Agrifinance: Reaching the Rest of Africa

This paper discusses Opportunity International's (Opportunity) efforts to expand financial access to Africa's agricultural industry. Opportunity has historically focused on urban areas to access clients easily and at lower cost. It decided to expand into the rural areas in 2008, focusing particularly on the agricultural industry, which plays a key role in rural Africa. Previous attempts at developing sustainable rural microfinance models in this industry failed due to obstacles such as complex farming operations, improper farming techniques and infrastructure, lack of access to markets, information and management, and irregular income flows. Opportunity sought to overcome these obstacles by developing a strategic and holistic approach to agricultural lending. Key features include:

• Combining traditional microfinance character-based lending techniques with technical criteria;
• Incorporating insurance and savings into loans;
• Providing education to farmers on basic business disciplines;
• Developing loan terms that will accommodate cyclical cash flows;
• Providing technical assistance and a handbook on farm management to clients;
• Diversifying portfolio risk across a variety of sectors and crops;
• Implementing a sophisticated management information system and a prudent risk management system.