The obvious solution? Interventions to improve access to credit. The less obvious but more effective solution? Don’t start with credit – instead, first focus on building technical capacity, especially among small-scale women producers. This has been the mantra for 2SCALE’s vegetable partnership in the Grand Popo region in southern Benin.
says Eric Lakoussan, who coordinates this partnership. 2SCALE worked with private firm East West Seed International to set up 24 demonstration and learning plots in different parts of Grand Popo. East West provided new, high-yielding, disease-resistant varieties of tomatoes, cabbages and onion. On each plot, the new varieties were grown alongside local varieties, for comparison. The plots also showcased best-practice methods for planting, pest and disease control and other husbandry aspects.
Field days were held at each plot, attracting more than 1,200 farmers as well as large numbers of vegetable traders and input suppliers. The results of the capacity-building program quickly became evident. Producers are now using new varieties and better management methods. Demand for seeds and other farm inputs has grown substantially. Tomato yields have increased nearly five-fold, from 12 tons to 59 tons per hectare.
After – and only after – yields and quality had improved, the emphasis shifted to finance. 2SCALE connected farmers with ALIDé, a local microfinance institution that was already involved in agricultural financing. ALIDé was willing to lend to more farmers, but worried about risk; so 2SCALE helped establish a system that was attractive for both borrowers and the lender. A guarantee fund was created to reduce ALIDé’s risks. Interest rates were reduced from 24% to 12% per year. Repayment terms were adjusted, with smaller but more frequent installments. ALIDé waived its collateral requirements, allowing farmers in a group to “guarantee” each other’s loans.
The loans were supported by other initiatives: training on business practice, credit management and marketing; strengthening of business relationships between producer organizations, traders and input distributors; and project-sponsored exchange visits between members of different clusters, to share lessons on farming practice as well as credit management – in particular, how to prevent defaults.
In 2016, every single loan was repaid ahead of schedule, encouraging AliDé to expand lending. In 2017, farmer groups negotiated directly with ALiDé, without the intervention of 2SCALE. Credit disbursement increased ten-fold, from €95,000 in the pilot phase to more than €1 million in the second season. This season, credit arrangements are in place, which will enable 921 producers (including 300 women) to receive more than €1 million in loans.
says woman farmer Agbissi Adamah. “Earlier, I used to borrow money from relatives or friends, or even from shylocks. I had to pay 5 to 10% interest per month. But once I got involved in 2SCALE, I was able to get credit easily, paying just 1% per month. This is the first time women in our community could access a ‘soft’ loan. Earlier, we could never meet the guarantee requirements, and there were too many procedures. I was able to borrow 1.5 million FCFA (€2,300) in 2015 and 2.5 million in 2016, and I repaid everything. I have expanded my fields, my business is growing. I am even building a new house that I will rent out... And it is not just me. This project has changed the lives of so many women.”
Jacques Tchekou, Operations Manager at ALIDé, is equally enthusiastic. “What makes 2SCALE unique is the package it offers – quality seeds, training on crop production, financial education, business relationships and continuous support from coaches in the field. I have seen many NGO programs over the past 10 years. They all address some of these aspects, but 2SCALE looks at all these aspects holistically. With 2SCALE, when we say capacity strengthening, there is something there. In this program, the farmers are in the center – and their coaches are well trained and fully supported. In a few years, we will be Un cas d’école (a textbook case) from which others can learn.”