Strengthening the resilience of Sahel’s small-scale producers by broadening access to finance for the agricultural sector

Aminata Ouedraogo

The Case of Aminata Ouedraogo in Burkina Faso

In Burkina Faso’s Centre Nord region, young entrepreneurs like Aminata Ouedraogo integrate traditional family activities with new opportunities to expand their businesses. Within the commune of Kaya, Ouedraogo runs a micro-enterprise with a diverse set of activities including selling wheat bran and other types of animal feed. She also processes peanuts to create peanut oil and a type of flour known locally as “koura-koura”, which she sells to bakers for pastries. Processing koura-koura is a long-standing tradition in Burkina Faso, passed down from mother to daughter, that provides hundreds of jobs across the region.

Kaya is home to a large livestock market, which serves as a regional supply center and popular trade hub for vendors from across Burkina Faso and neighboring countries. Nearly 86% of the working population in the country’s rural areas derive all or part of their income from livestock: presenting an excellent business opportunity for feed sellers. However, over the past couple of years, Burkina Faso has been severely impacted by food and nutritional insecurity. Violent extremist attacks, growing food price inflation, climate change, and the residual effects of the COVID-19 pandemic hit the Centre Nord region particularly hard, resulting in hardships for the local population and the 494,000 internally displaced persons who now reside in the region.

Ouedraogo was not spared the country’s tribulations. In 2021, her business collapsed following an armed attack which destroyed goods and cost Ouedraogo a large part of her working capital. The displacement of several customers from the surrounding villages compounded Ouedraogo’s cash flow challenges as they would previously buy koura-koura on credit and repay her during the Kaya market. To get her business back on track, Ouedraogo contacted several microfinance institutions (MFIs) to obtain a loan. Unfortunately, as with millions of women in Burkina Faso’s rural areas, Ouedraogo’s access to adequate and timely financial services is limited or nonexistent. The loans she was offered consistently fell short of covering the cost of 5 tons of wheat needed to kickstart her business’ recovery. In January 2022, Ouedraogo finally received a loan of USD 7,065 thanks to the support of USAID CATALYZE Finance for Resilience (F4R) partner financial institution (FI) GRAINE SARL.

Launched in October 2019, the USAID-funded CATALYZE project aims to unlock $2 billion in private sector financing for development impact over eight years, particularly in underserved social sectors and countries. As part of the overall project, the four-year CATALYZE F4R activity began operations in Burkina Faso in August 2020. CATALYZE F4R aims to mobilize $13.6 million in private sector financing in Burkina Faso and Niger by 2024.

CATALYZE F4R partners with FIs in Burkina Faso by providing incentives for loans offered to young entrepreneurs and agricultural sector actors working in F4R’s target value chains, such as cowpeas, small ruminants, and poultry. The goal of such partnerships is to motivate FIs to participate in agricultural financing, leveraging the financial incentive mechanism to increase the appeal of investing in entrepreneurs and farmers and ultimately build sustainable financing resources beyond the incentives and the life of the activity. GRAINE SARL, a CATALYZE F4R partner since 2021, understands that financial investment in agricultural value chain stakeholders, particularly women and young entrepreneurs, can lead to fairer and more sustainable markets. Through this collaboration, GRAINE SARL has financed USD 269,095 in business loans, including USD 177,746 for women-owned businesses and USD 170,436 for youth-owned businesses.

The impact of the GRAINE SARL-F4R partnership is further evidenced by their investment in Ouedraogo with the loan she received. Together, GRAINE SARL facilitated processing Ouedraogo’s credit application in less than 2 weeks and enabled her to increase wheat bran purchases by 20 tons. After repaying this first loan a few days ahead of schedule, Ouedraogo applied for a second loan of USD 11,597 to open a warehouse at the livestock market to store her wheat bran. Thanks to these loans, Ouedraogo’s profits increased by 100%.

Greater economic power has enabled Ouedraogo to become more autonomous and improve her family’s food security situation. She continues to work with GRAINE SARL, saving part of her income with the FI to build a peanut processing facility. Ouedraogo’s success is also impacting her community and reducing unemployment in Kaya. Her enterprise has grown from 6 to 10 permanent workers and from 50 to 60 temporary workers. Additionally, as part of her work collaboration with GRAINE SARL, Ouedraogo serves as the point of contact for a women-led association of 5 entrepreneurs, which is one of the 316 enterprises F4R has assisted, of which 40% are women-led.

This article was originally published by: Palladium