Welcome

Farmers’ benchmark study Third Round of Data Collection: Kenya Andrew Karlyn Director of Strategy and Learning

Methodology

Nationally representative survey of smallholder farmers FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Nationally representative survey of smallholder farmers Random Sample Booster Sample 1 Booster Sample 2 National representative sample N=1200 Booster sample for Central and Western N= 620 Booster sample for Meru and Tharaka Nithi( Sorghum) and Migori (Soya beans) N=180 A B C Total Target Sample=2,000

Defining Smallholder Farmers FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Selection Criteria Land size cultivated in the last 12 months is between 0.1 and 10 acres Land Size Households involved in any of the below activities: Crop farming Livestock farming Both crop and livestock farming Buying and selling farm produce Activities Agriculture provides a meaningful contribution to the households’ livelihood, income or consumption ( Self Identified) Contribution to Household Income Individual respondents were selected randomly in households qualifying as smallholder farmers. The criteria for selection of individual respondents were: 18 years and above Involved in making financial decisions Involved in making agricultural decisions

Defining Digital Financial Inclusion FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Defining Digital Financial Inclusion 1 Access to Savings Access to Credit Remittances Access savings account through ATM Access savings account through mobile banking Access savings account through a bank website/ Internet banking Access savings account through mobile money Loan disbursed through EFT Loan disbursed through Mobile money Loan repayment through EFT Loan repayment through mobile money Sent money in the last 12 months using mobile money 2 3 Fulfillment of any of the above criteria was considered in identifying respondents who are Digitally Financially Included

Farmers’ Profile

Demographics Gender Segregation Marital Status Age Segregation FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Education level Gender and Age of Respondents Marital status and Income levels Count % 1035 52% 970 48% Marital status % Monogamously married 73% Widowed 12% Single/ Never married 10% Separated 3% Polygamously Married 2% Divorced 1% Marital Status Gender Segregation Years Count % 18-30 436 22% 31+ 1569 78% Age Segregation Income Levels

Average Size of land Cultivated in the last 12 months ( Acres) FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Age and Gender appear to be important determinants of the size of land under cultivation Average Size of land Cultivated in the last 12 months ( Acres) Parcel 1 Parcel 2 Parcel 3 Parcel 4 Parcel 5 Parcel 6 Age 18-30 Years 1.33 1.03 .82 .77 .49 .25 31+ Years 1.47 1.06 1.12 1.22 1.74 .38 Gender Male 1.56 1.13 1.26 2.86 Female .98 .93 .85 .80 Female and Youth farmers tend to have cultivated slightly smaller parcels of land in the past 12 months prior to the survey. Over 90% of the interviewed farmers cultivated one parcel of land in the last 12 months with an average size of 1.44 acres

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Household decision making appears more jointly between household head and female spouse N=2005

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Over 90% of interviewed smallholder farmers engage in multiple value chains N=1928

Smallholder farmers do crop farming for own consumption and sale FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Smallholder farmers do crop farming for own consumption and sale N=1928

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Travelling merchants at farm gate are preferred buyers because they pay at hand N=1928

Smallholder farmers are predominantly paid in cash FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Smallholder farmers are predominantly paid in cash Buyers of Farm Produce Payment Channels Cash Cheque Mobile Money Transfer Account Transfer (EFT) In-kind Trader/ brokers/ Traveling merchant- at farm gate 99% 0% Local market -Retail Local market- wholesale 1% Farm gate-neighbor 97% 2% Trader/ brokers/ Traveling merchant- at Aggregation point 91% 9% Local School 82% 8% Processor 29% 35% Co-operative 21% 4% 73% Farm gate brokers/trader/ traveling merchant 100% N=1928 Digital payments are mainly made by processors and Brokers at aggregation points- mainly for cash crops like Tea and Coffee.

Smallholder farmers spend more on farm inputs FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Smallholder farmers spend more on farm inputs

Farm expenses are mainly paid in cash FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Farm expenses are mainly paid in cash Although payments are made in cash, the farmers tend to take farm inputs on credit mostly from the buyers of their produce and repay at a later date Credit implies paying later and cash means paying immediately. N=1928

Preparedness for Digital Inclusion

Scores on Mathematical calculations FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection 90% of the interviewed smallholder farmers were able to get at least one mathematical calculation right Scores on Mathematical calculations Overall Male Female 18-30 Years 31+ Years 6% 2% 3% 1% 5% 1 11% 4% 9% 2 30% 13% 17% 24% 3 16% 14% 4 19% 8% 5 N=2005

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Over 50% of the interviewed smallholder farmers are able to read and understand statements presented to them Ability to Read Overall Male Female 18-30 Years 31+ Years Respondent read fluently without any help 58% 65% 52% 71% 55% Respondent struggled to read 29% 27% 31% 25% 30% Respondent unable to read 13% 9% 17% 3% 15% Ability to understand Respondent fully understood without any help 66% 51% 72% Respondent struggled to understand 35% 32% Respondent was unable to understand 11% 7% 14% N=2005

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Smallholder farmers exhibit good financial behavior despite the fact that they lack emergency funds which are a good opportunity for loans N=2005

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Over 50% of the interviewed farmers make plans on how to spend their income although they rarely stick to those plans Frequency Kenya Male Female 18-30 Years 31+ Years Always or most of the time 40% 33% 35% Sometimes 37% 42% 36% Rarely 15% 16% Never 9% N=2005

88% of the interviewed smallholder farmers own mobile phones FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection 88% of the interviewed smallholder farmers own mobile phones N=2005

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Less than 50% of the smallholder farmers make digital payments using their mobile phones N=1959

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection A slight increase in the number of smallholder farmers using internet through their phones in 2017

Digital Financial Inclusion of Smallholder farmers

68% of the interviewed smallholder farmers are digitally included. FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection 68% of the interviewed smallholder farmers are digitally included. N=2005 Less youth farmers are digitally included as compared to the elderly farmers(31+ years) Among males and females interviewed, there seems to be the same level of financial inclusion

Distribution of Digitally Included Farmers FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Distribution of Digitally Included Farmers Central province recorded the highest number of smallholder farmers that are digitally included ( 84%) particularly in Kiambu county Coast province recorded the lowest percentage of digitally included smallholder farmers; this could be because of low sample size for coast A high number of the digitally included farmers use mobile money for sending money. Both digitally included and excluded smallholder farmers tend to grow the same type of crops with Maize being the main crop grown but the digitally included tend to sell more quantities as compared to digitally excluded farmers.

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Digitally included farmers supplement their farm income with income from casual jobs N=2005

66% of the interviewed farmers own a basic phone FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection 66% of the interviewed farmers own a basic phone Country Type of Phone Male Female 18-30 Years 31+ Years Digitally Included Digitally Excluded Kenya Basic Phone 62% 70% 51% 71% 61% 79% Feature Phone 22% 17% 26% 14% Smart phone 18% 13% 20% 6% High number of smart phone owners are digitally included

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Male youth farmers make more electronic payments as compared to older farmers Male Female 18 - 30 Years 31+ Years Digitally Included Digitally Excluded Receive calls 98% 99% Make calls 97% 96% Withdraw money 80% 75% 79% 77% 87% 56% Send/receive text messages 78% 73% 85% 55% Deposit money 72% 62% 71% 66% 82% 31% Buy airtime top-ups 61% 52% 54% 34% Receive payments 37% 26% 35% 30% 41% 8% Make payments 28% 40% 7% Access Information 22% 18% 29% 17% 25% 9% Use/browse the internet 10% 4% Send/receive photo messages MMS 15% 6% Facebook 24% 14% 3% WhatsApp 20% Download music, video or games 5% 19% 2% N=1959

Agricultural Advisory services

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection 57% of the smallholder farmers have access to Agricultural advisory services N=2005 A slightly higher number of digitally included farmers have access to Agricultural advisory services

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Number of smallholder farmers accessing Agricultural advisory services has been increasing over the last three years Farmer to farmer extension has remained to be most important channel for passing information among smallholder farmers

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Farmer to farmer extension is a common channel for sharing information among the smallholder farmers

Other useful channels for sharing information with smallholder farmers FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Other useful channels for sharing information with smallholder farmers N=2005 More farmers are listening to Agricultural radio programs though very few ( 4%) consider radio programs as a source of Agricultural advise

Financial Services

More than 50% of the interviewed smallholder farmers have savings FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection More than 50% of the interviewed smallholder farmers have savings N=2005 50% of those who have a saving product are digitally included farmers A higher number of old farmers are saving as compared to youth farmers

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection The number of smallholder farmers saving is decreasing over the years for Central and Western provinces It is important to note that each year different farmers are randomly selected to participate in the survey.

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Digitally included farmers prefer to save with M-Pesa because of ease to access own savings N=1156

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection There is a slight increase in the number of smallholder farmers saving with Equitel and Microfinance Bank in Central and Western provinces N=1156

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection In addition to lack of additional income, lack of information about saving products appears as a barrier to saving in Kenya Barriers Male Female 18-30 Years 31+ Years Digitally Included Digitally Excluded Lack of additional income for saving 47% 53% 18% 82% 41% 59% Lack of information about saving products 54% 46% 22% 78% 44% 56% Lack of useful saving products 52% 48% Saving products available are not affordable 26% 74% 39% 61% Saving institutions not accessible 50% 15% 85% 37% 63% Access to savings 11% 89% 68% 32% N=849 N=1156

20% of the interviewed farmers are currently servicing a loan FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection 20% of the interviewed farmers are currently servicing a loan N=2005

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Slightly less number of smallholder farmers are saving currently as compared to the previous two years (Central and Western provinces)

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection ‘Chamas’ are a preferred source of credit because of accessibility and loan terms A high number of female respondents preferred loans from Chamas while men highly preferred bank loans M-Shwari seems to be a preferred source of loan for the few youths currently servicing loans/ credit

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Number of loans from M-Shwari and KCB M-Pesa have slightly increased in Central Province

There are many avenues to access and repayment of loans FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection There are many avenues to access and repayment of loans N=401

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection High interest rates and lack of adequate information about credit facilities are the main reasons for low uptake of loan Male Female 18-30 Years 31+ Years Digitally Included Digitally Excluded High Interest rates 52% 48% 24% 76% 69% 31% Lack of proper information about credit facilities 45% 55% 23% 77% 59% 41% Lack of appropriate credit products 50% 60% 40% Loan institutions are not accessible 22% 78% 61% 39% Not interested 25% 75% 62% 38% Money to repay 42% 58% 10% 90% 68% 32% Strict rules 18% 82% 66% 34% Taking loan is against my religious faith 54% 46% 4% 96% 47% 53% How to use the loan 19% 81% No guarantor/security 70% 30% Age Listed by CRB 51% 49% N=1604

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Pests and diseases and changing weather conditions are the main challenges facing smallholder farmers N=2005

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Smallholder farmers mainly depend on their savings to cope with uncertainties Coping Strategies Male Female 18-30 Years 31+ Years Digitally Included Digitally Excluded Did not do anything 49% 51% 19% 81% 68% 32% Depend on own savings 53% 47% 22% 78% 80% 20% Go to friends/Family 50% 17% 83% 76% 24% Look for money 21% 79% 65% 35% Borrowed money 18% 82% Reduce expenses 13% 87% 59% 41% Increase work Look for more and different food 66% 34% 23% 77% 75% 25% N=2005

There is very low uptake of insurance as a strategy to cope with risks FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection There is very low uptake of insurance as a strategy to cope with risks N=2005 Low number of youths and female farmers have insurance cover of any type Medical insurance forms a higher percentage under ‘other insurance’.

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Number of smallholder farmers using Insurance as a coping strategy for risks is decreasing over the years The percentages are inclusive of NSSF and NHIF

The main barrier to use of insurance is lack of information FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection The main barrier to use of insurance is lack of information N=1443

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection Lack of information and perceived cost of insurance act as barriers to use of insurance Barriers Gender Age Male Female 18-30 Years 31+ Years Don’t understand insurance 41% 53% 48% Too expensive 39% 35% 37% Cannot comply with monthly premium payment 17% 13% 18% 15% No interest 10% 12% 11% Do not need insurance 8% Do not trust insurance 5% 4% 6% Lack of support from insurance providers 3% N=1443

FARMERS’ BENCHMARK STUDY: KENYA THIRD round of data collection A high percentage of interviewed farmers either rely on themselves or family/friends for financial advise N=2005