Magnay, a British-born, 33-year veteran of the agricultural development sector in Africa, has worked with several African governments to develop agricultural advancements, and now leads http://www.opportunity.org/Opportunity[/intlink]‘s agricultural finance program in Africa. His work is highlighted in an article published last week in Medill Reports, a newsservice written by graduate journalism students at Northwestern University. 

Although the proportion of the economically active population engaged in agriculture has been falling in developing regions worldwide, it still exceeds 50% in Africa and Asia. Agricultural microfinancing, however, has been seen as too risky for financial institutions and many stopped providing the service. Agriculture accounted for 31% of World Bank lending in 1979-81, but by 2000-01, it had fallen to less than 10%, according to the U.N. International Fund for Agricultural Development.

“Climate is the biggest risk to agricultural lending,” said Paul Christensen, professor at Northwestern’s Kellogg School of Management. Christensen has three years’ experience as a fund manager for microfinancing investments. “One flood can wipe out all of your [banking institution’s] loans.” Which is why Opportunity has implemented an agricultural finance program that includes weather-indexed crop insurance, which can protect the farmer and the investor against the effects of climate change and unexpected weather events, like drought or flood.

A 2007 study released by Opportunity indicated nine primary requirements for a successful weather-indexed crop insurance system. Among them is a reliable network of weather stations, quality historic weather data dating back 30-40 years and relatively similar soil water containment capacity on the farm as is near the weather station. 

Opportunity successfully tested its first weather-indexed crop http://www.opportunity.org/our-work/microinsurance/insurance[/intlink] pilot with 892 groundnut and maize farmers in Malawi. As a result, today, over 65 % of its population–more than 2,000 farmers–has weather-index crop insurance. Due to the program’s success in Malawi, it’s expanding its agriculture finance program to several other African countries in the next few years, including http://www.opportunity.org/blog/interview-with-ghana-agricultural-finance-officer/Ghana[/intlink] and Mozambique, and then to follow in Rwanda and Uganda.

Want to meet John Magnay in person and learn about innovations in agrifinance in Africa? He’ll be leading a http://www.opportunity.org/opportunity-international-conference/breakout-sessions/breakout session[/intlink], “Agricultural Finance: Reaching More of Africa,” at http://www.opportunity.org/opportunity-international-conference/Opportunity’s Fall Microfinance Conference[/intlink] on Oct. 8-9. http://www.opportunity.org/opportunity-international-conference/Click here[/intlink] to learn more and to register for the conference.

Further reading:

1. http://www.opportunity.org/blog/interview-with-ghana-agricultural-finance-officer/Spotlight on Agricultural Finance: An Interview with an Agriculture Finance Officer[/intlink]
2. http://www.opportunity.org/blog/melinda-french-gates-on-the-impact-of-agriculture-finance/Melinda French Gates on the Impact of Agricultural Finance[/intlink]
3. http://www.opportunity.org/blog/what-were-reading-world-finance-magazine-discusses-opportunitys-agricultural-finance-program/What We’re Reading: World Finance Magazine Discusses Opportunity’s Agricultural Finance Program[/intlink]

Watch the “Harvesting Hope” video:

Amosi Kasamira’s face lights up as he shares his plans for the next season. ‘My vision is to replace the grass roof of our home to better protect us from the sun and rain,’ he explains, ‘and I intend to cultivate ten acres next season.’ –Excerpted from: ‘There is Still a Lot of Work Ahead,’ World Finance, July-August 2010 (pp. 152-154)

Amosi Kasamira and his wife heard about the agricultural finance program at Opportunity International Bank of http://www.opportunity.org/our-work/where-we-work/microfinance-in-africa/microfinance-in-malawi/Malawi[/intlink] (OIBM) two years ago. Since then, they have repaid their first loan and are now growing more maize than ever before. They’ve also been able to increase the size of their land plot and access fertilizer and seed.

Deborah Foy of Opportunity International UK details Amosi’s family’s story in the July-August 2010 issue of World Finance magazine. She outlines how http://www.opportunity.org/Opportunity[/intlink]’s agricultural finance program in sub-Saharan Africa is empowering smallholder farmers like Amosi with http://www.opportunity.org/what-is-microfinance/microfinance[/intlink] solutions like savings, insurance and loans.

As Foy explains in the article, Opportunity has developed a strategy to manage the risks inherent in providing financial products in rural areas, with undeveloped markets and farming techniques, poor infrastructure, and clients who have little credit history.

Opportunity ensures a profitable and well-managed agriculture microfinance program through:

• Traditional character-based lending techniques to select responsible borrowers
• http://www.opportunity.org/our-work/microinsurance/Insurance[/intlink] like weather-index crop insurance, where available, to protect against drought or flood, and credit life insurance that’s included in all loans
• http://www.opportunity.org/our-work/savings/Savings[/intlink] to help manage cash flow
• http://www.opportunity.org/our-work/training/Training[/intlink] on the principles of saving, borrowing, cash flow and good business practices
• High-quality technical assistance for clients with agriculture extension services to improve land management and yields
• Diversified portfolio risk across a variety of sectors, crops and geographic areas
• A robust, sophisticated management information system to ensure constant, real-time information on the status of agriculture loans within the portfolio

Opportunity recently wrote a guest blog post for the Hunger and Undernutrition Blog about Foy’s World Finance piece. Check out our blog post as well as the Hunger and Undernutrition Blog‘s wide-ranging coverage of a number of topics related to hunger, nutrition, poverty and agriculture by expert guest bloggers.

Access the full World Finance article here.

Watch a video about Opportunity’s Malawian agricultural clients and crop insurance:

Jakobo Chikayiko is an Opportunity agriculture finance client in Malawi.

 Want to do more to impact global poverty? In an interview in the August issue of Smithsonian magazine, Melinda Gates outlines the techniques the Bill & Melinda Gates Foundation is using to fight global poverty in the 21st century. (“Melinda French Gates on Saving Lives,” by Terence Monmaney) It’s part of the magazine’s 40th-anniversary issue, featuring ”40 Things You Need to Know About the Next 40 Years.” If you ever feel that poverty in the developing world is an inevitable fact of life, this interview is an encouraging look at the wide range of strategies that can and are being employed to fight it.

Along with using new http://www.opportunity.org/our-work/technology/technology[/intlink] like cell phone banking, and implementing education and healthcare reforms, Gates emphasizes the importance of reaching rural people, especially farmers, with investment and support. 

Poverty is often viewed as intractable. What has your experience taught you about it? 

History has shown that it’s possible for people to overcome even extreme poverty and hunger[…] We also know that certain strategies have an immense impact. Investing in agriculture, for example. Advances in agriculture during the Green Revolution doubled food production, saved hundreds of millions of lives and laid the groundwork for broader development in many countries. 

Indeed, the Gates Foundation makes significant investments in agricultural development. The foundation, along with The MasterCard Foundation, has given Opportunity a $16 million grant to establish an agricultural finance program in order to reach 1.4 million people, including 90,000 smallholder farmers, in sub-Saharan Africa. The program provides farmers access to financial tools like savings accounts, innovative farming techniques, crop insurance, professional training and market linkages. 

Not surprisingly, women play a crucial role in agricultural life in the developing world. And so Gates emphasizes the inextricable link between empowering women and fighting poverty. 

Studies suggest development aid goes furthest if it is directed to women. Is that your experience? 

[…]Agriculture may be the area where the special role of women in development is most clear. Most small[holder] farmers in sub-Saharan Africa and South Asia are women, but a lot of agricultural interventions don’t take that into account. Some programs aim to increase the productivity of crops without understanding that higher production can mean that women have to work longer and harder in the field, leaving them less time to care for their households; that can undermine the welfare of the household in general. And we know that when a woman gets cash for her work, she is more likely than her husband to spend it on things like food and school fees. 

When you wonder if global poverty is an unavoidable fact of life, read Gates’ encouragement for what can and is being done to impact the most economically marginalized people in the world. Read the entire interview at smithsonianmag.com.

The members of the "Strive to Achieve" Trust Group welcome Alexandra Arch with refreshments and stories of their agricultural challenges and triumphs.

The events of the day center on getting to the source. Not only did we trace the chain of coffee production back to the very farmer who planted the seed, but we also arrived at the source of the famed Nile River.

Moving out of the city of Kampala, Uganda and into the rural area of Kalagi, about 90 minutes away, we trade traffic for slow-going country roads. Our bus plods down rich red dirt roads, weaving through unruly greenery, tamed in areas by farmers who planted patches of coffee or maize, the most common crops in Uganda. Papyrus plants line the roads, deeply carved by recent rainstorms, and we pass small brick huts guarded by a flock of chickens or a goat. We are headed to a Trust Group meeting of farmers, the Kerangura Ogutateganya (translated: “Strive to Achieve”) weekly meeting.

In the rural areas, Opportunity International lends to a majority of women who are not only known in their community for being financially savvy, but are also responsible for farming. Agrifinance has been a major topic of discussion at Opportunity International, as the organization continues to develop a loan product geared towards supporting farmers, the backbone of the Ugandan economy. And this mission is supported by a significant grant from the Bill & Melinda Gates Foundation. Uganda has ample rain and fertile soil for farming the beans necessary to sate the worldwide caffeine fix.

Financing the risky, and often heartbreaking, farming industry is incredibly complicated and involves supporting the many players in the farming chain. Funding small-scale farms can be especially tricky, trading off low yields for big jobs. But looking at the proud faces of the people who have attended this 10 a.m. Trust Group meeting, there is no doubt that agrifinance is a gamble worth taking.

Although rain is imminent, the group graciously arranges chairs, couches and mats to accommodate the larger group today. The farm owner, a venerable man with a graying goatee and long lines of life engraved on his face, is prominently seated at the head of the circle. The group members greet us visitors warmly, offering us fruits, nuts and drinks, and then they begin to tell us their stories, translated through their loan officer Cathy.

Traveling a mud road in the countryside of Kalagi, Uganda.

As it turns out, most of the clients utilize Opportunity International loans to fund additional business ventures, in order to help make ends meet. Yonah has a retail shop and produces charcoal. Francis raises pigs and Ismael runs a small medical clinic. They call Cathy, a compassionate, tough-as-nails woman, “teacher.” She travels weekly to the village by boda boda for these meetings, rain or shine . The trip is sometimes arduous, but she is committed to her job, which often requires more than financial advising. (Today, we are able walk in her shoes after our bus was halted by the muddy roads–it took most of the men in the village to push it out.)

Many members of the Trust Group have small plots of land where they grow coffee, and buyers either come to the village or the growers sell it to a coffee collective. All the growers say that they are waiting to get additional financing from Opportunity to gain better access to fertilizer that will improve yields, and thus, incomes.

Today, it is difficult for me not to write about every person we meet, because they are usually eager to share their poignant stories, hardships and successes. The countryside and its people are compelling, and the experience of sharing a few hours with them is unforgettable.

When the afternoon is over, we roll into our night’s lodging, perched in the lush hillsides overlooking the Nile River. The vast river determinedly presses downstream against the bows of fishing boats ferrying across it, hoping for a bountiful last catch of the day. I am looking forward to dipping a toe in this awe-inspiring river tomorrow…

This is the fourth in a series of blog posts from Alexandra Arch. Read more on Opportunity’s blog about her arrival in Kampala, Uganda, her first visit with a Ugandan Trust Group, and her experience meeting Ugandan schoolchildren as well as entrepreneurs.

Alexandra Arch sends us her reflections and insights from her Insight Trip in Uganda. Arch is a freelance writer based out of Bend, Ore. An avid outdoor enthusiast, she also is trying her hand at operating a farm and raising animals. The author is particularly looking forward to shopping in the African markets and floating on the Nile.

Opportunity International is prominently featured in an article entitled “Food & Microfinance: Helping Farmers Reap Rewards” in today’s Financial Times. The article highlights Opportunity’s leadership in providing both agricultural finance and microinsurance to smallholder farmers to help them increase production, support their families and feed their communities. It also references “Feed the Future,” USAID’s new global hunger and food security initiative.

John Magnay, agricultural advisor for Opportunity International, is quoted as saying, “Microfinance is the lubricating system for smallholder farmers. Unless they can get access to inputs and finance the production and marketing cycle, they will not be able to produce at optimum levels.”

The article continues: “MicroEnsure, the insurance agency of Opportunity International and one of the shortlisted organisations for the Banking at the Base of the Pyramid award, is working with the United Nations through the Munich Climate Insurance Initiative to create a $5bn climate change insurance plan. This will cover people in developing countries who are facing increased incidences of climate-related flooding, drought and other extreme weather events. These experiments in micro-insurance for smallholders come at a critical time, as the risks that farmers face are likely to rise sharply with the effects of climate change.”

Sowing the seeds of success: a Tanzanian farmer working in her cornfield. Photo by Financial Times.

The article also highlights our program in Malawi as an example of microfinance institutions and non-governmental organizations that are starting to address the financial needs of smallholder farmers. “In Malawi, Opportunity International combines microloans with savings accounts and weather insurance products. ‘We’re also encouraging farmers to plant trees,’ says Mr. Magnay. ‘So, in seven or eight years, they will have household fuel wood and timber to sell.’”

Click here to read the full story.

To learn more about Opportunity’s agricultural finance initiative, attend the Opportunity International Microfinance Conference on Oct. 8-9 at the Marriott Crystal Gateway in Arlington, Va. The conference will feature speakers such as John Magnay and Roger Thurow, Senior Fellow on Global Agriculture and Food Policy for the Chicago Council on Global Affairs, as well as breakout sessions on key issues such as global poverty, hunger and microfinance. To register, click here.

Watch our video or read the latest Impact newsletter to find out how you can get involved with Opportunity’s Banking on Africa campaign to provide financial access to more people living in poverty.

Opportunity International is working to equip countries to be agriculturally self-sustainable through microfinance.

There is a green revolution occurring in the developing world led by passionate individuals with a heart for change. Within this revolution, Opportunity International is equipping nations to do something radical–to feed themselves.

In honor of www.blogactionday.org, I would like to introduce Lucas Chingore. Lucas is a farmer in Mozambique. His desire was to farm on a plot of land just outside of town. But his goal was always out of reach. He did not have the financial services that he needed to succeed. Finally, he found Opportunity International and his farm took root. He received a loan for an irrigation pump that brought precious water to his crops and greatly enhanced his yield. Another loan allowed him to diversify into poultry so that hundreds of chickens now populate his fields. And he opened an Opportunity savings account to protect his business profits and earn interest.

Lucas is now feeding his family, his community and his nation, thanks to a loan from Opportunity.

Two-thirds of the sub-Saharan Africa labor force is employed in agriculture. With this in mind, Opportunity institutions in eight African countries (Ghana, Kenya, Malawi, Kenya, Mozambique, Rwanda, South Africa, Tanzania and Uganda) are committed to addressing the issue of food security. Opportunity plans to solve this great agricultural conundrum through the success of people like Lucas.

The issue of food sustainability is not a new issue. It is, however, one of the most pressing problems in the developing world. With the global food crisis still a battle that the poor face daily, Opportunity International recognized the need for a long-term solution to this chronic problem.

Using technology, Opportunity has pioneered crop insurance that mitigates weather problems in farming. Using education, Opportunity is teaching farmers about the true market value of their crops. Using savings products, Opportunity is allowing farmers to manage their cash flow. Using new seeds, Opportunity is helping farmers to increase crop yields and decrease risk.

As Roger Thurow and Scott Kilman insist in Enough, this is a problem that can only be solved by creativity and commitment. Opportunity International has become a champion of the farming poor. And in doing so, Opportunity has equipped nations to feed themselves.

To read more about Lucas’ story, click here. To learn more about Blog Action Day and the topic of climate change, go to www.blogactionday.org.

Opportunity International President and CEO, Kadita "A.T." Tshibaka, at the Board of Governors Conference

I have always admired Opportunity International CEO Kadita “A.T.” Tshibaka. He has a way of coming into a room and making everyone feel special. And blessed. And happy. And empowered. He is able to connect with everyone–from a client in the field to a banking executive.

Today is no exception.

“A.T.” (as he is warmly called by his colleagues, friends, and family) expressed deep gratitude for the involvement of Opportunity’s supporters, and opened the Board of Governor’s Conference with a call to keep the poor at the forefront of our minds as we go through our days.

“Come and hear the stories. The stories of our clients, the stories of our staff members who have poured out their lives for the poor,” he said. “Stories of what we can do if we hold hands and work together.”

His welcoming address included his report of a recent meeting with Bill Clinton at the Clinton Global Initiative. He touched on Banking on Education, on Agrifinance, on the potential for a banking license in Colombia.

“With your support, we are making the difference in the lives of many.”

Thank God for people like Kadita “A.T.” Tshibaka. I left the session this morning feeling inspired and motivated.