government, in the form of the National Irrigation Board (NIB).

“We expect to harvest about 2,000 tons of maize from eight of the nine villages in the project by May,” says Raphael Ngenga, the Equity branch manager in Garissa, a town on the Tana River. The river will provide the water that will irrigate 5,000 acres to be planted to hybrid maize under the loan programme worked out last year with the NIB. The project will release farmers from their dependence on erratic rains.

The goal is to have a total of 2,000 farmers participate in the project with loans averaging Sh50,000 each per planting season in groups of six farmers who act as co-guarantors. So far, the project has loaned Sh7.1m to 250 farmers growing maize on 497 acres.

At another project being run under the scheme in Coast province, more than 150 new farmers applied to participate in a week on the opening of the second phase, in addition to those who had already registered and were seeking a second loan for the next planting season.

Back in Bura-Tan, Mwangi expects to harvest 75 90-kg bags of maize from his own three acres by the end of 2010. After paying back his Sh50,000 loan as well as his share of tractor rental and irrigation fees (a total of Sh5,500 per planting season) he hopes to pocket around Sh100,000 for the first of three annual planting seasons - based on the current government-suggested price of Sh2,300 a bag.

Three of his five children are in school, and the other two are set to go to the new school being built with proceeds from the project’s first successful harvest.

Although many are satisfied with the results of the first phase of the project, Ngenga said there have been surprises. Some of the farmers took the inputs and disappeared, leaving their debts to other members of their groups. Others neglected the land, which is held in tenancy but owned by the NIB.

The process of monitoring the application of fertiliser wasn’t completely effective. But, most of all, no one counted on the monkeys, who were among the first to appreciate the succulent young cobs of maize!

However, looking back on the year since he first went seeking business in Bura-Tana, Ngenga surveys a field of nearly ready-to-harvest maize. “You can see the product in the field; we have the inputs, and we have the water, so I didn’t see much risk. There is every indication that the first harvest will be very good,” he says.

Written by Bob Koigi

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