Smallholder Financing Scheme

• Proposed use of funds is for an activity eligible under the project and amount requested is not more than the equivalent of $1,000 for each member. The APG shall provide a comprehensive list of activities to be supported by the SFS, including an explanation of how the investment will help farmers to undertake CSA, grow higher quality crops and add value, or cope with the impacts of climate change and reduce greenhouse gas emissions.
• The type and value of individual budget items will be listed. The FME team will benchmark costs against the market while a technical Sector Specialist within the FME will check that the items requested are relevant for the business plan purpose and are viable, e.g., will there be sufficient utilization of equipment (either within the subgroup, APG or outside the APG to make investment viable);
• be registered with the PAFO as a farmers group or agricultural cooperative having met the requirements of the MAF Ministerial Decree of 25 September 2014 regarding agricultural producers’ groups;
• the APG should have, or be willing to open, a bank account with a registered FI with joint signatories;
• be prepared to contribute to the investment cost (10%) in accordance with SFS policy;
• APG members shall be primarily be involved in the cultivation of vegetables and/or rice;
• proven links with agribusinesses;
• confirmation that the SFS shall be available to all members of the APG;
• APG members shall have participated in the capacity building and knowledge transfer training on CSA and green finance options including crop insurance and public-private-community partnerships (PPCP), and in particular on group formation and strengthening, provided by the project under outputs 2 and 3;
• and confirmation to abide by the terms of the SFS (e.g. to propose loan repayment terms for sub-groups of farmers who lend from the scheme).

SFS objective is to help investments for improved farm practices at an individual level. Support will be provided through training, both on climate smart agriculture and for APG formation and strengthening. In order to further incentivize farmers and APGs to adopt new technologies, finance will be provided by the project (at rates determined by the APGs which will be better than financial institutions, including MFIs, which currently have few clients in the agricultural sector) through a smallholder financing scheme (SFS), with an emphasis on technology and equipment which helps farmers to undertake CSA, grow higher quality crops and add value, and cope with the impacts of climate change and reduce greenhouse gas emissions.

The SFS funds will be disbursed to APGs who in turn will disburse money to groups of members on a revolving fund basis. As part of the eligibility criteria, APGs will be expected to provide 10% of the investment cost as seed funding.

To improve project efficiency, the SFS will be combined with the MGS as a separate funding ‘Window’ of the MGS. The budget for the SFS is $1.39 million based on a grant of approximately $25,000 for 50 APGs. APGs will be eligible to apply both for the MGS (vegetable pack houses) and the SFS.