Through innovative financing solutions, Africa’s subsistence farmers are slowly but surely transforming themselves into commercial producers of crops.

In Uganda, one of the projects financed by Stanbic Bank Uganda, part of the Standard Bank Group, is an aggregation of 25 producer groups made up of 5,000 farmers who are linked to a local marketing company and the Kapchorwa Commercial Farmers Association (KACOFA) to provide agricultural cooperative services, benefiting about 3,000 farmers in the Kapchorwa District.

The 25 producer groups are in Budaka, Manawa, Mbale and Pallisa districts. After receiving their first-ever loan they were able to buy, with the assistance of the marketing company, improved agricultural inputs such as seeds, fertilisers and pesticides. This enabled them to significantly increase their yields.

These groups have an agreement with the marketing company to grow maize, beans and soya at guaranteed prices. These groups have now received a second loan to meet their production needs for the second cropping season.

Kapchorwa grew from a small smallholder farmers’ organisation into one of Uganda’s leading for-profit cooperatives with significant market share and several supply contracts with local and international marketing companies. The association focuses on the cultivation of barley, maize, wheat, sorghum and potatoes.

Kapchorwa has received financing to enable the cooperative to aggregate the commodities produced by member and non-members smallholder farmers and then sell it in the market under specific off-take agreements. In addition, Kapchorwa used part of the funds received from Stanbic Uganda to purchase agricultural machinery to service its members.

Jacques Taylor, director of agriculture for Standard Bank Africa says the two projects are strong examples of the kind of initiative that the bank supports across the continent with several partners. These partners provide risk-sharing guarantees which give additional security to the bank, enabling it to finance smallholder farmers and agri-SMEs that are perceived to have higher risk profiles.

A further demonstration of partnership across the value chain comes from Ghana where Stanbic Bank Ghana is financing The Masara N’Arziki Association initiative. Masara is based on the extension and provision of quality inputs to smallholder farmers. The programme offers support across the crop-growing spectrum. It begins by alerting and educating farmers about the benefits of block farming and continues with the supply of seeds and fertilisers.

Continuing support includes professional assistance of extension officers who monitor farming practices and obtain further support when it is needed. Masara works with about 5,000 smallholder farmers in northern districts of Tamale, Damong and Tumu.

Masara is working with smallholder farmers operating under Ghana Grain’s partnership of organisations from government, the private sector and NGOs. Stanbic Bank Ghana participates in this partnership by providing required funding.

This initiative is helping to transform subsistence maize farming into commercial and market-oriented production that can be a source of prosperity in rural areas. The purpose of the funding is to help farmer groups buy seeds, fertilisers and agrochemicals to grow maize.

“Maize is a staple crop and the basis for many subsistence farming operations that typically are less than five acres in size. The challenge facing countries like Ghana is to transform this sector so that crop production is increased and commercialisation becomes viable to the benefit of rural farmers and the population as a whole. To do that we need to develop the entire agricultural value chain from input to delivery stages,” says Mr Taylor.

For the Masara scheme, a number of farms with an average size of just 1.91 hectares were combined for a total size of 4 160 hectares. Maize outputs were increased to 3.04 metric tonnes per hectare in 2009, well above the Ghanaian national average of 1.4 metric tonnes per hectare.

Says Mr Taylor: “What is most significant is that these smallholder farmers have real prospects for contributing to the national agricultural output. At the same time, they are creating opportunities for themselves and their families.”