The One Acre Fund provides access to microloans, training, insurance, and other hard-to-get help that boosts farmers' incomes and curbs flight from farms into cities.
After years of neglect, a new generation of lenders is making microfinance work for Africa’s small farmers.
Traditional microfinance has never been particularly well suited to agriculture. With variable incomes that typically rise after harvests and taper off during the off-season, farmers are unable to keep up with the inflexible payment schedules that come with most microloans. Additionally, external factors such as weather, disease or price volatility can severely constrain farmers' incomes and ability to repay loans.
So, you're a poor farmer and want a flexible loan that fits your income? Too bad, most [microfinance institutions] MFIs say, try opening a kiosk.
The result has been an uneven expansion of financial services to "microentrepreneurs," even as access to credit has dried up for Africa’s small farmers. But the focus on providing credit to microenterprises is helping to fuel an unsustainable explosion of "traders and hawkers" in urban areas. With farming becoming less attractive, the migration of rural Africans to cities and towns in search of new opportunities is leading to overcrowding, unemployment, and conflict.
In response, the One Acre Fund is proposing a new type of microfinance designed specifically for Africa’s small farmers. Named this winter in The Global Journal's list of the Top 100 Best NGOs in the World, OAF works with farmers across Kenya, Rwanda, and Burundi to provide a package of agricultural goods and services that includes training, credit, access to inputs, and insurance.