1. International Conference on Innovative Agricultural Financing 28-29 April 2015 Discussion theme: Farmers Financial Literacy Programmes – pathway to streamline lending process By Saleh Usman

2. AFRACA’S MAIN DOMAIN OF INTERVENTION

3. Why AFRACA cares for Rural and Agricultural Finance  Agriculture accounts for 70% labour force and between 25% - 70% GDP in most of the Sub-Saharan countries.  But is only financed by 3% of countries budgets.  High input prices, inadequate credit financing options leads to low investment in agriculture.  Africa’s food supply continues to depend on smallholder farmers but lack of financial services confines their efforts to productivity enhanced investments.  Access to finance is key to unlocking agricultural potential and funding growth in this sector.  Low levels of financial literacy and capacity by smallholder farmers, agribusinesses banks, has been key to lack of access to finance.

4. Financial Literacy in the Value Chain Input Suppliers Farmers & Producer/ Groups Collectors/ Traders Processors Medium and Large Exporters/ Wholesalers

5. Rationale for Financial Literacy FarmersFinancial Institutions Sources and uses of farming income How agri-value chains develop Why and how to saveUnderstand financial needs of farmers Record keeping and budgetingDevelop suitable products / services to fit needs Types of financial services, how to use, how to access Agri –loans portfolio management Other technical sevices – production, markets, PHL, Understanding contractual agreements i.e farmer-buyer-FI agreements

6. Financial Literacy Initiatives – KMP  Received funding of USD 500,000 from AGRA to train and link 8,000 farmers, 180 SMEs, 400 FO Representatives, 100 women entrepreneurs to formal financial institutions and 160 FI staff trained on lending to farmers.  Pilot initiative is in Kenya and Tanzania for two years (2013 – 2015). Topics covered include: Savings – importance, options/products, matching savings goal vs products offered. Budgeting – steps, ways to improve money management, Loan Management – reasons for borrowing, steps, risks, equity vs debt, factors to consider, interest calculation. Use of ICT to access financial services from FIs.

7. Key Lessons Learnt Choose a sustainable methodology (one-on-one, TOTs, study guides etc) Develop/adapt a relevant curriculum Financial literacy is a life changing initiative for farmers in planning for farm income. Women beneficiaries of the training have new drive and stronger demand for further training; they have become enthusiastic to discuss and promote gender equity.

8. Key Lessons Learnt Cont… Improved gender relations Initiatives creates a platform where FIs are able to share experience and innovative ideas on lending to smallholders Contextual differences in countries of implementation Engage government to enhancing impact (e.g. Central banks championing FL and Consumer Protection)

9. Way Forward?? Explore partnerships with web-based platforms like MaishaEdu – for material targeting staff FIs & youth. Balance innovations for both farmers and FIs. Continuous review of curricula for financial education targeting farmers and FIs. Gender targeted initiatives – having women trained guarantees improved livelihoods of community. Increase lending and support services to agriculture sector.

10. Other Initiatives…..  A lot has been done in this field by other partners such as Equity Bank Ltd, MicroSave, FSD, SCC, Opportunity Bank,  At the global level players can borrow ideas or adapt approaches that are being used elsewhere such as by the: a)International Network on Financial Education www.financial-education.org www.financial-education.org b)Yearly conference: www.FinancialEducationSummit.orgwww.FinancialEducationSummit.org c)Global Training Program: www.GlobalFinancialEd.orgwww.GlobalFinancialEd.org d)Financial Education Fund (FEF) - FEF is a new fund which will support innovative projects in Africa that improve financial capability: www.genesis-analytics.comwww.genesis-analytics.com

11. Thank you

12. Our contact details AFRACA Secretariat, Kenya School of Monetary Studies (KSMS) Noordin Road, Off Thika Super Highway, P O Box 41378, 00100 Nairobi, Kenya Tel: +254 20 2717911/ 2715991; +254 717 698394 Fax: +254 20 2710082 Email: afraca@africaonline.co.ke Website: www.afraca.orgwww.afraca.org