Opportunity International’s AgFinance Model: Responding to Farmers’ Needs Amid a Pandemic
August 26, 2020
By Tim Strong and Tineyi Mawocha | Opportunity International
Tineyi Mawocha serves as the Africa Regional Director and lives in Uganda. Tineyi oversees operational partnership management and supports business development for the region through high-quality program strategies, concepts, and proposals for resource mobilization.
Leading Opportunity’s AgFinance program is Tim Strong. Based in Malawi, Tim manages a diverse portfolio of agriculture finance products and services throughout Africa. He spearheads Opportunity’s efforts around implementing and mainstreaming gender-inclusive services to empower women in farming.
Opportunity’s Agriculture Finance (AgFinance) model is structured to bring scalable, competitive, and high-impact loans and training to families living in poverty in hard-to-reach regions of the world. Today we work through local, vetted, and regulated financial institution partners, hand-in-hand with our program teams, to bring critical poverty solutions to agricultural communities in sub-Saharan Africa to break the cycle of generational rural poverty:
- Tailored agricultural loans to maximize the quality and quantity of what farmers grow and sell
- Technology-enabled training in key skills to increase knowledge in agricultural best-practices, increase harvest productivity, improve their financial literacy, and strengthen the management of household finances
- Strengthening with markets to empower farmer groups to maximize profit from their crops.
Tineyi Mawocha: How has COVID-19 impacted farmers, food systems, and our partner financial institutions?
Tim Strong: The medium-term effects of COVID-19 are becoming quite clear: food insecurity is now becoming a global reality, and we are extremely concerned about this. The World Food Programme estimates that COVID-19 will double the number of individuals suffering from acute hunger. We know, given the poverty rates of the farmers we work with and the limited capacity of distribution networks across Africa, that this is a dire situation.
Farmers and financial institutions are finding themselves on the frontline of this economic crisis. We look at the communities around us, and hunger really is a terrifying issue.
Farming families and urban families alike are seeing rapidly depleting food reserves. People are really suffering. Opportunity’s relationship in our communities is allowing us to lead in this fight. Micro and Small agribusiness liquidity is evaporating, and the ability to maintain jobs for rural employees is becoming a hardship.
COVID-19 has had an inequitable impact with regard to gender. The protection of women’s economic status is a top priority for all of our Agricultural Finance programs. Opportunity’s Education Finance Program notes on the impact of rural school closures, specifically on out-of-school girls. Additionally, we know that women, particularly in rural communities, are the first to lose during an economic downturn.
At the beginning of this pandemic, we calculated that nearly 9,000 farmers and 2,300 agribusiness clients were immediately at extreme risk of completely losing their livelihoods. As lockdowns, travel bans, and lending moratoria continue throughout the year, we anticipate more than half a million rural lives impacted amongst the farmers that we support, with 58,000 loans outstanding, risking our projecting new disbursements this year to another 80,000 farmers.
Tineyi Mawocha: In Uganda, early on in the lockdown, the Government announced that agriculture was considered an essential service. Our farming clients were able to work. However, their greatest challenge was access to markets, and though domestic produce markets were open, restrictive conditions applied. A number of farmers lost their harvests in the field due to lockdown complications. Off-take markets for coffee and other export value chains were also impacted by the global lockdown.
Given the significant potential impact on farmers, how has Opportunity’s AgFinance Program responded during the initial period of the pandemic?
Tim Strong: Appreciating farmer resilience underpins our response. Historically, farmers’ ability to rebuild is the very reason that our AgFinance team believes that we should invest in farmers and rural businesses. We partner with and learn from people who believe that year after year, despite shocks, hardship, floods, droughts, pests—and disease—they will continue to work for themselves, their families, and their communities.
Last year, we had the privilege of running focus group discussions with farmers in Mozambique that lost their livelihoods to Cyclone Idai. One point really stood out to me: six months after the floods receded, the farmers and agribusinesses that rebuilt, reported that flexible loan management, grace periods, and their savings accounts were significant reasons for their ability to start again. This is now a cornerstone of our approach, and the Rapid Response Fund is allowing us to support and to redesign.
The AgFinance Program has developed a staged response plan, phased across 30-day actions, 150 days, and then the future beyond, based across three principal pillars: Staff, Clients, and Partners.
Of particular note, we are also incredibly proud of our partnership with Opportunity International Savings and Loans (OISL) in Ghana. At the beginning of COVID’s arrival onto the continent, Isaac Gyesi, OISL’s Head of Agribusiness, led his team in acquiring permission as a critical service from the Government of Ghana to continue moving through rural communities despite local travel restrictions, putting themselves at personal risk. This enabled them to reach an estimated 40,000 rural lives during the critical growing season for their cocoa portfolio. I continue to be inspired and continue learning from our partner financial institutions, which continue to meet farmers’ needs despite ongoing uncertainty.
The First 30 Days. During the first phase of this crisis, the AgFinance Program reacted aggressively to ensure that staff was protected, farmer engagement and livelihoods maintained, and both financial institutions and funding partners were constantly engaged.
The use of digital technology has been critical across all three channels of staff, farmers, and partners. Specifically, for farmers, the use of Digital Financial Services (DFS) and mobile money payments by literally all partners to manage repayments and disbursements. Opportunity’s historic and ongoing faithfulness to digitize channels has been critical. Additionally, Opportunity’s investment into Farmer Support Agent networks has enabled us to work together with local Ministries of Health to combat fake news and relay critical public health messaging.
Days 31-150. We have pivoted our response to engage with the new realities on the ground. In terms of staff care, our priority is to maintain—ensuring that team members and agents continue to be protected and that work continues. With regard to farmers, we have moved our engagement into “beyond business as usual.” We are developing new digital training modules, developing new financing tools, and launching digital financial diary programs to monitor the ongoing effect of COVID-19 on farmer livelihoods. We are moving out of our traditional role and expanding to ensure that rural clients access markets as we are noting the breakdown in supply chain services.
Our relationship with partners is adapting as well. We have launched a landscape analysis across the continent of Special Purpose Vehicle (SPV) requirements to examine the required structures to securitize risky debt amongst our partners’ portfolios. We have joined four COVID-19 rural and AgFinance peer working groups, focused both regionally and globally.
Tineyi Mawocha: From the banking side, most regulators, including Uganda’s asked financial institutions to restructure, refinance, or offer moratoriums on repayment. This is what our partner banks have been doing. However, these restructures could not be done on a “wholesale” basis. Each borrower had to confirm their interest with the financial institution and rework their cash flow so that the restructures or refinancing could be done effectively. Due to the high number of clients involved, this has been a slow and painstaking process.
How will Opportunity’s AgFinance programming adapt moving forward?
Tim Strong: We are forming new partnerships and submitting new program proposals to move beyond this current crisis and ensure that farmers 1) continue to be served and 2) we leverage the crisis to expand our product offering. Our motto for the future is to Restart, Adapt, and Expand. We are increasing our internal capacity and expanding digital Farmer Support Agent networks. We are re-engineering our farmer and partner training methodologies to better serve their needs, particularly in the light of adaptation. Throughout all of this, we ensure the ongoing frequent and open communication channels with all our partners. Our Program team and our Financial Institution Partners continue to be consistent in the fight to ensure that we can serve farmers to the level they deserve.
And this is an incredibly important note: Our AgFinance program is abundantly aware that we cannot do this work alone. We need to strengthen the support that we give to our financial institution partners with new structured financial instruments, E-learning platforms, Business Case Assessments (currently with the amazing support of Credit Suisse’s Global Citizens Program), and improved business intelligence. Still, we need to strengthen our partnerships with private sector agribusinesses as well. This is critical for the long-term sustainability of our support for farmers.
Tineyi Mawocha: We are also encouraging our colleagues in Edufinance to promote TVET financing aimed at youth in the agriculture sector. This way, more jobs can be created in this sector. Africa is blessed with abundant land, fairly good water supply, which simply needs to be harnessed, as well as a fast-growing and youthful population. Agriculture holds great potential for the continent’s development.
What inspires you and your teams to continue serving farmers?
Tim Strong: I could not be happier with our leadership, our program teams, and our financial institution partners, all of whom have been continually pushing and fighting to ensure that we can serve farmers to the level that they deserve. But most importantly, I continue to be inspired by the strength that we see amongst the farmers themselves as they continue to work every day to provide food for their communities and their countries. This is leadership, this is justice, and will result in the end of extreme poverty in our lifetimes, despite the setbacks that farmers face literally every year.
Tineyi Mawocha: Thank you, Tim, I am also inspired in this area, and my greatest wish is to see young Africans taking up agriculture and not seeing it as a subsistence activity for older folk. We in Africa need to embrace agriculture as a sustainable family business.
For more information about Opportunity International, please visit opportunity.org.