The agricultural finance sector is changing rapidly, with new trends taking root in different geographies. The Smallholder and Agri-SME Finance and Investment Network (SAFIN) is changing with the times, and bringing its services closer to the providers, enablers and recipients of finance for sustainable food systems. Our members are committed to supporting this evolution, with four institutions stepping up to host Regional Network Coordinators for SAFIN activities in Asia and the Pacific, Latin America and the Caribbean, and sub-Saharan Africa.
In this interview, we hear from Willis Ogutu Odhiambo, Youth Employment in Agriculture Specialist at AGRA and newly appointed SAFIN Regional Network Coordinator for East and Southern Africa, about the trends, challenges and opportunities in the region.
The global financing gap faced by agricultural SMEs continues to linger despite decades of support for the sector. What are the main challenges you see in your region?
In East and Southern Africa, limited access to wholesale capital in local currency is one of the main challenges agricultural SMEs face. Financial institutions often depend on foreign-denominated loans, exposing them to currency fluctuation risks. As local currencies depreciate, loan servicing costs rise, straining the financial stability of both lenders and borrowers. Cautious lending further restricts capital flow to the agricultural sector, particularly impacting microfinance institutions and commercial banks.
High interest rates and lack of collateral also hinder SME growth, with interest rates for agricultural loans exceeding 20% in some areas. Many SMEs struggle to provide collateral, especially in regions with informal or poorly documented land tenure systems.
Climate change adds another layer of difficulty, with unpredictable weather patterns, droughts, and floods affecting crop yields and livestock health. This creates additional risk for agricultural SMEs and makes the sector even less attractive to investors. Inconsistent and poorly implemented agricultural policies in the region add to this equation more uncertainty and limit the number of targeted support programs. Ultimately, this means many SMEs miss out on the benefits of broader agricultural policies, which limits their potential for growth and innovation.
What are the untapped opportunities for agricultural finance in your region?
Countries in East and Southern Africa are yet to fully leverage digital financial services to enhance financial inclusion access for farmers in rural areas, agricultural insurance to mitigate financial risks and attract investment, and innovative financing models such as impact investing and crowdfunding. Improving financial literacy and developing tailored financial products can improve the odds for SMEs in the sector. Expanding partnerships between private sector players and development organizations would also increase investment and support for sustainable agricultural practices, unlocking potential for growth and resilience in the region.
AGRA recently took on a leading role in convening the agricultural finance community in the region through SAFIN. Please tell us about your institution’s agricultural finance work, and what informed its decision to take on this role.
AGRA plays a crucial role in inclusive agricultural finance by bridging gaps between stakeholders. It provides technical support and grants to national governments and funders to develop risk-sharing facilities, improve policies, and enhance regulations. Financial service providers benefit from AGRA’s expertise and grants, aiding the design of cost-effective agricultural finance products and connecting them to risk-sharing opportunities. Agricultural SMEs gain from AGRA’s efforts to create a creditworthiness rating system and a robust Business Development Services (BDS) ecosystem. Small-scale farmers, in turn, benefit from tailored financial models in the sector. For us at AGRA, extending our work to support SAFIN member in the region to build a more inclusive agricultural finance sector made perfect sense.
As you chart a path for your new role as Regional Network Coordinator, what have you heard from SAFIN members in the region as their key priorities? What are your hopes for SAFIN members to achieve together in the region?
SAFIN members active in the East and Southern Africa region shared with me several key priorities, but I expect that these may evolve with further dialogue. First, digital innovation is critical for reaching agricultural SMEs in rural areas. SAFIN members and their partners need to collaborate to enhance the role of digital tools in improving access to finance and services for remote enterprises. Second, advocacy is necessary to address policy, regulatory, and institutional gaps that weaken the enabling environment. By working together, SAFIN members can generate evidence to support reforms in these areas. Third, developing agricultural value chains was also recognized as essential to making the agricultural sector more attractive to lenders and investors. Overall, I have seen a real interest in deepening collaboration both within and outside the SAFIN network, particularly by engaging with insurance providers, government agencies, and commercial banks.
Meet the Regional Coordinator
Ogutu Odhiambo (Willis) is an Agricultural Economist and Enterprise Development expert with more than eight years of experience. He has worked in the financial inclusion space with a commercial bank supporting farming rural communities to access financial services by leveraging technology in Kenya. He has also worked in the financial and social inclusion space developing strategies, programs, and products to accelerate access to finance and economic opportunities for youths, women, and people living with various vulnerabilities across Africa. Currently, he works as a Youth Employment Specialist at AGRA and is based out of the head office in Nairobi Kenya. He also leads the SME Development Community of Practice within AGRA.
