Kenyan farmers hope to benefit from insured loans that will help them purchase farm inputs and seeds. Unlike other commercial bank loans, the Risk Contingent Credit Scheme, which is a brainchild of Washington-based IFPRI, aims to cushion farmers from huge losses accrued from crop failures due to climate change.
For the past four seasons, there has been little rain in Machakos county, and farmers have watched in despair as crops withered away. Climate change has pushed them closer to poverty as they stream to markets to buy food instead of living off their own harvests. Beatrice Ndavi is one of those farmers.
“The farmers of Machakos county have a challenge of drought because when there is a drought, we don’t get enough food for our families,” Ndavi said.
Help came in 2017, just before another drought, in the form of a loan facility dubbed the Risk Contingent scheme. It is the brainchild of the International Food Policy and Research Institute (IFPRI). Senior scientist Linzhou You is leading the project.
“When the rains doesn’t come, there is no harvest, the farmers don’t need to pay back the loans. Of course, if the rains come you have a good harvest you have to pay back the loans, plus insurance premium,” Lingzhou said.
This is a departure from the traditional practice where commercial banks avoid lending to smallholder farmers, according to Esther Muiruri, a director at Kenya’s Equity Bank.
"So, for one acre we process for them about 10,000 Kenyan shillings [$97] so that they are able to buy fertilizer, certify seeds and other chemicals that they need for their crops to grow,” Muiruri said.
The farmers receive the loans after undergoing agronomy training, as well as financial literacy classes. Ndavi took the first loan and was among 265 farmers who took a second loan this week.
"Before the banks started giving us loans, the production was very low because we were just using the manure alone. But when we started applying these artificial fertilizers there has been improvement in production,” Ndavi said.
The plan is still in its pilot stage, but there are plans to replicate it for other arid areas in African countries.
