Credit and know-how boost farm incomes |
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| Enhancing livelihoods and income through Integrated land management and Credit Provision | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Farm households in the highlands of western Kenya are improving their livelihoods using a community credit scheme and a set of decision-support tools. Depleted soils, due to continuous maize cropping, together with Striga infestation, have trapped farmers in a cycle of low yields and poor soil fertility. To diversify into higher value crops on their limited land, households must intensify maize production. The credit scheme lets farmers invest in fertilisers, while the decision-support tools help borrowers with land management questions. Although developed in Kenya, these tools are applicable to many areas of Africa dominated by poor, food-deficient, semi-subsistence farm households. In Kenya, the tools are promoted by a World Bank-funded project, and they have also been introduced in Uganda. Project Ref: NRSP16:
Research Programmes: Natural Resources Systems Programme Relevant Research Projects: R7962 Contact person and Institutions
Three outputs are considered:
These outputs were developed between 2001 and 2005 to address problems facing farm households in the highlands of Western Kenya. In this high potential area, characterised by high population densities and small land holdings, but also chronic soil phosphorus deficiency, continuous maize cropping to satisfy household food needs has resulted in depleted soils unable to support even moderate agricultural performance. In addition to low soil fertility, striga infestation is endemic, further depressing maize yields. Despite the high priority placed by farmers on maize production, few households meet their food needs for more than five months of the year. With 80% of land under maize for home consumption, agricultural activities generate little cash income for investment in improving soils. Farmers are trapped in a cycle of low yields and poor soil fertility. To free up scarce land for planting to higher value crops, households in these areas must intensify their maize production. This could simultaneously improve food security, generate cash income and enable them to invest in their natural resource base for future productivity. To do this, households need to access a range of support services. Firstly, they require market access in order to realise improved income from crop sales. Secondly, they need technical knowledge on best cultural practices for new crops and on how to improve their soils. Thirdly, they must be able to access inorganic fertilisers and improved seed of crop varieties that are appropriate to local production conditions and markets. This requires both that fertilisers and seeds are available locally and that farmers are able to afford them. Therefore, the community based credit scheme (known as SCOBICS) was developed to enable farmers to invest in fertilisers, whilst the decision support tools assist borrowers (and other local farmers) in land management decision-making. So far project R7962 has ensured that the farmers using these outputs can also access their preferred inputs and market information. Local mechanisms for coordinating agricultural services are being developed. Although these outputs have been developed to address problems facing farm households in the highlands of Western Kenya, they are applicable to many areas of Africa dominated by poor, food-deficit, semi-subsistence farm households.
The outputs are focussed on maize. However, one of the keys to successful maize intensification on small farms is the simultaneous diversification to other crops that can be sold. In Western Kenya soya was promoted for this reason and also because it can contribute to soil fertility management and household nutrition. We note that the credit model could be taken up with different commodities in many areas of medium-high agro-ecological potential. Indeed, larger farms with less serious phosphorus deficiencies would actually make it easier to achieve viability!
We suggest that the outputs of this research would benefit from being combined with other outputs that aim to:
If the credit scheme is scaled up in western Kenya, it would be desirable to partner with the Agmark project (http://www.cnfa.org/page.cfm?pageID=120) to benefit from the input voucher scheme that they have developed. How the outputs were validated: 1. Decision Support Tools. These were developed with selected farmers from the project area in western Kenya, who contributed to seven local workshops dedicated to their development. Further feedback was subsequently obtained from a variety of stakeholders (farmers, extension staff, NGOs and input stockists) at a multi-country workshop conducted under NRSP project R8400. Following this workshop the tools were simplified for broader dissemination within western Kenya and further afield (Kenya, Tanzania, Uganda). 2. Credit scheme. The credit scheme has been designed in regular consultation with representatives of the target communities in Western Kenya. Two stock-taking workshops, in late 2002 and in 2005, have provided feedback on the detailed design of the loan product (e.g. loan duration, interest rate, regularity of repayments, group requirements) and on the operation of the scheme more generally. There has also been regular interaction with borrower groups during which these issues have been further discussed. The scheme has been discussed periodically with one commercial service provider in western Kenya, which has also provided training inputs to some borrower cohorts. One might consider three levels of validation for the credit scheme: · Firstly, the scheme must demonstrate that it is capable of achieving high repayment rates (95%+), which are necessary for ultimate commercial viability. Over its whole life (including early years of learning through error!), the scheme has achieved a loan repayment rate of 86%. In the last three years, the rate has ranged between 90-100%. Expectations are high for 2006 as the rains have been very good and repayments are proceeding well; · Secondly, it must demonstrate that these rates can be achieved amongst a large enough number of borrowers to cover (most of [1]) the operating costs of the loans officer. The scheme is not yet scaled up enough either to cover costs or to fully test the capabilities of its "contact person" mode of operation. How many groups can a single loan officer service without sacrificing loan repayment performance in rural areas where transport is poor and if the loan officer interacts primarily with the group contact person? (N.B. This approach is necessary due to the small loan sizes required by very poor rural households). · Thirdly, the scheme could be operated commercially by a micro-finance company. This has yet to happen as work is still in progress on the first two steps above. The RIUP would provide an ideal opportunity to achieve further scaling up and thereby validate the credit scheme approach. [1] The question of subsidy for such a scheme is discussed below. Where the Outputs were Validated: Primarily western Kenya (see above). Who are the Users? The staff of project R7962 continue to administer the SCOBICS credit scheme. The loans officer works with various types of farmer committee or organisation in the areas of scheme operation to ensure the smooth running of the scheme. These include:
The decision support tools are used by borrowers within the scheme and also by some neighbouring farmers (non-borrowers). Through projects R7962 and R8400, various secondary and tertiary stakeholders have been introduced to the decision support tools. The tools are now being used by VI Agroforestry and the Uganda National Farmers' Federation. In western Kenya they are also being promoted within an additional division of Siaya by the World Bank-funded KAPP project, which is also considering ways of building on the project's experience with credit delivery. In Uganda they are available to farmers through NAADS. Where the Outputs have been Used: The output are mainly used in the project areas in western Kenya namely villages of Yala division (Siaya district), Emuhaya division (Vihiga district), Matayos division (Busia district) and Sigowet division in Kericho district. However, the decision support tools are now also being used in Uganda. Scale of Current Use: In 2005 the SCOBICS credit scheme served 321 borrowers spread across four districts (Siaya, Vihiga, Busia and Kericho) and had a loan portfolio of just under KShs 1.1million (US$14,250). During the period 2001-05, it served a total of 788 borrowers, of whom 52% were men and 48% women. In 2006 the scheme has a loan portfolio of just under KShs 1.3million (US$17,950). Demand for the SCOBICS credit project amongst farmers and their partner organisations in western Kenya is very high. However, expansion is currently constrained by limited capital, with the completion of project R7962 and given that the scheme is not yet self-sustaining. With regard to the decision support tools, an NGO like Vi-Agroforestry can work with thousands of farmers in western Kenya. An institution such as the Uganda National Farmer Federation has national coverage, reaching over 200,000 farmers through 73 members' organisations. However, we do not have data on how many of these groups or members have actually used the decision support tools. Use of the decision support tools is still spreading. In Kenya, they are being publicised and promoted through the COSOFAP consortium, which currently hosts over 100 partner organisations that are active in western Kenya. These include research and development organizations, International Agricultural Centres (IARCs), non-governmental organization (NGOs), community-based organization (CBOs), Regional Land Management Unit (RELMA), farmer groups and associations. Policy and Institutional Structures, and Key Components for Success: The presence in western Kenya of numerous organized farmer groups, sub-location committees, catchment committees and CBOs, networked through COSOFAP, has assisted in both the spread of the SCOBICS credit scheme and the promotion and/or adoption of the decision support tools. The committees have provided an entry point into new communities for SCOBICS. Without these and the information about them provided by COSOFAP, a credit provider would face higher search costs when seeking appropriate areas in which to expand - and possibly also greater costs of farmer mobilisation when there. Conversely, it is possible that the relationships within these committees and groups serve to limit the spread of both SCOBICS and the decision support tools within the wider community. Two issues are critical for future successes of these groups: 1. Capacity building: areas that need more emphasis include attitude change for the stakeholders, capacity building for farmers and exchange visits between farmers in order to improve the work of farmers. 2. Farmer empowerment: this should assist the groups in lobbying for support from extension services, research organization, policy makers and local government officials. Without pressure from below, coordinated service provision is unlikely to happen for the majority of Africa's smallholder farmers. The gap between existing reality on the ground and policies should be narrowed by creating an enabling environment for policy makers to participate and get involved from formulation to implementation stage of activities Lessons Learned and Uptake Pathways Promotion of Outputs: Research outputs from the project have beendisseminated to various primary, secondary and tertiary stakeholders that provide services to farmers in Kenya and Uganda (refer to Project R8400 on"NRSP uptake promotion in East Africa"). About 200 target institutions (100 each from Kenya and Uganda) were selected. The institutions were mainly those with national coverage, operating in several districts in the country, or region of the country and pro-poor in their approach These include:
In Kenya demand for these products have stemmed from their use by COSOFAP and partners during training, workshops and trade exhibitions and In Uganda, stakeholders were sensitized through workshops and buy-in meetings. Potential Barriers Preventing Adoption of Outputs: Barriers include:
How to Overcome Barriers to Adoption of Outputs: Given the large number of organisations working on agriculture and rural development in western Kenya, including the considerable funding from Rockefeller Foundation, coordinated service provision is a realistic objective, even given the limitations of the public extension service. However, wider adoption and effective uptake of either the credit product or the decision support tools requires mechanisms for coordinating the activities of multiple service providers, which is only likely to occur where the state (local government?) takes a lead in working with the private sector to promote agriculture in a particular location. Lessons Learned: Mechanisms are needed to bring together output buyers, credit providers and seed suppliers (all from the private sector) with researchers and extension workers (mainly public sector) to support farmers in particular communities or districts to intensify their maize production, diversify into higher value products and invest in their soils. The COSOFAP consortium of organisations may be able to encourage the necessary coordination in parts of western Kenya. Alternatively, district development planning processes may offer the most appropriate mechanism for encouraging such coordination. The KAPP project is promoting this approach in Kenya. However, our observation is that this is an issue that has yet to receive serious policy consideration in many contexts. Poverty Impact Studies: An impact survey was carried out in 2005 in western Kenya. Out of the eight project areas, three were selected for the survey on the basis that 1) they had the longest history of project activities and 2) they represented fairly concentrated communities where a control population of similar farmers could be readily identified. Involvement with the full range of project activities (proposed outputs) was closely linked to participation in the credit scheme. Therefore, to assess the impact of project activities, questionnaires were administered to 188 randomly selected households in the chosen areas and also to 94 current or past borrower households within these areas. Information was collected on household membership, assets, agricultural production and other income earning activities. The findings are reported in: Poulton C, Ndufa J.K, Ogolla G and Maina P 2005 Impact Survey Report. Annex B: Linking Soil Fertility and Improved Cropping Strategies to Development Interventions. NRSP Final Technical Report. How the Poor have Benefited (including gender and other poverty groups): The majority of borrowers interviewed during the 2005 impact survey in western Kenya reported a positive impact on their livelihoods from access to credit and participation in other project activities (e.g. use of decision support tools). Farmers have improved their knowledge base for their decision-making on crop soil fertility management and have made changes to their cropping systems. These changes have enhanced household food security and increased income from crop sales. Impact on human assets - improved food security The impact survey showed that households that borrowed from the credit scheme achieved higher yields than those that did not. Average yields for borrowers and non-borrowers in the main growing season were 1380 kg/ha and 700 kg/ha respectively. Analysis of the data using a regression model concluded that, holding other factors constant (including wealth, landholding and gender of head of household), accessing credit enabled households to raise maize yields by around 600 kg/ha. Moreover, 69% of borrowers claimed an increase in maize yields over the past four years compared with just 11% in the non-borrower group. The survey also showed that borrower households produced, on average, enough maize to feed themselves for seven months of the year compared to five months for non-borrower households. Impact on financial assets - increased cash income Almost all respondents agreed that access to credit through the scheme had increased their household's agricultural production. Over 70% of borrowers claimed to have increased their incomes through crops sales as a result of their loans. Impact on natural assets - investments in soils and farm Out of 80 respondents who claimed to have seen one of the decision support tools, 63 claimed to have made a change in their cropping pattern based on it. Of these, 56 reported benefits from having done so: principally better soil fertility, higher yields and greater income from farming. Borrower households were found to be more likely to diversify into new crops; 59 % of borrower households had introduced new crops since the beginning of the project compared with only 16% of non-borrower households. Who has been reached? The impact survey showed that project outputs had reached predominantly, but not exclusively, the "moderate poor". They are in groups and they have been ready to adopt new crops and varieties to improve their livelihood. Above all, they have some stability in their income flows (either through better agricultural practices and slightly larger farm plots or access to employment or remittances) to enable them to take on the liabilities associated with credit. Of the 94 borrowers surveyed, just under 30% came from the lower quartiles (3 and 4) of the wealth ranking. This corresponds to the "assetless (or near assetless) male & female headed households in rural areas" within the "extreme vulnerable poor" poverty grouping. Participation within the credit scheme by widows reflected the proportion of widows in the wider community; however, the data suggest that participation by this group of households came largely from the better-off. Direct and Indirect Environmental Benefits: Farmers participating in the project have been able to increase their investment in the fertility of their soils, principally through increased use of inorganic fertilizer and the cultivation of dual-purpose soyabeans. The decision support tools stress the benefits (biophysical and financial) of combining organic and inorganic techniques for soil fertility management. Adverse Environmental Impacts: None anticipated. Coping with the Effects of Climate Change, or Risk from Natural Disasters: The outputs clearly have the potential to increase farm household incomes and food security. Increased income should increase households' resilience and reduce their vulnerability to outside shocks. At the farm level increased diversification in cropping patterns (as seen in borrower households) can reduce the vulnerability of households to specific, adverse weather events. In particular, alternative crops such as dual-purpose soyabeans are more suited to the relatively more risky short rains than maize. Diversification can, therefore, safeguard farm productivity in years of poor rainfall. At present farmers plant land to maize during both rainy seasons in a bid to improve food security. With higher yields from maize during the long rains this is no longer necessary; thus enabling 'safer' cropping in the short rains. Relevant Research Projects,
with links to the
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For relevant research projects, with links to further information Geographical regions included: Kenya, Uganda,  Target Audiences for this content:Crop farmers, Livestock farmers, Fishers, Forest-dependent poor, |
