Written by Mac Parish, Kiva Field Support Specialist, Anglophile Africa.
Kiva has traditionally been a microfinance funder only focusing on microfinance institutions but we are currently exploring ways that we can leverage our risk-tolerant, low-cost funding to provide impactful finance for development, especially institutions that are not necessarily microfinance institutions per se. We have recently expanded our partnerships to cover non-traditional microfinance in areas such as mobile payments, green energy, higher education, and agricultural financing. In our non-traditional partnerships, Kiva is keen on partnering with institutions such as universities, manufacturers/distributors of green energy products, mobile payment companies, etc., which have the ability and are willing to access and manage Kiva funding on behalf of end beneficiaries.
The first of these institutions in Kenya is a nonprofit based in Bungoma called One Acre Fund. In the words of the organization, One Acre Fund "is a new social enterprise that enables hard-working farm families in East Africa to double their farm profit on every planted acre". When they say that they double the farm profit on every planted acre, they are not exaggerating. A recent study has confirmed a 102% average gain in profitability on each acre. OAF currently serves 73,000 families in Kenya and Rwanda, and is expanding at a rate of around 100% per year.
Kiva will fund subsistence farmers in Kenya living on around one acre of land that have enrolled in One Acre Fund's program. Each farmer joins as part of a group, with which One Acre Fund directly works. One Acre Fund delivers a “market bundle” package to these groups that includes high-quality seed, fertilizer, and crop insurance.
This is where Kiva comes in. OAF will fundraise during the months of July-October, when farm input prices in Kenya are historically low. Kiva capital will provide the liquidity that One Acre Fund needs to purchase these inputs, which will then be distributed to the enrolled farmers in February, at the beginning of Kenya's planting season.
One Acre Fund provides extensive agriculture training to its farmers at every stage in the growing season, from planting until post-harvest storage and handling. This training allows farmers to maximize the return that they receive from the market bundle.
Importantly, farmers are protected from weather risk by crop insurance, which is provided to all of One Acre Fund’s farmers. The growth of agriculture finance has been limited by the fact that it is high risk. If rains don't come, crops won't grow, and farmers will struggle to repay their loans. By relying on a weather-indexed insurance scheme developed by the Syngenta Foundation and UAP (known as kilimo salama), One Acre Fund helps to mitigate this risk.
Following is a borrower success story, written by Stephanie Hanson of One Acre Fund, that illustrates this organization’s wonderful work!
Lorna Simiyu is a farmer in Mukwa village, western Kenya. Maize is Lorna’s main crop, but she also produces a small amount of beans for consumption at home and sale at the local market. Her husband Paul works at a hotel in Nairobi and is only able to visit one weekend a month. As a result, Lorna—who is just 29 years old—has full responsibility for raising their family and attending to the farm.
Lorna and one of her children - Photo Credit: Ebrahim Kigame, One Acre Fund
Each morning, Lorna is up and preparing breakfast by 6 am for her five children, four of whom attend the local primary school. Once they have left for school, her attention turns to milking the family’s two cows, closely supervised by her youngest daughter Theresa (aged 2), who never leaves her side. After milking, there are eggs to collect from over a dozen hens, and that is all before her main activity of the day: weeding the maize field.
With so many commitments, Lorna would not be able to think about improving the family’s maize harvest were it not for her One Acre Fund group, Furaha. Furaha is Swahili for happiness, an appropriate term given Lorna’s optimism for her farm and her enthusiasm at being involved with One Acre Fund for the first time this year.
Before joining One Acre Fund, Lorna could not access good seed and fertilizer, and she was producing less than 5 bags of maize on ½ acre of land. But this year’s harvest looks different, and Lorna attributes this to being able to plant on time and learning how to use fertilizer correctly.
Lorna’s maize harvest ended up being about 10 bags on ½ acre of land. Because she completed repayment of her loan in June, she is able to store all 10 bags of maize for household consumption and for future sale.
“I will wait until May next year before selling so that I can get the best price for my maize,” she said.
That a young mother can singlehandedly bring up five children, take care of the farm, ensure everyone has enough food to eat, and still look for ways to improve the family’s income is a huge testament to Lorna’s determination.
Next year, she intends to expand the number of acres planted with One Acre Fund so that she has an even larger surplus of maize to sell at the market. As One Acre Fund farmers continue to increase their yields, they can help contribute not only to their own food security, but the food security of the country.
Kiva is extremely excited to welcome One Acre Fund to the website. You can see their first loan here. To learn more about One Acre Fund’s field operations, visit their Partner Page on the Kiva website or their Blog!