Kenya: Farmers Benefit From Insured Loans

Kenyan farmers hope to benefit from insured loans that will help them purchase farm inputs and seeds. Unlike other commercial bank loans, the Risk Contingent Credit Scheme, which is a brainchild of Washington-based IFPRI, aims to cushion farmers from huge losses accrued from crop failures due to climate change.

For the past four seasons, there has been little rain in Machakos county, and farmers have watched in despair as crops withered away. Climate change has pushed them closer to poverty as they stream to markets to buy food instead of living off their own harvests. Beatrice Ndavi is one of those farmers.

“The farmers of Machakos county have a challenge of drought because when there is a drought, we don’t get enough food for our families,” Ndavi said.

Help came in 2017, just before another drought, in the form of a loan facility dubbed the Risk Contingent scheme. It is the brainchild of the International Food Policy and Research Institute (IFPRI). Senior scientist Linzhou You is leading the project.

“When the rains doesn’t come, there is no harvest, the farmers don’t need to pay back the loans. Of course, if the rains come you have a good harvest you have to pay back the loans, plus insurance premium,” Lingzhou said.

This is a departure from the traditional practice where commercial banks avoid lending to smallholder farmers, according to Esther Muiruri, a director at Kenya’s Equity Bank.

"So, for one acre we process for them about 10,000 Kenyan shillings [$97] so that they are able to buy fertilizer, certify seeds and other chemicals that they need for their crops to grow,” Muiruri said.

The farmers receive the loans after undergoing agronomy training, as well as financial literacy classes. Ndavi took the first loan and was among 265 farmers who took a second loan this week.

"Before the banks started giving us loans, the production was very low because we were just using the manure alone. But when we started applying these artificial fertilizers there has been improvement in production,” Ndavi said.

The plan is still in its pilot stage, but there are plans to replicate it for other arid areas in African countries.

See What Everyone is Watching

More From: VOA

Don't Miss

AllAfrica publishes around 700 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.