Turning African Smallholder Farmers into Agric Entrepreneurs

A smallholder farmer demonstrating KickStart's irrigation pump.

Poor African farmers are understandably reluctant to invest a year’s income in agricultural equipment. However, for those who do take the risk, the rewards can be substantial.

KickStart, an NGO founded 20 years ago in Kenya, aims boost the incomes of smallholder farmers, not through handouts, but by selling them tools to improve their output. The company produces small-scale irrigation pumps that can increase farm income by up to 1,000%.

KickStart has a direct presence in five countries on the continent, namely Kenya, Tanzania, Mali, Burkina Faso and Zambia. It also has an office in San Francisco, mostly for fundraising purposes.

The pumps, branded MoneyMaker, are manually operated, either by hand or foot. They can pull water up from 7 metres and the most expensive model is capable of irrigating close to 1 hectare of land.

In Tanzania, farmers can buy the pump bundled with hoses and spare parts at Tsh.99,000 (US$56), for the cheapest model. KickStart says that it chose the name MoneyMaker because that is a poor person’s greatest need – a way to make money. The average net farm income in Tanzania is currently Tsh.120,000 ($67) a year; KickStart says that the average farm income for those that use its technology is Tsh.1 million ($562).

Most smallholder farmers in Tanzania are entirely reliant on rainfall, which has become increasingly erratic due to climate change. Because farmers receive the same rainfall, all crops are harvested at the same time, and hit the market together. This drives down prices as well as farmers’ earnings. In addition, by relying on rainfall, most farmers can only harvest once or twice a year.

With their own irrigation systems, farmers can greatly increase their earnings. “The idea . . . is . . . that farmers can get three or four crop cycles a year. When it is dry season and no one else has crops, they are growing things, taking them to the market, when the prices are high,” Alfred Wise, KickStart’s Tanzania country director, told How we made it in Africa in an interview.

KickStart is trying to position smallholder agriculture as serious business. “For many poor Africans, farming is not an ‘aspirational’ activity. People dream of being a successful business person but see farming as a dirty, backbreaking chore. We are trying to change that. We’ve launched a comprehensive marketing campaign built on the message, ‘Farming is My Business’, to link farming with success,” says the organisation on its website.

To date KickStart has sold 45,000 pumps in Tanzania. However, according to the organisation’s estimates, there are up to 800,000 Tanzanian farmers with access to water who can benefit from the technology.

While KickStart operates as an NGO, the pumps are sold for profit by agricultural dealers. In Tanzania alone, MoneyMaker pumps are available in around 230 outlets. The organisation’s strategy is for everyone in its supply chain to benefit financially. “It can only be sustainable through these [dealers] making their margin,” notes Wise. “And then understanding that the farmers they sell irrigation equipment to, can become better farmers, then have money, then come back and buy a lot more seed and fertiliser and pesticide from them.”

Poor farmers are usually extremely “risk averse”. KickStart is well aware of this. “We know that our tools represent a significant investment for a family,” says the organisation.

Wise explains that most customers buy the pumps on recommendation from other farmers. “Our strongest way of getting new farmer adoption is through existing farmers that have used it and it has proven itself to them. They are usually reluctant. We are asking some of the poorest people in the world for money to invest in technology. So they are rightfully wary. In Tanzania, we have sold . . . about 45,000 pumps. So in a sense it is getting a little bit easier because farmers will talk to their neighbours about how they are making money, how they have moved from a mud house to a block house. How their kids are going to school. So it is getting a little bit easier.”

Source:How We Made It in Africa

Can smallholder farmers transform Africa’s agricultural output?

Mohit Arora believes that small-scale farmers can play a central role in boosting African agricultural output.

Much has recently been written about Africa’s agricultural potential. It is estimated that over 60% of the world’s available and unexploited cropland is in sub-Saharan Africa. 

The continent’s agricultural sector, however, faces various challenges – from insufficient irrigation systems and use of fertilisers, to poor storage and transport facilities leading to post-harvest losses.

The vast majority of African farmers are smallholders. However, recent years have seen increased investment in large-scale commercial projects. But should African agricultural development be driven by commercial farmers or smallholders?

Mohit Arora, head of agriculture at Standard Bank Africa, believes that with the right support, smallholder farmers could transform Africa’s agricultural output if they are integrated into a free market and financial system supported by appropriate legal systems that address land rights and contractual rights.

In an interview with How we made it in Africa, Arora used the example of India, where the government prioritised smallholder farming. The government provided a market mechanism where smallholders were treated fairly. “That meant that any trade between a farmer and any other counterparty had to be verified by the government.” A minimum price for certain key commodities were also guaranteed. In addition, Indian banks were incentivised to lend to the agricultural sector. These measures transformed India from a country unable to feed itself, to an agricultural powerhouse that not only has been feeding well over billion people for a few decades but will export US$10bn of food this year.

According to Arora, besides government intervention, smallholders can also be supported through microfinance.

In addition, Africa’s smallholder farmers should be assisted through extension services and improved technology. “Attention to extension services is not quite up to the level that it should be. Meaningful contributions from the government is to get extension services going, basic extension services – help the farmers get their financial planning right, what commodities are they going to plant … African agriculture doesn’t really need high-tech technology – it needs basic technology at this stage,” explains Arora.

“If you look at the south of Brazil, tobacco farmers don’t have more than 10 or 20 hectares… and Brazil is a tobacco powerhouse. In India, 80% to 90% of the farmers are smallholder – and India is one of the world’s top producers in many commodities… An interesting one in India is milk. The majority of the farmers do not have even more than a few cows, [yet] India produces the world’s largest amount of milk,” he says.

Many opportunities, but challenges remain
“Africa is turning out to be a gold mine of opportunities,” says Arora. “All the categories of the value chain are growing.”

However, Standard Bank faces various challenges in servicing the continent’s agriculture sector. One of the key challenges include financial and market risk management by the bank’s agriculture clients.

“As banks get involved, they expect the financial management to be of a certain level to be able to get comfortable and lend. A lot of lending is happening, but banks can do much more if clients organise themselves in a manner that is more conducive to financing by major banks. We often aim to not just lend but advise the client on enhancing their financial and risk management practices so that they effectively access wider financial markets as they grow.” says Arora.

Grooming talent, particularly by providing staff with continent-wide exposure, is also not easy as moving people across Africa can be a challenge. “As Africa is moving towards trade integration it needs to look at easing the flow of people to support trade (in line with people policies within trading blocks of the EU, Latin America and the Middle East).  We can actually do a lot more if we can rapidly develop talent … It is not easy to move people across countries. Even within the trading blocs, it is not that easy to move,” notes Arora.

Africa has got its work cut out when it comes to agriculture, but Arora believes that governments are generally steering the sector in the right direction.

He reckons more needs to be done to build awareness about the positive things happening on the continent. “A lot of brilliant things exist in Africa, but it doesn’t market itself that well… In countries like Ghana, Zambia, they are doing some really brilliant stuff in agriculture. Awareness particularly in the Western markets is building, but it is not quite at the level that it should be.”

Source: How We Made It in Africa